A Catholic Call
to End
Payday Lending Abuses
by Jean Hill
Say the words “payday lender” in some circles and
stories of friends, family members, or neighbors who
sought quick loans to make ends meet and ended
up caught in a devastating cycle of debt will begin to
flow.
Often, these stories begin with someone living
paycheck to paycheck and unsure how to make a rent
payment, buy food, pay bills, and cover other short term
expenses. The tales end with harassing phone
calls and court filings for repayment of ridiculously
high-interest rate loans and mounting debts that now
include court costs.
As Catholics, we are called not only to empathize
with these stories but to act to protect the poor
and vulnerable who find themselves preyed upon by
unscrupulous businesses.
Prohibitions against charging outrageous interest
on loans go back to Babylonian times. More than one
Old Testament prophet condemned usury, along with
exploitation of the poor. Yet usury not only persists in
our modern economy, it prospers. In 2010, there were
an estimated 19,700 payday loan stores in the United
States (That number does not include Internet loan
sources. A recent federal agency report found at least
332 separate Internet loan providers). Thirty-two states
permit loans with triple digit or no caps on the amount
of interest the lenders may charge.
The Catechism of the Catholic Church insists that
“economic life is not meant solely to multiply goods
produced and increase profit and power; it is ordered
first of all to the service of persons, of the whole man,
and of the entire human community” (no. 2426). In
theory, payday lenders provide a service to individuals
who are often barred from traditional bank loans. In
practice, however, these loans are vehicles for exploiting
people already in a highly vulnerable financial state.
In a typical payday loan transaction, the customer
seeks to make ends meet until the next paycheck, or
maybe the next two. Unlike a traditional loan, however,
the individual will not sit down with the lender and
determine a reasonable repayment structure based on
ability to pay. The customer will not be able to bargain
for a better rate or realistic payment plan. Instead, the
astronomically high interest rates (the national average
is above 400 percent per loan), fees, and payment schedule
will be based solely on the needs of the lenders.
In short, the loan is all about the profit of the business,
rendering the persons seeking help, in the words
of Pope Francis, “as consumer goods which can be
used and thrown away” (Address, May 16, 2013).
The social doctrine of our faith compels each of us
to be involved in changing such an unjust system. We
can raise our Catholic voices to remind payday lenders
that their customers are first and foremost human
beings, not profit centers. We can insist that our state
and federal governments establish reasonable limits
on the actions of the lenders to ensure they are not “so
powerful as to reduce the [consumer] to subservience”
(St. John Paul II, Centesimus Annus, no. 15).
Now, as the Consumer Financial Protection Bureau
considers regulations to address some payday lending
abuses, is an opportune moment to challenge our
congressmen and women to take additional actions
against usury to protect the working poor, as our Pope
and our doctrine urge us to do.
Jean Hill is government liaison for the Catholic Diocese of Salt
Lake City.
Article taken from To Go Forth, a blog from the United States Conference of Catholic Bishops’ Department of Justice, Peace & Human Development.
Copyright © 2016, United States Conference of Catholic Bishops, Washington, DC. All rights reserved.
Quote from the Catechism of the Catholic Church, second edition, copyright © 2000, Libreria Editrice Vaticana–United States Conference of Catholic Bishops,
Washington, DC. Used with permission. All rights reserved.
Quote from Pope Francis, copyright © 2013, Libreria Editrice Vaticana, Vatican City State. Used with permission. All rights reserved.
Quote from St. John Paul II, copyright © 1991, Libreria Editrice Vaticana, Vatican City State. Used with permission. All rights reserved.
