The Ecumenical Poverty Initiative (EPI) was joined by more than 20 faith partners from national denominations, state ecumenical bodies and individual faith and church leaders, representing millions of Christians in the U.S., to urge the Consumer Financial Protection Bureau to issue a strong rule against the predatory practices of payday and auto title lenders. Predatory lenders use harmful financial products to exploit low-income workers when they are most vulnerable. According to the letter, “[Predatory lenders] take advantage of people with limited financial resources, normally when they are facing an emergency or crisis situation. By offering small-dollar loans and charging exorbitant interest rates with short repayment plans, borrowers who already have limited financial resources are often trapped in a cycle of debt having to obtain one loan to pay off another. Ultimately this leads to a downward spiral into a cycle of debt that it takes years to overcome.”
Calling predatory lending a “moral outrage,” the letter urged the CFPB to close loopholes and issue a strong rule that would protect low-income workers against small-dollar loans that charge exorbitant interest rates, sometimes as high as 300 percent, with unrealistic repayment options.. Specifically, the letter urged the CFPB to make sure borrowers had the ability to repay loans; require lenders to show that loan payments are affordable and will leave borrowers with enough money to be able to pay their necessary expenses; provide sufficient protections against flipping borrowers from one unaffordable loan to the next; and, ensure that the proposed rule includes all abusive loans, without exception.
Signers recognized the unique role that faith leaders and congregations have in helping those who get caught in a debt trap because of predatory lending practices. “As faith leaders we often hear about the real damage done to individuals and families by the predatory practices of payday lenders. Our churches are repeatedly called upon to help parishioners and others in our communities to cover the costs of these high-interest loans when borrowers have no place else to turn,” stated the letter. “We also know that many pastoral leaders are called on to provide spiritual support for individuals who have had to file bankruptcy, lost their car or home or experienced other dire consequences in their lives because of predatory payday lenders. Many affected by these unjust practices live with guilt and shame that they carry with them in unhealthy and unproductive ways. This has to stop!”
EPI submitted the letter before the close of the CFPB comment period on Oct. 7. Thousands of comments were submitted by faith groups and coalitions, including the Faith and Credit Roundtable and Faith for Just Lending, both of which EPI is a part.
To read the full content of the letter, click here.