Overview – Predatory Lending
Focus Text: John 2:13-22
“Jesus also poured out the coins of the money changers and overturned their tables. He told those who were selling the doves, ‘Take these things out of here! Stop making my Father’s house a marketplace!’”
Scripture Commentary & Pastoral Reflection from Modern Day Moneychangers
“Borrowers of payday loans are often faced with the same decision as the ancient Jews: either pay for the convenience of an overpriced good, or not have an important need met. As Jesus deemed this type of exploitation to be unacceptable during His time, we should stand up against such practices today.”
Personal Vignette from Too Much Month at the End of the Paycheck
“In a neighborhood like ours, where you don’t have a bank within walking distance, you will see within a three-block radius four payday lenders. I’ve noticed the check cashers have turned over to payday lending because they get more regular business: you go in this Friday and borrow money, and then in two weeks you’re right back in again.”
Key Fact
Payday lending (sometimes called cash advance) is the practice of using a post-dated check or electronic checking account information as collateral for a short-term loan. These loans are structured so that borrowers typically cannot pay them off, and must keep renewing them for months on end. The interest payments—about $50 each pay period for a $300 loan—never reduce the loan principal.
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Focus Text – John 2:13-22
The Passover of the Jews was near, and Jesus went up to Jerusalem. In the temple he found people selling cattle, sheep, and doves, and the money changers seated at their tables. Making a whip of cords, he drove all of them out of the temple, both the sheep and the cattle. He also poured out the coins of the money changers and overturned their tables. He told those who were selling the doves, “Take these things out of here! Stop making my Father’s house a marketplace!” His disciples remembered that it was written, “Zeal for your house will consume me.” The Jews then said to him, ‘What sign can you show us for doing this?” Jesus answered them, “Destroy this temple, and in three days I will raise it up.” The Jews then said, “This temple has been under construction for forty-six years, and will you raise it up in three days?” But he was speaking of the temple of his body. After he was raised from the dead, his disciples remembered that he had said this; and they believed the scripture and the word that Jesus had spoken.
Additional Texts
You shall not wrong or oppress a resident alien, for you were aliens in the land of Egypt…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. If you take your neighbor’s cloak in pawn, you shall restore it before the sun goes down; for it may be your neighbor’s only clothing to use as cover; in what else shall that person sleep? And if your neighbor cries out to me, I will listen, for I am compassionate.
Exodus 22:21,25-27
O LORD, who may abide in your tent? Who may dwell on your holy hill? Those who walk blamelessly, and do what is right, and speak the truth from their heart; who do not slander with their tongue, and do no evil to their friends, nor take up a reproach against their neighbors; in whose eyes the wicked are despised, but who honor those who fear the LORD; who stand by their oath even to their hurt; who do not lend money at interest, and do not take a bribe against the innocent. Those who do these things shall never be moved.
Psalm 15
For scoundrels are found among my people; they take over the goods of others. Like fowlers they set a trap; they catch human beings. Like a cage full of birds, their houses are full of treachery; therefore they have become great and rich, they have grown fat and sleek. They know no limits in deeds of wickedness; they do not judge with justice the cause of the orphan, to make it prosper, and they do not defend the rights of the needy.
Jeremiah 5:26-28
Other Lectionary Texts
- Exodus 20:1-17
- Psalm 19
- I Corinthians 1:18-25
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Commentary and Pastoral Reflection on John 2:13-22
For years, the payday lending industry has financially exploited economically vulnerable populations. Low-income families, the elderly, minorities, and military personnel have all been targets for these abusive lenders. Ironically, the industry claims they are providing a much-needed service to these populations—quick and convenient short-term credit. However, this convenience can cost citizens more than 400 percent annual interest on each loan. The business model of payday lending is designed to cultivate repeat borrowers, forcing already income-strapped people into a cycle of debt. Over 90 percent of payday loans are made to people who take out five or more loans per year.
These predatory practices are very similar to the practices of the moneychangers found in all four Gospels (see also Matthew 21:12-13, Mark 11:15-17, and Luke 19:45-48). Upon encountering the moneychangers, Jesus was angered to the point where he physically chased them out of the temple, accusing them of turning the temple into a “den of thieves.” Judging from Jesus’ response, abusive financial practices were something he would not condone then and would surely condemn now.
And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves, And said unto them, It is written, My house shall be called the house of prayer; but ye have made it a den of thieves (Matthew 21:12-13).
Sellers of Doves and Animals
Payday lenders tout their business as one that provides a necessary “service” to the community. They claim that they are filling a need for short-term credit that conventional banks are not providing. Payday lending, therefore, targets a niche that is most likely to need short-term credit to make ends meet, or to pay for financial emergencies. There is a perceived convenience in that there are no credit checks and that payday shops are located in close proximity to targeted neighborhoods. However, the high interest rates and unavailability of installment payments keep borrowers from ever paying off the principal—leaving already vulnerable borrowers paying more for their loan than they originally intended and probably more than they can afford.
Biblically, we see a similar abuse with the sellers of doves mentioned in the Gospels of Matthew and Mark. During the time this event is mentioned, Jesus had just entered into the city of Jerusalem to celebrate Passover, among other things. During the annual Passover season, Jews from all across the Roman Empire would converge at Jerusalem and participate in various rituals and feasts. These rituals included animal sacrifice in the temple to atone for sin and uncleanliness.
People traveled hundreds of miles by ship and by foot to Jerusalem, sometimes from as far as Greece and Italy , and it became extremely cumbersome and inconvenient to transport large livestock along their journey. There was also the stipulation that sacrificial animals must be “without spot or blemish” (Numbers 19:2) in order to be considered worthy for sacrifice, meaning the animal could not have any defects, disease, or injury. Lengthy traveling increased the likelihood that the animals would succumb to injury. This created a new market for people needing animals for the Passover celebration. Jerusalem merchants would set up booths in the temple courts to sell the various animals, allowing people the convenience of leaving their own livestock at home.
Unfortunately, these same merchants exploited their visitors by selling their merchandise at inflated prices, pocketing the extra profit for themselves. The prices were usually even higher immediately before feast periods. Jews needing these animals for Passover were faced with the choice of either paying for overpriced goods, or not fully participating in important activities they had already traveled so far to enjoy. Knowing this, Jesus chased these men out of the temple, making a definitive statement that such exploitation was not to be tolerated.
Borrowers of payday loans are often faced with the same decision as the ancient Jews: either pay for the convenience of an overpriced good, or not have an important need met. As Jesus deemed this type of exploitation to be unacceptable during His time, we should stand up against such practices today.
The Moneychangers
The ancient moneychangers provided a different service than the animal merchants, but were similarly predatory. According to the Old Testament (Exodus 30:13-15), Jewish law required that every adult of at least twenty years of age, regardless of economic status, pay an annual tax of a half-shekel. These funds were used for the general support of the temple and religious functions. However, shekels were currency commonly found only in the Jerusalem area, and the yearly tax could only be paid in the shekel currency. This meant Jews coming from foreign lands, with their foreign currency, would have to exchange their money for money native to Jerusalem. Shekels were also needed for temple offerings and for the purchase of sacrificial animals.
Old Testament law did not actually prohibit the practices of animal sales or moneychanging from taking place, especially considering those traveling long distances to the temple. One may contend that it was not the presence of the merchants and moneychangers that upset Jesus, but rather knowing that their presence would take advantage of people that deserved better. Moneychangers exchanging foreign currency for shekels had the advantage of knowing the exchange rates of the different currencies. Foreigners ignorant of how much their Greek or Roman coins were worth in shekels were easily shortchanged from what was actually owed to them. The moneychangers would capitalize on travelers from already impoverished and poorly educated backgrounds.
Payday lenders similarly capitalize on people who have few resources and who may be desperate. When faced with a lack of alternatives for fast and convenient short-term credit, some borrowers are led to believe that loans at 400 percent interest are the only avenues for their financial solutions. Instead of finding constructive assistance, many get trapped in a cycle of debt payments that results in easy profit for the lender, while leaving the borrower in the same financial difficulties. Lenders truly interested in providing a helpful “service” should not want to burden the same people they are supposed to serve.
A Moral Dilemma
One could imagine Jesus’ encounter with the merchants to be filled with frustration. He saw how some were willing to use God’s people for financial gain, and to disrespect the holiness of the temple in the process. Some believe that the temple priests were also receiving a share of the merchants’ profits, since they would have to permit them access to conduct business on temple grounds. Witnessing this corruption is the only occasion in the Bible where Jesus expresses anger in such a dramatic and physical way.
From a moral standpoint, payday lenders are not much better than the ancient merchants and moneychangers. Payday shops disproportionately set up their businesses in high-traffic target areas, just as the moneychangers established themselves in the temple courts. Even when media scrutiny and state legislation cast a spotlight on their industry, they vigorously search for legal loopholes that would permit them to continue their scams.
Others will boldly defend their right to lend on grounds that they are simply meeting a demand, regardless of how many families are hurt in the long run. They also have access to expensive and powerful lobbyists who will try to influence government into permitting their industry to do business in particular states. These attempts at influencing lawmakers are similar to the influence merchants may have had with the high priests.
Call to Action
Payday lending is not only a financially irresponsible practice, it is a morally irresponsible one as well. It takes advantage of unsuspecting and vulnerable individuals who may believe they have no other financial alternatives. As Jesus instructs us to “love our neighbor” (Mark 12:31), we should strive to protect the welfare of our neighbors—just as Jesus did in the temple. Today, many states are debating the future of payday lending in their area. There must be a voice of moral clarity to stand against the influences of greed and predatory lending. With your help, many people can be spared the burden of living in a predatory debt cycle.
Excerpted and adapted from Modern Day Moneychangers by Delvin M. Davis, Center For Responsible Lending
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Worship Aids for John 2:13-22
Responsive Reading
In mercy, O God, you confront us and expose our sin. May we respond in spirit and in truth, confessing our failure, reclaiming our hope.
In our lust for lifeless objects and our relentless pursuit for more, we cross the line between innocent desire and masked idolatry. We seek salvation in spiritless things, worship you for our own gratification, and see ourselves and each other as mere consumers and commodities.
Forgive us, O God, for we have sinned.
In your mercy, raise us from the dead.
Breathe new life into your people. Empower us to be a prophetic community, speaking against unjust practices that prey on your children, living fully the gospel of Jesus.
Create in us a consuming passion to love and serve you. Amen.
(Adapted from Robert B. Kruschwitz, Mastering Mammon, The Center for Christian Ethics, Baylor University ; found at www.baylor.edu/christianethics/index.php?id=14744)
Prayer of Confession
Most gracious God – we call upon your name and seek your mercies.
We know Lord that we are not worthy of your faithfulness, for we have been unfaithful. Help us to walk with wisdom.
We confess to you, O Lord, that we often lose sight of what is important – that we cheat you, our brothers and sisters, and ourselves, because of our thoughtlessness, our fear, our greed, our pride.
We have offended you, O God – serving masters other than you. We confess that we allow the love of money to cloud our judgment. We confess that we ignore the plight of our low-income brothers and sisters who become victims of greed and usury.
Hear our prayer to you; forgive, and help us to walk with wisdom.
We confess to you, O Lord.
…………… (silent prayer) …………..
Forgive us O Lord, and help us to walk with wisdom.
Touch us and make us whole. Amen.
(adapted from Kir-Shalom, a lectionary resource website, www.spirit-net.ca/sermons/c-or25-98.html)
Prayer of Confession
Tender and Fierce God,
whose work is justice and whose delight is mercy,
forgive us for ignoring the cries of workers
who labor under the tyranny of harassment, violence and poverty.
Free us from greed
that comforts our bodies and eats away at our souls.
Free us for a life of joyful resistance
to evil, injustice and oppression
in whatever forms they present themselves;
through Jesus Christ our only Lord. Amen.
(from Interfaith Worker Justice, www.nicwj.org/pages/materials.LIP2000txt.html)
When Greed Blinds Us
Benevolent God,
We acknowledge your manifold gifts to us – among them the gift of life, the gift of love, and the gift of the sacraments. Yet we confess that too often we allow greed to blind us. When greed blinds us, we cease to rejoice in your gifts; we no longer acknowledge your generosity. When greed blinds us, we unwittingly condone the consistent and flagrant injustices that transpire around us daily. When greed blinds us, we legitimate practices such as predatory lending, which serves to prey upon the poor and the ‘least of these.’ We ignore its stranglehold grasp on those less fortunate, blindly categorizing it as part of the ‘free market’ of our depraved society. When greed blinds us, we accept this unrestrained usury as a necessary part of the economy, all the while ignoring its devastating effects upon those merely trying to survive. Forgive us, benevolent God, when greed blinds us. Remind us that we are called to justice – your justice – that preys not upon the weak, but rejoices in the dignity and humanity of all of your creation. Help us to speak your gospel to those in the grips of this predatory practice, and against those involved in the oppression. For it is with and through the power of the Holy Spirit that we pray, Amen.
(by Jason R. Jenkins)
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Suggested Hymns for Predatory Lending
Lord, Whose Love Through Humble Service
United Methodist Hymnal 581
Presbyterian Hymnal 427
The Hymnal (1982) 610
Moravian Book of Worship 688
Chalice Hymnal (Disciples of Christ) 461
O God of Mercy, God of Light
Lutheran Worship 397
O Jesus, Crowned with All Renown
The Hymnal (1982) 292
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Quotes about Predatory Lending
Credit is a system whereby a person who can’t pay gets another person who can’t pay to guarantee that he can pay.
Charles Dickens
The most powerful force in the universe is compound interest.
Albert Einstein
Money often costs too much.
Ralph Waldo Emerson
There is no sanctuary so holy that money cannot profane it, no fortress so strong that money cannot take it by storm.
Cicero
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Vignette about Predatory Lending
Quotations from Victims of Payday Lending
“God’s been good. But He has some more good than He has given me. I have four [payday lenders]. On a monthly basis I pay $350 worth of interest. That’s my car payment right there in interest. I am making two car payments, but I only have one car. In a way they are doing a favor for people, but in the long run it’s not a favor. You have to pay them to get your money back so you can pay somebody else. It’s not designed so you can get yourself together – it’s designed for you to come back to them [payday lenders].”
L. Smith
“Which payday lender did I use? I used five. I went because I was on disability and my check only comes at the end of the month. I told them I couldn’t pay every two weeks…I had to go to the other ones, and this is how I got hooked. I got arrangements with all of them. I owe about $1,000. It is a nightmare. I warn people if you don’t have to mess with them, please don’t. You can get hooked on them…so I warn, if you don’t have to, please don’t.”
B. Stewart Yon
“Different things were going on. My boss couldn’t make payroll, I was drawing unemployment, I had just purchased a house…the AC broke down. I had four [payday lenders] at a time. I owed $1,200. Now I owe $900. They are harassing my references, my friends about my debts. ‘Can you have T. Brown contact us? Can you have her to call?’ I am in a vicious cycle and I don’t see a way out.”
T. Brown
“In a neighborhood like ours, where you don’t have a bank within walking distance, you will see within a three-block radius four payday lenders. I’ve noticed the check cashers have turned over to payday lending because they get more regular business: you go in this Friday and borrow money, and then in two weeks you’re right back in again. I worry about the future of the community. And you already have a lot of people who never walk into a bank. What about the future, when banking is done [solely] online? You’ll see even more ‘unbanked’ people – the ones who don’t have a computer, don’t have a telephone.”
O. Rainey, Community Activist
Too Much Month at the End of the Paycheck: Payday Lending in North Carolina, by the Community Reinvestment Association of North Carolina, The Center for Community Capitalism, Frank Hawkins Kenan Institute of Private Enterprise, and The University of North Carolina at Chapel Hill, January 2001. Used with permission.
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Contacts and Resources for Criminal Justice
www.responsiblelending.org
The Center for Responsible Lending is a unit of the Center for Community Self-Help (Self-Help), based in Durham, NC. Self-Help is one of the nation’s leading community development lenders and has provided $3.5 billion in financing to help more than 40,000 under-served families own homes or small businesses.
www.mortgagebankers.org/IndustryResources/ResourceCenters
The Mortgage Bankers Association’s predatory lending website contains reports and links to state and local legislative updates concerning predatory lending.
www.nclc.org
The National Consumer Law Center is a nonprofit advocacy organization that seeks to build economic security and family wealth for low-income and other economically disadvantaged Americans. We promote access to quality financial services and protect family assets from unfair and exploitive transactions that wipe out resources and undermine self-sufficiency. For over 40 years NCLC has used its expertise to write the rules of a fair marketplace.
naihc.net
National American Indian Housing Council promotes, supports, and upholds tribes and tribal housing agencies in their efforts to provide culturally-relevant, decent, safe, sanitary, and affordable housing for Native people in American Indian communities and Alaska Native villages. They provide training, technical assistance, research, communications and advocacy.
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Key Facts about Predatory Lending
1. Payday lending costs Americans $5 billion annually.
2. Payday lending (sometimes called cash advance) is the practice of using a post-dated check or electronic checking account information as collateral for a short-term loan. These loans are structured so that borrowers typically cannot pay them off, and must keep renewing them for months on end. The interest payments—about $50 each pay period for a $300 loan—never reduce the loan principal.
3. North Carolina refused to renew a payday lending exemption from the state’s 36 percent interest rate cap in 2001 when it expired, making the practice illegal again under state law. In 2005 and 2006, the North Carolina Attorney General and Commissioner of Banks enforced the law against payday lenders who tried to evade it through partnerships with out-of-state banks, forcing them to follow the law or leave the state. However, current law allows small consumer loans from banks with interest rates between 25%-54%.
4. In the summer of 2008, AARP reported that bankruptcy among older Americans has doubled since 1991. As banks raise their overdraft fees and make it easier to hit their account holders with multiple charges, unauthorized overdrafts strip fees from Americans 55 and older at the level of $4.5 billion per year. Nearly $1 billion of that comes from people who are heavily dependent on Social Security income.
5. The average purchase that triggers overdraft fees is $17; the average overdraft fee is $34.
6. Overdraft fees cost Americans $24 billion annually.
7. According to the Center for Responsible Lending, debit cards are the most frequent trigger for overdrafts even for people 55 and older – these debit card overdrafts are both extremely costly and easy to prevent if the banks were interested in discouraging them. On the contrary, bank practices intentionally maximize overdrafts by automatically approving these debit purchases and changing the order they subtract transactions in their daily account balancing, debiting the highest dollar amount first and artificially increasing the number of $34 fees they can charge.
8.Home foreclosures hit communities of color the hardest. An estimated 17% of Latino homeowners, 11% of African-American homeowners, and 7% of white homeowners have lost their homes to foreclosure or are now at imminent risk.
