Let us make no bones about it. This financial crisis is a major spiritual crisis. It is the crisis of a society that worships at the temples of consumption, and that has isolated and often abandoned millions of consumers now trapped on a treadmill of debt. It is the crisis of a society that values the capital gains of the rentier more highly than the rights of people to a home, or an education or health. It is the crisis of a society that idolises money above love, community, wellbeing and the sustainability of our planet. And it is a crisis, in my view, for faith organisations that have effectively colluded in this idolatry, by tolerating the sin of usury.
I define usury as the exalting of money values over human and environmental values; of creating money at no cost and lending at rates of interest intended to accumulate reserves of unearned income. Of reaping that which one did not sow.
Christians began to dilute the sin of usury as far back as the 1500s. John Eck, supported by the Fugger banking family, in his book Tractates contractu quinque de centum (1515), defended 5% as an acceptable rate of interest as long as the borrower and lender mutually agreed to the loan. Martin Luther took exception to this laxity, and raged that “heathen were able, by the light of reason, to conclude that a usurer is a double-dyed thief and murderer. We Christians, however, hold them in such honour that we fairly worship them for the sake of their money … Meanwhile, we hang the small thieves … Little thieves are put in the stocks, great thieves go flaunting in gold and silk.”
Credit card companies are the worse. Get the wrong side up on a card and miss a payment and people are locked in for years; especially when the upper rate knocks on the door of 30%. We’ve run several debt management programs at our church and it’s a pretty standard line: a crisis hit and someone needed the credit quickly … they miss a payment and now are virtual economic slaves to the card companies. That these same companies have made huge contributions to members of the Congress over the years …
Brian
Am I correct in interpreting this as a member of the staff of the Guardian arguing for the implementation of a theocracy? I guess that some theocracies are OK if you are the one in charge.
Charging interest for the use of money is not inherently a “sin.â€
We do not expect people to rent us houses, cars, or machinery for free. Interest is the fee we pay for renting other people’s money. It also compensates the lender for bearing the risk that we will not repay the loan.
But during the current crisis, we must still obey the Law of Love. Just as we sin if the idolize money, we as individuals also sin if we treat our debtors will needless harshness.
The moral picture becomes more complicated as we turn from individual debtor-creditors relationships to impersonal credit markets. Bondholders have no duty to accommodate a defaulting corporate debtor.
But in these extraordinary times, big financial institutions should ponder the Parable of the Unmerciful Servant in Matthew 18:21-35. We the People are keeping many financial institutions afloat. They, in turn, should be open to reasonable offers to give borrowers more time to pay. http://new.kendallharmon.net/wp-content/uploads/index.php/t19/article/16893
And if they won’t show prudent flexibility, they invite Congress to write them a sterner prescription.
This is a great time for churches to offer debt-management programs of the sort Brian [#1] refers to.
It would be a very unusual farmer that was able to buy, outright, the equipment that it takes to feed the millions of souls that need constant nurishment. It seems to me that we christians need to give a break on placing capital at risk for the many good things that capital encourages. Yes, that same capital can also encourage an equal host of evil but that only goes to show that capital is not God.
Jesus said, “…give a cup of water in my name..” I can only assume that one can also give 1 million cups of water in His name if one has access to sufficient capital.
Don
While I appreciate Irenaeus’ calm and sensible rejoinder, I think that the Church HAS been grossly nelgigent in this area. Howard Dayton of Crown Financial Ministries (successor to its famous founder, the late Larry Burckett), and Dave Ramsay are just the two best known authors and speakers who have been pleading for years for Christians to avoid going into debt needlessly. As Ramsay loves to say, quoting Proverbs 22:7, “the borrower is SLAVE to the lender.” Like many other Americans, I learned that lesson the hard way. I think EVERY church should offer something like Ramsay’s popular 13 week course, Finanical Peace University, as a part of their stewardship education efforts. And particularly at this time of year, when so many churches conduct their annual pledge campaigns.
I recognize, of course, that biblical proscriptions of usury (such as Deut. 23:19) must be understood against their historical background in an agrarian society, where commercial loans were practically unknown and most people were subsistence farmers. But there is still an important principle at stake in the idea that the People of God were not to charge one another interest (Jews could charge interest on loans to Gentiles, but not a fellow Jew). Namely, God’s covenant people weren’t to exploit one another.
I recently heard that a local philanthropist in my hometown of Sioux Falls, SD, donated a staggering sum, $400 MILLION, to the hospital where I was born, instantly transforming it into a world class medical center (it was already home to the USD medical school), similar to the famous Mayo Clinic in Rochester, MN. At first, I was pleased and proud.
And then someone pointed out that the generous benefactor, T. Denny Sanford, had made his fortune as a banker by exploiting the loose lending laws in my homestate and making astronomical piles of money through the obscenely exploitative practices of the credit card operation run by the bank he founded (First Premier Bank). I used to bank there myself. Now, I felt much, MUCH more ambivalent about Mr. Sanford’s stunningly lavish gift. And Sanford was known for being a devout Roman Catholic too.
Please note: I’m NOT saying that all charging of interest on commercial loans is wrong. I’m NOT saying that Thomas Aquinas was totally right, and John Calvin was totally wrong. Essentially they lived in very different economic eras and were addressing radically different historical contexts. After all, the Master did say in one of his parables that the man who was loaned the one talent but hid it in the ground should at least have invested it with the bankers and gotten a little interest for the owner.
But we live in a day and age when credit card companies regularly act like the infamous Shylock in Shakespeare’s immortal play, the Merchant of Venice, exacting their pound of flesh and treating many of their (often foolish and irresponsible) customers like the scum of the earth.
Personally, I think it’s high time that such notorious exploiters of the poor as payday loan companies and car title loan companies were much more strictly limited by law as to the interest rates they can charge, if those businesses aren’t forbidden altogether. I know someone who stupidly, in desperation, took out one of those car title loans, borrowing about $900 to meet a crisis (since they didn’t have an emergency fund, a major mistake, as Howard Dayton and Dave Ramsay keep insisting). The interest rate was 256% a year!! By the time he paid off the loan, it had ballooned to $1500 in just 3 months. Was he dumb? Yes. But was the company a form of legalized theft? In my opinion, yes.
David Handy+
Perhaps it’s simply a time for a Year of Jubilee.
T
The general usury rate that has been established for personal or consumer loans in the State of Connecticut is 12%. However, there is a federal law saying that state usury laws do not apply to banks that label themselves with the words “national”. A “national” bank is able to offer loans above the state usury limit. They can apply interest rates a number of points higher than the Federal Reserve Discount Rate. The Federal Reserve Discount Rate is the rate banks get when borrowing short term directly from the Federal Reserve Bank.
At the Federal level there is also a criminal limit, defined by Congress, for interest rates that is twice the amount of the particular state’s usury limit. So, in theory, it would be a federal crime to charge more than 24% interest in CT.
I think that the federal limit is much too high. We have a good credit rating. Actually, it is excellent. We had a balance on one of our cards [only one of our cards] that we were paying off. We had occasion to be out of state for about a month on business. We had our mail forwarded. Somehow, the bill from this credit card company got lost. When we realized that we had not payed them, we immediately called to explain and sent off a payment right away. We were 10 days late. We were assured that there was no problem, we would just pay a late fee.
On our next statement, our interest rate jumped from 5.9% to 23.5%. We had a several year history with this company. We had an excellent credit rating. We had no previous history of late payments with them. We payed off the balance on the card immediately. [I had bonds that I could have cashed to pay them off, and almost did, but decided to give business to their competitor instead and did a balance transfer. We have sinced payed off the balance at our own pace and we still have the high interest bearing bonds.]
The first credit card company treated us very poorly and lost our business while giving business to their competitor. I filed a complaint with the appropriate authorities. They skirted the law and technically avoided “usury” in our state. If we had had less means or a poorer credit history, we would have been in serious economic trouble. The relaxed threshold for usury ill served the credit card company itself and definitely did not serve us well.
National laws against usury need to be revisited. There should be a uniform threshold for federal usury. It should be much more closely aligned with state levels, not double. And, the level should be set much lower.
That’s my opinion.
Here’s a quote from our beloved Anglican C.S. Lewis which might be of interest to folks. In MERE CHRISTIANITY he writes:
Jon [#9]: Fair enough. But why should charging for the use of money stand on an altogether different moral footing from charging for anything else? Depending on the circumstances, we can sin by withholding food and shelter from those in acute need. But that does not make it wrong to sell food, build houses for sale to others, or operate hotels or apartment buildings.
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In any event, we lend and borrow money very differently than in Old Testament times. No longer can creditors enslave defaulting debtors and their families.
#10 “No longer can creditors enslave defaulting debtors and their families”.
No, but they can “enserf” them. If your wages are garneeshed, and you are forced to rent a home because you are unable to buy one, and you are unable to buy a car on credit or save up for one because your credit rating is ruined and your wages are garneeshed until you pay back your debt, then you are essentially a serf. Being a serf is in some ways worse than being a slave as masters are required to look after the slave but a serf has noone to look after them.
Personally I would favor loans of 7 years or less (that used to be the usual term for home mortgages) with all debts that are unpayable after 7 years being forgiven. Then banks would not be encouraged to let folks get in over their heads.
#10 Irenaeus, it stands there because it is DIRECTLY forbidden by scripture.
So, tell me…Is God doing a new thing to make the charging of interest just?
You may be a drudge, but you are not a serf, not even a peon.
But I’m all in favor of borrowers and lenders exercising prudent restraint.
Jefferson said “All interest is usury.” This may be the one point in which TJ and God were in total agreement.
[i] Deleted at the request of the commenter. [/i]
“It is DIRECTLY forbidden by scripture”
DaveJ [#12]: The Old Testament generally forbids usury; the New Testament does not. The basic question is thus whether the O.T. proscriptions reflect a moral law binding on Christians.
Here are the key O.T. passages:
1. Exodus 22:25-27:
“If you lend money to my people, to the poor among you, you shall not deal with them as a creditor; you shall not exact interest from them. If you take your neighbor’s cloak in pawn, you shall restore it before the sun goes down; for it may be your neighbor’s only clothing to use as cover; in what else shall that person sleep?”
2. Leviticus 25:35-37:
“If any of your kin fall into difficulty and become dependent on you, you shall support them; they shall live with you as though resident aliens. Do not take interest in advance or otherwise make a profit from them, but fear your God; let them live with you. You shall not lend them your money at interest taken in advance, or provide them food at a profit.”
3. Deuteronomy 23:19-20 sets forth the broadest, fullest prohibition:
“You shall not charge interest on loans to another Israelite, interest on money, interest on provisions, interest on anything that is lent. On loans to a foreigner you may charge interest, but on loans to another Israelite you many not charge interest.”
_ _ _ _ _ _ _ _ _ _ _
Christians have long understood the Torah to contain ceremonial and civil law that does not bind Christians and moral law that does. The question is whether, regardless of the circumstances, charging interest violates the moral law.
I believe that for Christians the binding constraint is Christ’s commandment to love our neighbors as ourselves.
_ _ _ _ _ _ _
Each of the three passages on its face distinguishable from most modern lending:
— Most modern lending is not to the poor, much less the destitute (cf. Exodus 22).
— Nor does it involve loans to one’s relatives (Leviticus 25).
— Nor is it to our “fellow Israelites.” Remember that Deuteronomy 23:20 permits loans to “foreigners” (i.e., non-Israelites).
So reading these passages as prohibiting interest involves stretching them somewhat beyond their original context. You may regard that as the obvious, inevitable way to understand them. (The strongest argument for that position would be that everyone is now a “fellow Israelite” and that we should treat everyone as our kin.)
_ _ _ _ _ _ _
Note that each of these three O.T. chapters include commandments that few Christians regard as binding: e.g., executing anyone who sacrifices to any god other than the Lord (Ex. 22:20), neither sowing nor reaping every fiftieth year (Lev. 25:11), and excluding all illegitimate children from “the assembly of the Lord” (Deut. 23:2).
DaveJ [#15]: Thank you for the accusation! I’ve been called many things in my life, but rarely a revisionist and never Susan Russell. T19 commenters less discerning than you will need to form their own conclusions about my orthodoxy.
In any event, read #16.
— Tell us whether you agree that Old Testament civil law does not bind Christians (although the moral law does).
— Explain why the moral law categorically forbids lending at interest to strangers. (In the next-to-last paragraph of #16, I’ve noted the best argument I know of.)
Jefferson (quoted in #14) was in some respects a world-class fool. This is the same Jefferson who wrote that we may exclude merchants and industrialists “from our territory as we do persons affilicted with disease.”
“You cannot segment your faith. You are FOR God, or you are against Him” —DaveJ [#15]
You have me intrigued.
1. Have you ever received interest on money kept at a bank, savings institution, credit union, or money market fund?
2. Do you currently have an interest-bearing account at a financial institution? If so, do you regard receiving the interest as sinful?
3. Have you ever borrowed money and paid interest on it (e.g., to buy a home, car, education, or anything else)?
4. If lending money at interest is sinful, is it also sinful to borrow money at interest—and thereby make yourself an enabler of the lender’s sin?
Usury has been in our system several centuries ago. It was not new anymore. However, there are some who considered it as unlawful but some agree that it is very crucial in lending industry. The most accepted term for usury is interest. But now the usury ussue us again being the talk of the town. Christian Power Rankings are the relative number of people, or per capita density, of Evangelical or Mormon Christians which use their Christian beliefs to decide who to vote for. (WASP or Catholics needn’t apply, though they’re the majority.) It’s part and parcel to a lot of usury law legislation that the Christian Right and others are trying to get passed, and while that ordinarily would be commendable, the only people they’re going after are lenders of payday loans. They’re leaving student loan and credit companies alone – just a bit hypocritical. There may be an end to installment loans, if the Christian Power Rankings are an indicator of the numbers.
Usury has been in our system several centuries ago. It was not new anymore. However, there are some who considered it as unlawful but some agree that it is very crucial in lending industry. The most accepted term for usury is interest. But now the usury ussue us again being the talk of the town. Christian Power Rankings are the relative number of people, or per capita density, of Evangelical or Mormon Christians which use their Christian beliefs to decide who to vote for. (WASP or Catholics needn’t apply, though they’re the majority.) It’s part and parcel to a lot of usury law legislation that the Christian Right and others are trying to get passed, and while that ordinarily would be commendable, the only people they’re going after are lenders of payday loans. They’re leaving student loan and credit companies alone – just a bit hypocritical. There may be an end to installment loans, if the Christian Power Rankings are an indicator of the numbers.
This is just plain wrong. Why is it that Senator Bob Corker continues to support his cronies, like payday lender W. Allan Jones of Check Into Cash? Read below for this guy’s story:
http://garyrivlin.com/2010/06/pioneers-of-subprime-allan-jones-and-the-payday-loan/
Scary, but true.