In 1996, Derek Drewery was a young man stationed at Wright-Patterson Air Force Base in Ohio when he ran into money problems.
“I can’t remember exactly what I needed a loan for,” Mr. Drewery said, “but I needed to borrow a few hundred dollars or so.” He turned to one of the short-term, high-interest lending businesses near the base for a “payday loan,” in which people borrow money against their paychecks and are typically supposed to pay it back within two weeks.
“When I went to pay it back it was a lot more than I had borrowed, so I had to borrow again to pay that back, and had to borrow again to pay that back,” Mr. Drewery recalled. “I got into the real churning situation to borrow this week to pay for last week.”
To help pay off the loan, Mr. Drewery cut back on food. “Finally, my dad caught wind of what was going on and sent me some Kroger gift cards, so I ate,” he said. “But at one point, I was sharing my last box of Cheerios with my little Jack Russell dog. I couldn’t afford food or anything.”
Now, Mr. Drewery, who works as an electrician and is the pastor of a nondenominational evangelical church in Springfield, Ohio, has joined an unusually diverse coalition of Christians that unites conservative churches with liberal ones to oppose predatory lending. One of these umbrella campaigns, Faith for Just Lending, includes, among others, groups of black Baptists and Latino evangelicals, the United States Conference of Catholic Bishops and the Salvation Army, which is considered conservative and evangelical.
In 2014, the conservative Southern Baptist Convention, the country’s largest Protestant denomination, passed a resolution proclaiming that payday lending “conflicts with God’s plan for human relationships” and “is a direct violation of the Love Commandment.”
The broad range of Christians seems to be making progress on the lending issue.
Last week, the Consumer Financial Protection Bureau released a long-awaited proposal to regulate payday loans, loans against the borrowers’ vehicle titles and other “high-cost installment loans.” The rules, which are now subject to public comment, would require that “before making a covered loan, a lender must reasonably determine that the consumer has the ability to repay the loan” and would limit the lenders’ ability to withdraw money from indigent borrowers’ bank accounts.
While the rules are a good start, they will not solve a problem of such enormousness, said Molly Fleming, a Roman Catholic from Kansas City, Mo., who leads the payday lending reform campaign for the faith-based organization PICO.
“In Missouri, the interest rate cap on payday loans is 1,950 percent annual percentage rate,” she said. “They are charging an average of 450 percent A.P.R.”
And payday lenders, which tend to base themselves close to the working poor, are ubiquitous. “In Missouri, we have more payday lenders than Walmart, Starbucks and McDonald’s combined,” Ms. Fleming said.
The bureau released a version of their proposed rules more than a year ago, in March 2015. According to Ms. Fleming, there has been “massive engagement” from the faith community.
When Ms. Fleming’s organization informally polled Christians in Missouri, “a majority of every ideological group supported interest rate caps,” she said. “But conservative Republicans supported them even more than moderate Republicans.”
Ms. Fleming’s theory is that conservative Republicans are more likely to be conservative Christians, and thus more aware of the Bible’s condemnation of usury — which is explicit in the Old Testament, and often inferred from the New Testament. She noted that in the Roman Catholic tradition, usury is thought to break the commandment “thou shalt not kill” because its impoverishing effects can deprive people of life.
Galen Carey, the vice president for government relations at the National Association of Evangelicals, which represents about 40 Protestant denominations, said that many evangelical churches had established funds to help poor congregants who might be tempted by short-term, high-interest loans. Now, he said, they are working specifically to counter the payday loan industry.
“There are a few cases where churches have set up no-interest or low-interest loans people can tap into and pay back, and then it’s reused to help other people,” Mr. Carey said. “When people are in a community, there is some accountability for programs like that to work pretty well.”
Jason Carrier, a pastor at Southgate Baptist Church, which, like Mr. Drewery’s church, is in Springfield, Ohio, is trying to help his church start a “grace-based lending” program that worshipers can use in place of payday lending. The program would direct any fees charged above the principal into savings accounts for the borrower, not into lenders’ pockets.
“In conjunction with a credit union, the money — for lack of a better word, we’ll call it interest — goes into a savings account, so they are learning to save money,” Mr. Carrier said. “To use the service, you have to take some classes, and you have a financial coach that will help you and walk with you along the way.”
Mr. Carrier’s church has already tested its program with several needy members. Ultimately, he said, he would like to directly challenge the payday lenders. “We’d like to have a storefront, just like your Check ’n Gos, but with space in the back for classes and financial coaching.”
Versions of grace-based lending have also been tried at churches in other cities, such as Pittsburgh and Cleveland. One of its main proponents has been the Christian Community Development Association, a nonprofit in Chicago that encourages Christians to live among the poor they serve. It was at a conference for the association that Mr. Carrier first learned about grace-based lending.
If, as expected, the Consumer Financial Protection Bureau’s new rules take effect next year, they will shield many of the most vulnerable borrowers, those least capable of repaying loans, from being pulled into the debt spiral. But the rules will not place a cap on interest rates, which is outside the agency’s power. Ms. Fleming said that she was hoping for legislation that would cap consumer-credit interest rates for everyone at 36 percent, as a 2015 revision of the Military Lending Act of 2006 did for service members and their families.
Carl Ruby, another pastor in Ohio, said that nearly every Christian he had spoken with was against payday lending — once they learned what it was.
“They have never thought about it,” Mr. Ruby said, “but when you put the facts in front of them, they all react in disgust. This is an issue that cuts across political parties.”
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