White House, Faith Leaders Team Up to Combat Predatory Lending

The White House and leaders of the faith community are joining forces to push for an end to payday lending abuses.

Payday loans are quick ways to get money without the hassle of a credit check.  Lenders trap many Americans in a crushing cycle of debt by charging exorbitant, and often misleading, interest rates. The annual interest rate is typically about 400 percent, making it extremely difficult for borrowers to repay.

Resistance from Special Interests

The president's advisers noted that the Consumer Financial Protection Bureau began working in 2015 on rules to reduce such abuses.

"Yet 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," the three advisers said.

During a telephone news conference call Southern Baptist public policy specialist Barrett Duke said,  "We need measures that rein in exorbitant interest rates" and "not half-measures" that are sometimes passed.

"The biggest challenge ... is getting public decision-makers to enact these particular regulations," added Duke.

Duke also told reporters that Americans would benefit from the federal government's annual percentage rate (APR) cap of 36 percent for military members.

It has been estimated that payday loans cost military families $80 million in interest and other fees each year.

CBN News reported on the hardships many of these predatory loans have on members of the military in 2011.  We spoke with Holly Petraeus, wife of Gen. David Petraeus, about the issue.

As assistant director of the Consumer Financial Protection Bureau's Office of Service Member Affairs in Washington, D.C., Petraeus's mission is to protect military families from financial predators -- a passion she has had since her days at the Better Business Bureau.

"I can give you an example of a young soldier we heard about who wanted to borrow $1,000," she said. "The lender was going to charge him $450 in fees and then 18 percent interest on that $1,000 loan. That's a predatory loan."

Payday Lending a Sin?

According to a new poll, a majority of Christians think payday loans are sinful and want laws to include regulation of such.

A February survey of 1,000 Christians sponsored by Faith for Justice Lending and conducted by LifeWay Research found that 77 percent think loaning money in a way that is financially harmful to the borrower is sinful.

Predatory lending is a pastoral and public issue, said Stephen Reeves, associate coordinator for partnerships and advocacy of the Cooperative Baptist Fellowship (CBF).

"Churches are, and need to continue, teaching stewardship as well as generosity ...," Reeves said. "To the public decision-makers, we want to show you that Christians widely agree that the laws and regulations should protect against expensive interest and loans that cannot be repaid.