HB 333: My Final Solution (and Post)
I am proposing my final solution for the Payday Lenders. This is not to say what I propose here is the best solution or even the most practical. I am only saying that this will be my final posting on HB 333. I have other topics awaiting my attention.
However, I must say this series has generated the most feedback, links, and comments than any other. This indicates my “practical theology” approach will eventually work. I just want to lay more groundwork before embark on similar topics in the future.
In the course of this series, I have defended the practices and existence of the Payday Lenders against the well-intentioned, but never-the-less dangerous, pulpit promotion by pastors of Ohio HB 333; a law to limit the interest rates charged by the Payday Lenders. You can read my arguments against their polemic here, here, here, here, and here.
However, my efforts in this area should not be taken that I think an interest rate of 391% is a good thing. I do not. I just don’t think the approach of passing legislation in this regard is the correct approach. The goal should not be to use Caesar to put an arbitrary interest limit on the Payday Lenders; the goal should be to make the borrowers more credit worthy.
In my post relating Acts 15 to the Payday Lender situation, I concluded that long term church members are entitled to charity loans at zero percent interest. However, short time members and those outside the church—even for charity loans—are subject to rates at whatever the market will bear. Therefore, the goal should be to move as many of the clientele of the Payday Lenders from outside to long term membership. This will involve not only a proclamation of belief but discipline and study on their part as well. The church, at least in this situation, will need to redevelop the catechumenate for these people with practical instruction not in theology but in living the Christian life. Part of that instruction will be in debt reduction, budgeting, and money management.
I propose we don’t battle the Payday Lenders, but the issues that drive people to use the Payday Lenders in the first place. Some of those issues are certainly the unexpected and disastrous, such as major medical issues or automotive breakdowns. However others relate to desires for things that can be foregone or saved for rather than purchased at the higher rates. It is those issues that the church can target through training and inculcating better habits and desires. In short, the church needs to get into the business of creating disciples.
And now for my most controversial conclusion in this regard yet. It is my decided opinion that it would be better in this regard to work with the Payday Lenders rather than to fight against them. After all, these businesses already have the offices, the evaluation procedures, and the experience in running these offices. Why make something second rate as an alternative?
So here is what I propose. A church, or better a group of churches, should approach an office or chain of Payday Lenders with this proposal. Once they have a customer that qualities for one of their loans, they can offer them a choice. They can have the regular interest rate under the standard terms and conditions; or they can have a reduced rate loan subject to additional terms and conditions drawn up by the church. The difference in rate is supplemented to the Payday Lender by the applicable church or church group, so they lose no income in the transaction. Also, the terms and conditions of the church must be drawn up in a legal contract that the borrow signs and agrees to bind himself. Should the borrow default on the terms, he will be billed for the difference in the interest rate and fees by the church. Should he not pay, he will be turned over to the same collection agencies, etc, that the Payday Lender uses. Also, he will be banned from getting any reduced rate loan for a specified period of time.
In either case, by not taking the Church’s offer, or defaulting on it later, the borrower has placed himself outside the Christian community and therefore outside of its protection. In essence, shake the dust off your feet and leave them to their judgment. The lash of the higher interest and the burden of debt is the way they have chosen and should not be interfered with by legislation or belittlement of the lenders.
The conditions put into the contract are based on Proverbs 22:7, “The rich rules over the poor; And the borrower is slave to the lender.” It is important to note that in the ancient culture in which this proverb was written it was not a philosophical construct; it was a reality. The borrower in ancient Israel literally sold himself as the collateral for his loan. In return, he came under the protection of the lender and may have even lived in his home as a servant. In that time, under the discipline of the master, the indentured servant would become disciplined—sometimes by some rather harsh methods. Yet at the end, not only did he pay off the loan and earn his freedom; he also received a “stake” in establishing his future and setting up a life that did not lead back into such slavery again.
However, such a practice would not be possible to impose today and would probably by impractical to manage anyway. However, what can be stipulated in return for the supplemented lower interest rate and charges would be an agreement to attend a particular church and/or a particular Bible Study for a specified period of time. Also, and most importantly, the borrower would have to agree to attend a church sponsored or led course on money management and budgeting. To attend that course he or she would have to agree to bring his checkbook and honestly disclose how the borrowed funds were used. During the course of the instruction, the borrower would be required to develop a budget. Hopefully under the tutelage of the Bible and the example of other Christians in the community he could help curb his desires for things he cannot afford or does not need while he works to subject himself to that same budget.
To make this work, the Church would have to keep rigorous records on attendance at the meetings, Bible Studies, and church services. Signed attendance sheets would be required at the minimum. Also, the deacons would need to be trained in teaching the practices of discipline and money management that hopefully they will be able to pass on. Certainly guidance should be sought for methods to teach such discipline to lower income families.
Finally, to make it work the church will need to be stringent in holding the borrower to the terms of the contract they signed and be just as ready to subject those same borrowers to the punitive conditions of those contracts should they fail to fulfill them. In this way, the church will teach accountability if nothing else.
I don’t know if such an idea is legally possible. If not, then a pattern as close to it should be designed. If the church cannot find one, maybe they can ask the Payday Lenders for some suggestions. I am willing to bet that they would have even better and more practical ideas than mine. After all, such a work is nothing new. It is always what the church was supposed to be doing in the first place: serving the community in the name of Christ.
It is a hard reality is that employed, hard working Ohioans sometimes fall short of cash between paydays. Eliminating credit options (which a 28% cap would do in Ohio) only hurts consumers and forces them into more costly (bounced check/overdraft protection/late bill payment fees), even unregulated alternatives (offshore internet and underground). Ideas like yours are crucial for hardworking folks who need access to short term credit to pay an unexpected expense.
—Payday Lending rep