Payday Lenders Boom Where Conservative Christians Exercise Political Power
The predatory practice of payday lenders flourishes in the Bible Belt, the very place where one would think that the piety and morality of church goers would oppose such ventures that charge the poor exorbitant interest rates exceeding those of "the old mafia loan sharking syndicates." That is not the case, according to a new study that maps the correlation of payday lenders and conservative Christians.
Written by Christopher Peterson, a law school professor at the University of Florida, and Steven Graves, an associate professor of geography at California State University, Northridge, "Usury Law and the Christian Right" will be published in the spring in the Catholic University Law Review. However, the study is now available to download.
"Our study systematically surveys over 20,000 payday lender locations, cast against a backdrop of Christian political power, local and regional electoral districts, and a variety of demographic considerations," wrote Peterson and Graves.
"We conclude with a high degree of statistical certainty that states with powerful conservative Christian populations tend to host relatively greater numbers of payday loan locations per capita as well as a greater commercial density of payday lenders," they said.
Calling their findings "a tragic and sad irony," Peterson and Graves said: "Those states that have most ardently held to their pious Christian traditions have tended to become more infested with the progeny of money changers once expelled by Christ from the Hebrew temple. Legislators in those states who have effectively used Biblical principles to shape their legislative agenda on social and cultural issues have failed to consistently apply Biblical principles to economic legislation."
Payday lending is a practice that requires minimal credit check on borrowers and a post-dated check for the amount of the cash loan plus the interest charged due in one to two weeks. More often than not, borrowers are unable to repay their loan when it comes due and slide into deeper debt.
For example, a $325 loan, due in two weeks, would carry a finance charge of $52. However, the average payday borrower ends up paying an estimated $793 on a $325 loan, according to the study.
"The political power of Conservative Christians within a state is a better predictor of payday lending severity than either race or poverty," Peterson and Graves wrote. "Of the thirty ZIP codes most saturated with payday lending in the United States, all but three are located in one of fifteen most conservative Christian states."
Three Bible Belt states came under special scrutiny. One was Alabama, which the study ranked first in the nation for the "political power of conservative Christian Americans." Even though Alabamians voted for so-called conservative biblical values, Alabama Christians "stood essentially idle while the state developed one of the very worst usurious lending problems in the country."
Second only to Alabama in the political power of conservative Christians, Mississippi has the "highest density of payday lending of any state." One congressional district has more payday lenders than banks. "Hinds County alone has more payday lenders than all of Minnesota," found the study.
The authors praised North Carolina, a state with "solid Christian credentials," for re-imposing "traditional Biblical values in their consumer financial services markets." They wrote, "After nearly seven years of aggressive enforcement efforts...North Carolina...appears to once again be largely free of payday lending operations."
The study contains an appendix with detailed information about the usury law in every other state.
The widespread practice of charging astronomical interest rates on loans made to the poor runs counter to the biblical injunction against usury, which is condemned along with the shedding blood, extorting and forgetting God (Ezekiel 22:12).
In a clear passage to the freed Hebrew slaves, God said through Moses: "If you lend money to my people, to the poor among you, you shall not deal with them as a creditor; you shall not exact interest from them. If you take your neighbor's cloak in pawn, you shall restore it before the sun goes down; for it may be your neighbor's only clothing to use as cover; in what else shall that person sleep" (Exodus 22:25-27)?
Not only does the Bible reject the excessive interest of the payday lenders, but the Bible speaks repeatedly about protecting the poor, the orphan, the widow and the stranger in the land.
Given the clarity of the biblical witness and the crippling reality of payday lenders, some Baptists are addressing the issue.
Religious Herald editor Jim White encouraged Virginia Baptists last fall to urge state legislators to place a cap on the interest rate payday lenders can charge. White called payday lending a "great injustice" and called a cap on interest charged "the least we can do."
White returned to payday lending in a January editorial, beseeching readers to contact their representatives supporting specific pieces of legislation that would cap payday lending. He wrote that these bills "will not eliminate the suffering of the poor. But, it will end one way the oppressed are being further impoverished."
The Baptist General Association of Virginia spoke out against payday lending in a November 2007 resolution, denouncing "the payday lending industry and its practice of further impoverishing the poor."
BGAV's Christian Life Committee members have contacted their own legislators, supporting reforms in payday lending. The committee is now preparing a report to present to Virginia Baptists that will identify the negative impacts on families of predatory lending and offer steps for advocacy.
The committee is also interfacing with the Virginia Interfaith Center for Public Policy, which has a campaign to combat payday lenders, including a pledge for action designed to lobby state legislators.
BGAV is clearly the moral exception among Baptist state conventions. Most appear so morally malnourished that payday lenders flourish and impoverish the poor.
What was it that the Hebrew prophet Micah said that the Lord required? That's right—"to do justice"—the very thing too many seek to avoid.
Robert Parham is executive director of the Baptist Center for Ethics.