University of Iowa Law Student: Ministers Struggling to Address Payday Lending

Pastors have always ministered to their flocks about economic matters, reminding them of the good things the Bible says about thrift and self-reliance, and how it criticizes such exploitive practices as predatory lending. But a recent study by University of Iowa law student Jonathan Landon shows that, like with so many other messages, their testimony doesn’t always get through.

“It suggests that some Christians’ understanding of their Christian calling does not extend to realms like economics,” wrote Landon, a third year law student. Landon’s research was part of a class project for professor Katie Porter looking at how ministers preach about economic issues and whether it affects their congregants’ behavior. Through a combination of interviewing ministers, watching and listening to sermons online, and reading through volumes of books and pamphlets produced by various Christian denominations, Landon took a snapshot of how religions treated economic questions.

What he found was that most ministers and churches preached the Bible messages of living within one’s means and an economic version of the Golden Rule: treat others in financial matters as you wish others to treat you. To see if the message was heard, Landon used the prism of payday lending services, businesses that make short-term loans to clients for a fee, which the client then pays off at their next payday. The services are often criticized by consumer advocates, though, who say they amount to predatory lending because the high fees mean consumers are paying a triple-digit interest rate, even when they could often access lower-cost credit elsewhere.

In his research, Landon found that ministers and religious organizations criticize payday lenders for usury, which is condemned many times throughout both Old and New Testaments. Ministers whom Landon talked to called them “loan sharks” and “piranhas” who prey on the poor and uneducated. Yet previous research has found the highest concentration of payday lending services is the Deep South and other geographic areas that are heavily populated with people who self-identify as evangelical Christians.

Landon, a professed devout Christian himself, said the ministers and religious organizations are aware of this dichotomy and do what they can to encourage those in financial need to stay away from payday lending services. For instance, he found most churches sponsor educational programs to help congregants get out of debt and sometimes provide direct charity aid or other services for people in dire financial straits.

And, of course, in their sermons and personal ministry, church leaders urge churchgoers to pay off debt and live within their means. Landon said they’re frustrated that so many congregants continue to use payday lending services despite their work, with one minister saying that a member of his own church even went into the business himself.

Landon said the ministers offered several possible reasons for this contradiction. Some pointed to a poor education system in the South that leaves many vulnerable to economic exploitation, while others said their congregants’ conservative political and economic beliefs lead them to put more faith in free markets than in Biblical teachings.
“Too many Christians let political views guide their biblical interpretation and not the other way around,” one minister told Landon.

And then there’s the challenge that ministers have faced for ages on a range of moral and ethical topics — many churchgoers aren’t interested in practicing from Monday to Saturday what they hear on Sunday. What happens in church stays in church.

As a result, Landon said congregants are reluctant to do something about what their faith tells them are usurious and sinful lending practices.

“One minister told me there are a lot of decisions being made by churchgoers on behalf of Christ, but not a lot of discipling of the people,” Landon said. “Another said that many congregants are just people in pews, and they don’t let the Gospel change their heart.”

Landon said churches need to do more to limit payday lending and other services that leave their clients in financial bondage. He cites as a good example a plan by the Presbyterian Church that lays out a strategy to increase support for people in financial difficulty, provide financial literacy and other educational programs, and advocate toughening laws that prevent predatory lending.