The Church of England wants to compete payday lenders out of business:
The Archbishop of Canterbury Justin Welby, the principal leader of England’s state religion, the Church of England, plans to force payday loan sharks out of business. The Church already invests in businesses, and is looking to invest money in credit unions to help them compete with high-interest lenders. The payday loan industry is worth around £2 billion ($3.1 billion) in the UK, and successful companies such as Wonga make hefty profits by charging 5,853 APR on short-term loans.
Five thousand percent annual interest means a one month £200 loan costs £270.
The CoE’s strategy centers around community credit unions, which would also address the check cashing poor fuckery that goes on in neighborhoods where people just don’t make enough money to interest banks.
Citizen_X
Good for the CoE! Could they set up credit unions to force payday lenders out of business in the US too, please?
I’m in favor of air strikes against payday lenders, but that’s just me.
Librarian
I don’t really think that the Archbishop of Canterbury could be considered a “god botherer.” I thought that term was meant only for right wing fundies like Pat Robertson and James Dobson..
chrome agnomen
act of contrition?
Emma
The CoE has its defects but they usually behave in a way I would consider “Christian” i.e., followers of Christ, not Old Testament worshippers.
Amir Khalid
An aside: Wonga is the shirt sponsor of EPL club Newcastle United FC. There was a kerfuffle last week involving them and a Newcastle player, Papis Cisse, a Muslim who didn’t want to wear a shirt with a Wonga logo because he considered the high interest on their payday loans riba i.e. usury. (The Magpies have two other Muslim players who are okay with Wonga-logoed shirts.) Cisse lost the argument when a picture came out of him sitting at a kasino table.
srv
Well, what else do you expect from a culture that worshipped Keynes and is crypto-marxist. Church just wants to shake-down the competition and turn chaplains into loan officers.
Just Some Fuckhead
Wow, you’d almost think The Holy Book prohibited usury.
AdamK
Usury is the new Charity! What will they think of next.
Violet
You do know the UK has actually had Soshulist governments. As in the ruling party was the Soshulists. That sort of thing would never happen here in the good old
FascistCapitalist USA.Zifnab
Payday lending to people with very little income is a brutal business. Yes, it’s easy to shit on lenders who want double their money and more back inside a month. Hell, I don’t think mafia loan sharks try to gut you for that much.
That said, plenty of people will try and defraud the lenders as well, since so many of these loans are tied to a paycheck that can vary radically from month to month (or cut off entirely, if the borrower becomes unemployed). Or to collateral that can’t be liquidated very easily. :-p
It’s a messy business. And it breeds mean people. I hope the Church of England isn’t going to come out of this experiment as just another jaded loan shark.
raven
@Zifnab: There was a time that I payed 10 for 20 and was glad to get it.
aimai
@Zifnab: The grammeen bank is calling on line 1. People with very little money aren’t actually that bad a risk–not 5000 percent risk. If you loan carefully and thoughtfully and your repayment terms are reasonable you aren’t really at as bad a risk as you are making out. If anything, you are at a greater risk making huge loans to wealthy people. They default all the time.
PaulW
I’m a little scared of churches getting into finances, because the temptation of a profit margin is gonna be there.
OTOH, we need non-profits to compete with the for-profits to break these trusts/monopolies, much in the same way we need more non-profits to compete with these for-profit online diploma schools. The reasons these loan sharks can operate at such dishonest levels are because 1) free market bitches and 2) their lobbyists stop legislators from doing anything to stop it.
This church really need to operate this with full transparency and full accountability. I’ll feel better about it if they keep it honest.
Chris
@Emma:
… and not worshipers of American nationalism, Ayn Rand novels and white Southern identity politics who just put the word “Jesus” in front of everything because “I’m a racist, a Social Darwinist and an asshole to boot” doesn’t sell as much as they’d hoped.
Violet
@aimai: Yes, exactly. The default rate for the Grameen bank is very, very low. I heard Muhammad Yunus speak a few years ago. At that time, which I think was before the 2008 crash, he talked of bringing the Grameen Bank here to the US and specifically mentioned the usurious rates of the payday loan shops as a reason they’d not only have a market but would do well and a lot of people would benefit.
mistermix
@PaulW: The issue with non-profits is exorbitant salaries of upper management. The devil always gets his due.
Jockey Full of Malbec
This will make Andrew Sullivan’s head explode.
The “CHURCH FAITH GOOD WARM FUZZY” circuit will be put at odds with the “UK WHITE WORKING CLASS DROLL LAZY PARASITES” circuit.
negative 1
@Amir Khalid: I’m a loyal Newcastle supporter… I’m glad Cisse’s contract renegotiation had a detour into the useful, and either he or his agent is very clever, but it’s really just a contract ploy.
Still though, we don’t really have a backup plan.
Violet
@Jockey Full of Malbec: Nah. It’s the Church of England, not the One True Church, the Catholic Church. The CoE is just a bunch of wannabes in Sullivan’s mind.
Paul in KY
@mistermix: IMO, they aren’t ‘non profits’ if they are paying those salaries & using most of the money to collect more.
Understand that by the lax laws of our land they are considered ‘non profit’.
RSA
@Emma:
Surprisingly (to me), most of the strictures against usury in the Bible are in the Old Testament—even in Leviticus, that favorite book of conservatives. Of course, they tend to pick and choose.
scav
@mistermix: Devil may indeed only get his due — upper management usually insist on getting far more.
negative 1
@mistermix: Care to back that up? Heads of major organizations get salaries in the millions all of the time, but if the organization doesn’t have stockholders somehow it’s immoral? For that matter, do you have some statistics on your Fox Morning Show-level analysis for that, or should we just take your word for [email protected]PaulW: The reason that they can operate at dishonest levels is because no one else will lend their clientele money. Having someone who will, and only charge the operative rate of default (hint: it’s not 5,000%) should wipe them out in short order. Ironically, the more stringent rules on mutuals in general (e.g. credit unions) prohibit them from ‘excessive risk’ lending and in general handicap them in helping in this regrd.
Jockey Full of Malbec
@Violet:
At least until the Pet Shop Boys weigh in on the matter.
(Ok, ok I’ll stop).
LittlePig
@Jockey Full of Malbec: This will make Andrew Sullivan’s head explode.
Whoo hoo! Christmas in July!
hitchhiker
I used to go to a big liberal church that had a fat endowment — like, they were taking a million bucks a year in profits out. They used that dough to keep their building running and pay salaries, which wouldn’t have been possible at all just off the collection plate or pledges.
I left the place partly because I couldn’t convince people that this was not healthy, and one of my ideas was to use the money instead to set up a nonprofit payday loan operation to put the moneytree folk out of business.
I still think it’s a perfect way for a mostly dead institution with a lot of jack lying around to make itself useful in a way that matters. Good on the C of E.
Villago Delenda Est
@aimai:
The Donald calling on line two, looking to refinance a ca$ino!
Davis X. Machina
Credit unions in Maine originally connected to French Canadian Catholic parishes are not uncommon. I can think of two, one in Brunswick, and one in Lewiston/Auburn, off the top of my head.
In the old days, the Yankee bankers wouldn’t lend to the millworkers, who were left to the loan sharks as a result. The caisse populaire movement came down from Quebec with the immigrants.
mistermix
@negative 1: I was responding to PaulW saying that the profit margin is a temptation for churches. I’m not saying they’re all that way – I’m saying that the corresponding temptation for non-profits is to juice up the salaries of the top people. Here’s an example from a few years back:
United way of Central Carolinas made $1.2 million in one year, and makes $365K/year, twice as much as the next highest paid employee:
http://www.ncrp.org/news-room/news-2008/135-united-way-responds-to-report-on-12m-pay-
Komen Foundation is another example.
Davis X. Machina
The Church’s interest in micro-capital is an old one. In Europe there was the monte de pietá movement, Church-sponsored pawnbrokers, intended to keep the poor faithful out of the hands of usurers, albeit probably with more than a bit of anti-Semitism in the project.
Emma
@RSA: Of course they pick-and-choose. Have you noticed how many of those “Christians” ignore everything that Jesus said about helping others and not judging them? Yeah. Thought you had.
RSA
@Emma: My favorite examples have to do with the rich not getting into heaven, with prosperity gospel types instantly becoming experts in Biblical exegesis.
Heliopause
The Old Testament actually forbids charging interest, period, to the poor. So investing in a credit union rather than a usurious lender is not really adhering to that standard.
As for Jesus, he not only disapproved of interest, he disapproved of loans.
gogol's wife
@Librarian:
I really like mistermix, but that headline is so offensive. Not only is the term “God-botherer” inappropriate here, the headline kind of elides hundreds of years of Christian philanthropy.
NickT
@gogol’s wife:
It’s lazy and dishonest and offensive. If mistermix wants to flaunt that combination of unpleasant qualities, maybe he should prop up his local bar instead of inflicting them on this blog.
Jay in Oregon
It’s not just payday lenders. I’ve gotten a series of letters from Springleaf Financial Services telling me that I’m pre-qualified for a secured loan up to $4,000-$5,000 (depending on the letter). All I have to do is give them a call and I can borrow up to $4,000 at an APR of…
32.49%
With 36 monthly payments of $175 and change, that means I pay $2,300 in interest on a loan of $4,000.
First off, who has an extra $175 a month they can spare for 3 years that can’t get a credit card with much better terms? Second, this is a secured loan which means I’m putting up some kind of collateral, like my car.
This was the straw that broke the camel’s back. I went to http://www.optoutprescreen.com/ to fill out and mail in a form demanding to be taken off of the lists for prescreened credit and insurance offers permanently.
Ms. D. Ranged in AZ
Wonderful idea! Now the Church of England can shag the UK citizenry both under and above the radar. The Catholic Church should be taking notes.
dp
@Librarian: Yeah, the English equivalent of Episcopalians is not really qualified as a “god-botherer.”