OKLAHOMA CITY—Payday lending traps many of America’s working poor in a vortex of debt, participants at the New Baptist Covenant II satellite meeting in Oklahoma City learned.
Each New Baptist Covenant facility focused on a mission project, and Oklahoma City organizers chose an awareness campaign about the perils of payday lending.
“People are preying upon the poorest and weakest among us,” noted Bruce Prescott, co-organizer of the Oklahoma City satellite and executive director of Mainstream Oklahoma Baptists.
Known by various names, payday lending is the practice of offering high-interest, short-term loans, usually in amounts from $50 to $500, Prescott explained.
In Oklahoma City, New Baptist Covenant participants sat in on an informational session about payday lending. Then, for their mission project, they visited payday lending offices near their churches, so they could see firsthand how small loans can add up to exorbitant debts.
Prescott said he hopes their experiences will help them educate the working poor about the dangers of payday loans and also pressure lawmakers to reign in the practice.
Payday lending has exploded in recent years, breakout sessions leaders explained.
Oklahoma law calls the practice “deferred deposit lending,” and it allows annual percentage rates to reach 391 percent, reported Kate Richey, an analyst for the Oklahoma Policy Institute in Tulsa.
In Oklahoma, the primary borrowers are nonwhite single women with low income and lower-than-average education, she said, noting: “Payday lenders won’t lend to people without jobs. So, the victims are the working poor. They’re preying on people with just enough so they can take it from them.”
These people don’t qualify for conventional loans from banks, and they often don’t have banks in their neighborhoods, anyway, Richey said. “If you don’t have a car and a bank in your neighborhood, where are you going to go?” she asked.
However, some banks actually own payday lending companies and make money off the exorbitant loans, she said.
Stephen Reeves, legal counsel for the Texas Baptist Christian Life Commission, showed a video clip of a retired military veteran who took out a $4,000 loan against his pickup truck so he could help his daughter get started in adulthood. The penalty for not paying off that loan was $1,200 per month, which did not reduce the principle on the loan.
“He could pay $1,200 per month forever and never pay off that loan,” Reeves reported. “That’s immoral.”
“The concept of usury is a biblical issue. When you charge people a high interest rate, you’re effectively stealing from them,” he said, noting Texas law allows an annual interest rate of 529 percent on a $300 loan.
Although payday lending laws vary from state to state, “the problem is the same,” Reeves said.
“It’s rotten to the core,” Richey said. “A lot of people are making money off of thousands of other people who are poor.”
Although lobbyists for the industry blocked the Christian Life Commission’s strongest proposals in the most recent legislative session, Reeves called payday lending “a winnable issue.”
“When people see what’s going on, they get it,” he said. “This cuts across the political spectrum, and it hits at the heart of race in this country. … We need to make it uncomfortable for politicians to defend it.”
He offered several suggestions for combating payday lending:
• Use data to document the harm done by exorbitant-interest loans.
• Gather bi-partisan support.
• Provide lawmakers with stories of real people from their own districts whose families have been harmed by the practice.
• Show lawmakers maps that illustrate the prevalence of the practice in their districts.
• Urge local towns and counties to enact resolutions and ordinances that curtail payday lending.
• Enlist the help of experts with research on the practices.