A.G. Gancarski
On Thursday, Florida faith leaders pushed forth a single message: payday lending expansion bills currently under consideration in Tallahassee (HB 857 and SB 920) are usury and should be stopped.
Both bills seek to authorize annual interest rates of up to 208 percent, via compounding interest, for larger loans and with longer terms than the payday loans currently allowed under Florida law.
Rev. Rachel Gunter Shapard of the Cooperative Baptist Fellowship of Florida, noted that faith leaders are “deeply concerned” about the bills that would “trap people in debt.”
Shapard advocated for a 30 percent interest rate cap, saying that lending “traps people … in a cycle of never-ending debt,” and questioning why lawmakers are privileging the concerns of lenders over people.
Bishop Adam J. Richardson of the Florida AME Church asserted that the legislation permits “usury with poor people as victims.”
“I consider it an economic justice issue,” Richardson asserted, also advocating a cap of 30 percent on interest rates (an issue on which he filed a constitutional amendment).
Pastor Lee Harris of Mt. Olive Primitive Baptist in Jacksonville is “appalled that we have legislators who would pass” these bills in committees, contravening the “express concern of the people.”
“They are still insisting on passing these bills,” Harris lamented, “bills designed to trap people in a cycle of debt … not being able to pay back without renewing the loan.”
Harris noted that his inner-city congregation has been bedeviled by these lending practices, adding another type of “high-cost debt trap” that targets the most economically vulnerable.
As with the others on the call, Harris advocated for the aforementioned Constitutional amendment.
Elder Wayne Wright described his experience with payday loans. A former computer programmer, Wright had to go to school to become a nurse after layoffs.
A high electric bill drove him to borrow, not realizing the “danger in stepping in that water.”
A $425 payday loan led to payments that made him short somewhere else, and he took out more loans online, taking hundreds of dollars of interest from each paycheck.
“You’re borrowing from the devil to pay the devil,” Wright said.
Rev. Dr. Russell Meyer of the Florida Council of Churches pointed out that the “payday lending industry” has given certain pastors financial incentives to speak up in favor of payday lending in Tallahassee and elsewhere.
Meyer bemoaned “predatory lending” and “predatory lobbying,” noting that the industry raked in $311 million in profit in 2017, with compounding interest trapping unwary borrowers.
“We need to get rid of these kinds of products altogether,” Meyer said.
4 comments
Russell Meyer
February 8, 2018 at 11:11 am
I walked back the comment on compound interest during Q & A. I meant “compounding loans,” which as was later explained, refers to borrowers needing to take new loans repeatedly before they get out of the debt trap.
Rachel Gunter Shapard
February 8, 2018 at 12:10 pm
The interest rate on these loans is indeed 200%. This can be verified in the house staff analysis which states: “Under the bill, the annual percentage rate would be 208 percent, excluding the $5 verification fee which would increase the annual percentage rate slightly depending on the amount of the loan and length of the term.”
deano bradley
February 8, 2018 at 4:57 pm
Forgive me but “faith leaders” are not in the business of dispensing financial wisdom. In fact, they are not in any business … unless the solicitation of donations passes for commerce. The founders of religion long ago seized upon usury for reasons that were self-serving. Today’s clergy knows no more about finance than their predecessors. Before jumping to conclusions, put down your “moral compasses” and read about what happens to communities denied access to credit … even expensive credit. In the world of finance – just as in the word of religion- predatory behavior will exist. Let’s not use those examples exclusively to make important decisions that will meaningfully impact the lives of responsible users of credit.
Sara Rice
February 15, 2018 at 5:37 pm
To Deano, I know and respect many faith leaders who minister to many desperate people, a significant number whose financial pressures have been multiplied by the predatory lending industry. I will stand with you everyday calling for the accountability of religious leaders and institutions. Regarding SB 920, though, lets attempt to clarify who benefits and who is left to suffer under a ‘regulatory’ bill that allows a 208% annual interest rate in a lending market that has a significant level of loan defaults. We can and are demanding a moral cap on predatory usury market behavior that SB 920 will allow to continue. A re-worked bill that actually regulates triple digit interest out of this lending market would likely do what you call for-protect, and perhaps even expand, our communities’ access to credit.
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