Church Voices

I came across this interview with the author of a new book called Collateral Damaged: The Marketing of Consumer Debt to America. One thing that jumped out at me is the changing moral view of lending money. Check out these two questions the author fields.

You actually assign a lot of blame for our recent troubles on a lack of interest rate caps—that is, on the absence of strict usury laws. Why?
Almost every state had usury laws in the 1920s, and they were circumvented one by one. Prohibitions against excessive interest started to disappear [South Dakota, for instance, loosened its laws in 1980,] and once they did, the credit-card companies recognized a wonderful opportunity. They could charge as much as the market would bear, claiming that they had to charge more for bad credit risks. You can argue that’s the democratization of credit, but it’s in the interest of credit-card companies to keep people under the yoke. We’ve just swapped loan sharks for legitimate loan sharks.

So maybe there are some people who just shouldn’t have access to credit?
I think everyone should have access to credit in a very strict proportion to their income—not a future projection of their income, which is what we’ve been doing. It’s been, “I’m now making $50,000 but in a few years I’ll be making $150,000, so no big deal, let’s go buy an expensive house now.” This whole business of giving more credit than a person can service is not only foolish, but if you tried to do that 200 or 300 years ago, it would have been considered immoral as well. We don’t think that way anymore, but essentially it is, because that person is going to be in debt forever.

I’ve written before about scriptural admonitions about usury. Early church leaders were vehement in their attacks on lending money with interest. The church has been remarkably silent on the issue in the last 100 years. It might be time for a renewed interest in this area.