Wednesday, September 21, 2011

Our State's Embarrassing Situation


This post originally appears in the September 1 issue of "The Southwest Spirit."

In recent days and weeks, many of us have noticed the added press a particular ballot initiative has been receiving all across our state.  This initiative concerns efforts to tighten the restrictions on payday lending in the state of Missouri.  “Payday” loans are short term loans with very high interest rates and fees marketed as potential emergency stop-gaps to allow a person or family to cover an unexpected, emergency cost until the next “payday.” 

The Post-Dispatch, as well as the Kansas City Star and the Columbia News Tribune, have run multiple articles presenting the maneuvering of various political action committees on both sides of a current ballot initiative aimed at curbing abusive lending practices.  As we observe these actions, it can be difficult to discern exactly what is going on.  We will all need to be particularly diligent as more information comes to light.

However, there are several truths which are a part of this debate and not in dispute.  By any measure, Missouri has the most lenient and permissive regulations on payday lending of any state in the nation.  No state has a higher maximum cap on APR (annual percentage rate) than Missouri; currently, lenders in Missouri are allowed to charge interest rates up to 1,950%, in addition to other fees.  The average interest charged on payday loans last year was 444.61%.  No other state in our country allows such high rates on these loans – in fact, many states have caps at less than half of what Missouri allows.

It is also estimated that over 95% of these loans are actually eventually paid back, even with high interest rates and fees.  These are not individuals and families abusing any system. It means our state is allowing the most vulnerable to be victimized by an industry which targets the poor.  This is not a Republican or Democrat issue.  This is a moral issue, and our state should be embarrassed.

As Christians, we can not justify building an industry entirely on the backs of the working poor who find themselves in desperate situations.  The argument some payday lenders are making against reforming our regulations is that it will cripple a thriving and growing Missouri industry.  While this argument may be debatable, what we must ask ourselves is do we want an industry to thrive only by preying on the less-fortunate?

I hope you will join me in paying close attention to this important debate, both at the local and state level.  It is impossible for me to believe the Old Testament prophets or Jesus, both of whom spoke at length about maintaining justice for the poor, would support predatory lending practices.  The time may be upon us for Christians of good will to stand together to oppose these practices today.

Grace and peace,
James