Predators and Prey

" Payday Loan Place Window Graphics " by  Taber Andrew Bain  is a Creative Commons image, licensed under  CC BY 2.0

"Payday Loan Place Window Graphics" by Taber Andrew Bain is a Creative Commons image, licensed under CC BY 2.0

On Wednesday I took part in a day of lobbying with Ohioans for Payday Loan Reform. I was part of a group that visited two Members of the Ohio House of Representatives, and another group that made our case to a Senator. After our meetings and a lunch-and-debriefing session, we gathered outside the Statehouse for a rally and press conference.

I have a considerable amount of experience doing advocacy in Washington, DC, but this was my first time visiting members of the Ohio legislature. In at least one case I was underwhelmed by what I found.

The first Member we visited was a frail-looking older woman from, I think, the Akron area. She looked to be in her late seventies, if not her eighties, and was impeccably dressed and coiffed. Something about her made me think of formal soirees at the country club. We presented our spiel about the need for payday loan reform, and she sat there blinking and nodding. She confessed that she didn’t know much about the issue, but that everything she had heard about it sounded bad. This might have sounded okay coming from one’s elderly aunt, but from a state legislator it was rather disheartening. Even more disheartening was the comment she made a few moments later. She claimed never to have seen a payday lending shop. (We looked it up later and found around a dozen of the establishments in her district.) We gave her the fact sheet we had brought and politely took our leave.

My first reaction to her claim of not having seen any payday loan stores was that she was not being entirely honest. But upon reflection it occurred to me that someone from her background and tax bracket could quite plausibly go through life without setting eyes on one, and could maintain a state of blissful ignorance about these predatory lending practices and both those who practice them and those who have them practiced upon them. After all, such a person probably doesn’t spend much time in the neighborhoods where these businesses flourish. She travels in different circles entirely.

And that is the essence of the problem: the ease with which we can insulate ourselves from the plight of people we assume are not like us. We live in different neighborhoods, our children go to different schools, we attend different churches, and so on. The very infrastructure of our cities enables this—limited-access roads and highways take us past those neighborhoods so that we don’t even have to go through them, let alone concern ourselves with the problems of the people living there paycheck-to-paycheck, on the knife-edge of penury.

I must confess that, although I know about payday lending institutions, I have never set foot inside one to see what they are really like. I have never sat down with someone who has become caught up in the endless cycle of debt that serves for all intents and purposes as the payday lenders’ business model. I know what it means to be in debt, but I live my life in the mainstream economy; I have barely a clue about what goes on in the secondary, or shadow, economy where these institutions predominate. What I know about the issue comes from standing on the outside looking in, not from within that world.

But even those of us who are on the outside have a role to play in correcting the heinous injustices of payday lending. One of the first things we can do is to educate ourselves. Did you know that…

  • Ohio has the fourth-highest usage rate—that one in ten Ohioans have used a payday loan?

  • the APR of unregulated payday loans in Ohio is the highest in the nation—a typical APR for a $300 loan is a staggering 591%?

  • a typical borrower who renews a $300 loan over five months would end up paying back $980—$300 for the original loan and $680 in interest payments and fees?

  • a 2008 referendum capped the interest rate payday lenders in Ohio could charge at 28%, but the companies quickly identified a loophole, so that nine years later not a single payday lender is licensed under that 2008 law?

  • a bipartisan bill in the Ohio House of Representatives, HB123, has been put forward that would close the loophole, setting an enforceable cap of 28% and up to $20 in monthly fees, and would restrict payments to no more than 5% of the borrower’s income?

As I said in each of my visits on Wednesday, I consider payday lending a matter of justice. It is a moral and religious issue, and the Bible makes crystal clear where God’s sympathies lie. In Exodus 22:25 we read, “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.” Likewise, Leviticus 25:35–36 tells us, “If any of your kin fall into difficulty and become dependent on you, you shall support them; they shall live with you as though resident aliens. Do not take interest in advance or otherwise make a profit from them, but fear your God; let them live with you.” And Ezekiel 18:12–13 pronounces judgment upon one who “oppresses the poor and needy, commits robbery, does not restore the pledge, lifts up his eyes to the idols, commits abomination, takes advance or accrued interest.” The prophet asks, “Shall he then live?” and answers his own question: “He shall not.”

Payday lending is predatory—it preys on those who are most vulnerable, such as low-wage workers who do not qualify for traditional loans but often need a boost to their paycheck to cover all their bills. The lenders take advantage of this vulnerability, easily trapping borrowers in a pit of debt few can climb out of. It’s immoral. It’s unjust. But we can reform the system.

We each have a voice. Let us use it to speak up for the poor and marginalized persons in whom we most clearly see the face of Jesus.