Bless Me Father For I Have Borrowed
By Andy Miofsky, Illinois Consumer Law Attorney on Feb 21, 2008 in Consumer Protection, Personal Finance
Newsweek’s Patrick Enright writes about a study scheduled to appear in the Catholic University Law Review by professors Christopher Peterson and Steven Graves that identifies a correlation between high concentrations of Christians in states with a proliferation of payday lenders.
Peterson is quick to disclaim any causal effect of one group begetting the other, however, he surmises that conservative Christians found a welcome ally in Wall Street bankers over the past 20 years to promote many of both groups common interests. Peterson suggests that usury and consumer protection laws were given short shrift in this alliance, as the moral majority focused on abortion and family values.
The boring numbers show a state such as Illinois with an estimated 10.6 per cent Mormon and Evangelical population has .625 payday lenders per 10,000 people; while neighboring Missouri with 2.5 times as many Christians as Illinois has almost 4 times the payday lenders per 10,000 of population. Peterson and Graves found the highest concentrations of payday lenders in the Mormon mountain West and the Bible belt.
With average interest rates between 156 to 869 per cent per annum, Enright writes that payday lenders are viewed by critics like the Center For Responsible Lending as predatory lenders that trap desperate people into high interest loans that they cannot repay.
In Enright’s article, Thou Shalt Not Steal, Payday lending association spokesperson Steven Schlein says a $15 charge on a two week $100 loan can be considered a 15 per cent interest rate. [My second grade math teacher Sister Mary Philomena would have whacked me with the ruler for that answer.]
Peterson says the tide is turning and state legislatures are beginning to realize a need to return to more conservative lending practices. Let us pray.
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ggoodno | Feb 22, 2008 | Reply
Your second grade math teacher would have told you that Steven Schlein was right. If it is a two-week loan, and you have to pay back 15% two weeks later, then it is 15% loan. Extending the interest rate out to a year makes no sense, since the loan is due in 2 weeks.
And the concept that payday lenders target evangelicals is ridiculous. I recall reading over the last six months that payday lenders target social security beneficiaries, African-Americans, Hispanics, military personnel, the elderly and I think several others. It sounds to me like they are targeting Americans. Which only makes sense, since most people living in American cities where payday lenders are located are Americans!