Indiana Legislature’s Predatory Lending Bill

I was listening to WFYI last week and heard a story which had me questioning if I heard the figures correctly. I checked the article at WFYI’s website and confirmed what I had heard to be true. It was both shocking and, sadly, at the same time, not all that surprising given our economic and political environments.

The Indiana House approved legislation on January 31, 2018 to create a new payday loan program where borrowers can get loans between $600 and $1,500, with a term of up to 12 months. The truly shocking part is that those loans can carry interest rates of up to 200 percent. Yes, you read that correctly, 200% interest!

The math is pretty straight-forward, but let’s look at a few examples. If someone took out a $600 loan, they would need to repay $1,800 by the end of the 12-month loan period ($600 principle and $1,200 in interest). With a $1,500 loan, and 200 percent interest, a borrower would need to pay $4,500 ($1,500 principle and $3,000 interest). The Republicans who supported the bill claim it is an effort to help those in poverty gain access to loans and build credit.

I find this to be a faulty premise, at best. What it amounts to is legalized predatory lending which extracts such large amounts of money – from those already financially struggling – that it will do little to nothing in actually helping the working poor establish better credit. It is more likely to place greater burdens on a population already having a hard time paying the most basic living expenses.

Such legalized predatory lending was just the type of system which Jesus spoke out against as being fundamentally unjust. In antiquity those who acquired more power and wealth were seen as greedy. In order for them to have more, someone else had to have less. Biblical scholars Bruce Malina and Richard Rohrbaugh have studied extensively the social context of Jesus’ day and explain that: “Being powerless meant being vulnerable to the greedy who prey on the weak. The terms “rich” and “poor,” therefore are better translated “greedy” and “socially unfortunate.”¹

It is within this context that Jesus speaks of “rich” and “poor.” His message of economic justice is one where balance must be restored between people in a society of limited goods (power, wealth, dignity). The “rich” (greedy) must return to the “poor” (socially unfortunate) a measure of power, wealth, and dignity. This is clearly in keeping with his Jewish tradition of God’s distributive justice. God provides enough for all. If there are any who have more (power, wealth, dignity), then they have it at the expense of others.

The social context of the New Testament helps our understanding of Jesus’ world and his views on wealth, poverty, power, and oppression. An understanding of this social context offers clarity that Jesus’ message is about both economic equity and social dignity for those who are vulnerable, oppressed, and on the margins of society.

Biblical scholar Walter Brueggemann observes correctly that a sweeping survey of biblical texts reveals testimony against an economy of extraction where “[T]hat extraction is accomplished by the predatory if legal means of tax arrangements, credit and loan stipulations, high interest rates, and cheap labor. The combination of these practices reduces vulnerable people to hopeless debt that in their ancient world led to a form of slavery, that is, debt slavery. The recurring predatory economy of extraction is countered in biblical testimony by an economy of restoration that pivots on debt cancellation.”²

In the most foundational of all Christian prayers – the one that Jesus taught his disciples; The Lord’s Prayer, addressed the deep human need of release from oppressive debt and providing for literal bread to survive another day.

“Pray then in this way: Our Father in heaven, hallowed be your name. Your kingdom come. Your will be done, on earth as it is in heaven. Give us this day our daily bread. And forgive us our debts, as we also have forgiven our debtors. And do not bring us to the time of trial, but rescue us from the evil one.” (Matthew 6:9-13 NRSV).

The Lord’s Prayer was a petition for daily bread (a basic food staple for survival) and for the release from debt (“debt” being the original term) as debt threatened the ability to have dignity and material necessities for survival. It is a petition for a social order that will allow for the supply of basic needs as God is asked to participate in the removal of the oppressive powers that impoverish people.

Jesus connects this to the radical forgiveness and release that is available in God’s reign. Jesus advocates for release from oppressive economic conditions and perceives a moral obligation for a new social behavior of forgiveness and reconciliation (Matthew 18:12-25; Luke 7:42-43, 16:1-8).

Government policy needs to do more to protect its people from predatory lending. What the Indiana House has done, in narrowly passing the bill 53-41, is legalize and promote lending practices which place even more financial burden on the working poor. They have created yet another way by which the greedy can profit from the economically and socially unfortunate in our society. Hoosiers of every economic class deserve better than what House Bill 1319 delivers.


Notes:

  1. Social-Science Commentary of the Synoptic Gosples by Bruce J. Malina and Richard L. Rohrbaugh, p. 398.
  2. Money and Possessions by Walter Brueggemann, p. xx.

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