Faith and community leaders have long fought to regulate the so-called payday loan lenders that are continually expanding across the nation.
New research on the issue is giving their opposition a boost, especially as Alabama legislators are within the final days of potentially passing regulations during the 2016 legislative session.
Faith for Just Lending (FJL), a diverse coalition of faith groups, released a report April 13 titled “The Collateral Consequences of Payday Loan Debt.” The report shares the experiences of churches and borrowers in dealing with payday and car-title loans.
It reported that ministers and faith-based social service providers overwhelmingly describe payday loans as harmful instead of helpful.
FJL also drew attention to the April 13 release of a LifeWay Research survey which polled 1,000 Christians on their attitudes toward payday lending issues.
‘It’s a sin’
“Self-identified Christians in 30 states — from Alabama to Wyoming — say it’s a sin to lend money to someone who can’t afford to pay it back,” LifeWay said in presenting its survey.
A typical two-week payday loan charges the equivalent of a 400 percent annual percentage rate, according to the Consumer Finance Protection Bureau (CFPB), a federal government agency tasked with consumer protection in the financial sector.
The Alabama legislation — Senate Bill 91, sponsored by Sen. Arthur Orr, R-Decatur — would limit the amount of interest that could be charged and would extend the time to pay off loans from 30 days to six months.
The bill — which does not cover title loans — has passed the Senate and is pending in the state House of Representatives.
At the federal level, White House officials also are pushing for regulations on the industry.
On April 14 three of President Barack Obama’s top aides met with religious leaders from across the country, including Southern Baptists, who described “heart-wrenching stories” of congregants whose lives had been ravaged by payday loans.
“What emerged was a common, powerful theme: that we have a moral obligation as a country to do something to stop payday lenders from preying on consumers by trapping them in an endless cycle of debt,” the trio wrote in an online post.
Obama’s advisers said CFPB began working in 2015 on rules to reduce such abuses, but “even as there is widespread agreement across a diverse array of faith communities that something needs to be done to address payday lending abuses, too often these reasonable efforts face stiff resistance from the special interests supported by the payday loan industry.”
Resolutions oppose
Alabama Baptists and Southern Baptists both addressed the issue in 2014 at their respective annual meetings by passing resolutions denouncing payday lending and calling for government officials to regulate the industry. They also called for churches to provide training in financial stewardship.
FJL was launched in 2015 by the Southern Baptist Ethics & Religious Liberty Commission. It is an effort to increase awareness of predatory lending and to motivate individuals, lenders, churches and the government to help bring an end to the practice.
About 20,000 payday and car-title loan stores exist in the United States, according to the coalition. Payday lenders also operate online.
(TAB with contributions from RNS, BNG, BP and LifeWay)
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