Monday, October 12, 2015

Payday loans and usury

One of the primary arguments I made in Elegant Technology was that high interest rates will destroy lives, communities, the global economy, and ultimately, the biosphere.  So the question is asked, why haven't extended periods where interest rates were at or near zero fixed the economy?
  1. The global economy would have been been MUCH worse if interest rates had been high since 2008.  It's why the world's central banks are still reluctant to raise them.
  2. It's easy to slow down the economy.  But it is also easy to slow things down so far it is virtually impossible to restart things—it is always easier to wreck than build things.
  3. Low interest rates do not apply to many loans—credit card debt, student loans, and perhaps the most evil credit arrangement of all—payday loans.
Today we see the arguments made by a woman from South Dakota who is organizing to rein in those crazy payday loans.  She is a Lutheran preacher's daughter who has decided to raise the theological arguments of old Martin himself made in opposition to the practices of usury (lots of Lutes in South Dakota.)  I found this piece interesting because even though I am also a Lutheran PK, I had already written the chapter linked to above before I discovered that the religious teachings of my youth should have agreed with what I discovered when Paul Volcker ran the prime to 21% in 1981.

And the only reason I think these arguments must be restated over and over is that there will be NO possibility to build a green future with high interest rates—or any more indebtedness at all, for that matter.

Luther, Usury, and the Cap the Rate Movement in South Dakota

by Anna Madsen, AUG 18, 2015

(Below is a repost of a blog posted on my site at It's a piece intersecting theology, faith, and the Cap The Rate movement to rein in payday lending in South Dakota. You can find the blog also at

If you know nothing else about Martin Luther, you know that he didn't like indulgences.

But if you don't know anything at all about Martin Luther (or have forgotten what you learned in confirmation [I won't tell if you won't: a few details have slipped my memory too...and, um, my teacher was my father]), this blog will be right up an alley that you might not have even realized you had.

Back in the day, an indulgence was a payment, of a sort, to the Catholic Church, one that promised to effectively purchase time out of purgatory, believed to be the post-death pivot place between heaven and hell.

The idea that one could pay one's way out of sin and into grace really rankled brother Martin (in German, hat ihn sehr gewurmt, which is just fun to say).

It gewurmt him so much that he wrote a tiny little thing called, oh, The 95 Theses, a list of ecclesial assertions and gripes which only happened to provoke massive religious, theological, and political revolutions.

Dollars to Dampfnudln, Lutheran children know the indulgence hawker Tetzel's ditty: "As soon as the coin in the coffer rings, a soul from purgatory springs." Luther quotes the jingle in Thesis 27, but in Thesis 28, he snarls that when we hear the coin clatter, we know only that greed has been satisfied.

God's will, he said, is done regardless of whether we pony up payment or not.

That is, you can't pay off God. In fact, while he's at it, you can't even pay off those asking for your money, for these sorts suffer from insatiable greed.

But was Luther done with his beranklement?

No way.

In his Explanation of the Ninety-Five Theses, no more shilly-shallying for him. Luther meant business: here, he hauled out the word "usurer:"

I do not know whether or not those who speak in such a matter want to make God a usurer or a merchant, one who remits nothing to us gratis but who expects us to make a satisfaction as payment for the remission. (LW 31:117) [Brought to my attention thanks to Philip Ruge-Jones' fine book Cross In Tensions: Luther's Theology of the Cross as Theologico-Social Critique, (Eugene, OR: Pickwick Publications, 2008), 80].Few insults hurled by Luther had more heat to them than when he pulled out the 'usurer' slur.

Usury, the act of charging interest on money loaned, hat Luther auch gewurmt.

A lot.

In fact, get this: according to Carter Lindberg, Luther "exhorted pastors to condemn usury as stealing and murder, and to refuse absolution and the sacrament to usurers unless they repent." ("Luther on Poverty" in Harvesting Martin Luther's Reflections on Theology, Ethics, and the Church, ed. Timothy J. Wengert, [Grand Rapids:Eerdmans, 2004], 148).


Pastors, get your exhorting on: Luther loathed the act of exacting interest (especially on the poor) so much that he excommunicated usurers until they turned themselves around. (Not as in the Hokey Pokey, but as in the the Latin word "con-versio", "to repent," which means, literally, to turn oneself around.)

Luther, never one to mince words (for a cheap cackle, take a look at the Luther Insult Generator [Insult Me Again!]) claimed that “after the devil there is no greater human enemy on earth” than an usurer.

There's a conversation starter.

Or ender.

(As an aside, Timothy Wengert's fine book Harvesting Martin Luther's Reflections on Theology, Ethics, and the Church, a compilation of essays written by several esteemed Luther scholars, contributed all sorts of thoughts and takes and quotes from and about Luther that were helpful to researching and writing this blog).

Seriously, even if you aren't the target of his words, you will shirk.

But a usurer and miser-belly desires that the whole world be ruined in order that there be hunger, thirst, misery, and need so that he can have everything and so that everyone must depend upon him and be his slave as if he were God. (Luther, as quoted in Lindberg, 147) How does he really feel?

(As an aside, "The Miser-Bellies" would be a great name for a band).

And this one, which condemns and mocks usurers who brazenly donate scads of money to earn communal glory, despite having accumulated their wealth by extorting the poor:

It is so easy to find a little excuse to light the devil's path...'I intend to accumulate my money in order then to endow Masses and services or to give alms for the support of the poor....' How skillfully Sir Greed can dress up to look like a pious man if that seems to be what the occasion requires, while he is actually a double scoundrel and a liar...You cannot show off how magnificent and proud you are, and then say that you have done it for God's sake and for the honor of the church and that you intend to pay for it with benefices and services. This would be as if someone pried open your house door and your treasure chest and took what he found, and then said that he intended to give part of it as alms. Oh, what a precious offering that would be! Here is the rule: If you want to give something to God, give from what is your own. He says (Is. 61:8): 'I hate the offering that comes from robbery.' LW 21:183Now, Lutheran theologian though I am, far be it from me to imagine that Luther was right on all things. He said horrible things about Jews and peasants, for example.

But here, it is worth paying attention. Luther's words against usurers are harsh, but they pale in comparison to the harshness of those who suffer under interest rates that are exploitative beyond belief.

The usurers of today are payday lenders, people who charge exorbitant rates to the least of these, the already-impoverished.

Lest I come off as a persnickety, narrow-minded, Church-lady-esque Lutheran, note that in addition to ELCA Lutherans, neither Episcopalians, nor UCCers, nor Methodists, nor Presbyterians, nor many other religious groups are at all down with usury either.

And Pope Francis! I realize it is not appropriate to crush on the Holy Father, but listen to how he positively channelled his gewurmt brother Martin on January 29, 2014, while addressing the National Council of Anti-Usury Foundations:

I hope that these institutions may intensify their commitment alongside the victims of usury, a dramatic social ill. When a family has nothing to eat, because it has to make payments to usurers, this is not Christian, it is not human! [!!!] This dramatic scourge in our society harms the inviolable dignity of the human person.Yikesies again. "...this is not Christian, it is not human!"

How does Pope Francis really feel?

See, it's not that these religious people and faith groups have too much free time, so why not pick on usurers for fun!


They know that Scripture is positively loaded with words of dismay and condemnation about usury and those who engage in it.

Try Exodus 22:25: "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."

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."

Luke 6:34-35: "If you lend to those from whom you hope to receive, what credit is that to you? Even sinners lend to sinners, to receive as much again. But love your enemies, do good, and lend, expecting nothing in return."

And yet.

And yet, it happens all the time: money has been and is lent to the poor at interest rates so high that it is impossible for many to pay off their mounting debt.

The practice is called payday lending.

As the US Government describes it, payday lending is an advance of cash for a short term, typically the length of a pay period (hence, "payday loan." Catchy, isn't it!). The loan comes due when the borrower is next paid.

However, because most people in need of these loans are chronically short on cash, "rollover" periods are common, with interest rates that balloon sometimes upwards of 1,000%.

That's 1,000%.

In South Dakota, the average is 574%.

That's an average. 574%.

The Center for Responsible Lending sketched out a nifty graphic to illustrate the cycle...which I can't seem to figure out how to paste into this blog. However, it simply draws the line from getting a payday loan ⇢ receiving one's paycheck ⇢ paying off the loan and associated fees ⇢ not having enough for other bills and expenses ⇢ again needing another payday loan.

According to, Pandora's box opened up in 1978, when the Supreme Court decided that “national banks were entitled to charge interest rates based on the laws of states where they were physically located, rather than the laws of states where their borrowers lived.” In essence, then, from this point on, anybody with any sort of credit rating could get their hands on a credit card.

1980 proved to be a further boon to the payday lenders, because in this year, banks and other lenders were allowed to set rates according to what they deemed the market allowed. Payday lenders were given a tremendous gift, because they could loan to anyone, asserting that they believed the market substantiated their decision.

We have a payday lending issue right here in River City. Or, South Dakota, as the case may be.

According to the Pew Charitable Trusts, South Dakota is one of only seven states that allow no rate cap for a payday loan. There is no protection from the consumer about how high these rates can go.

Who needs these loans? The poor, of course. Rich, or even moderately-be-incomed people, these folks don't need payday loans.

Nationally, the people who do are the poor, mostly women between the ages of 25-44, most without college degrees, mostly renters, mostly African-American, mostly divorced, and mostly those who earn below $40,000.

Those who take out payday loans, therefore, are the Least of These.

If I were smarter at graphics, I'd do an overlay of this map, showing the income distributions in Sioux Falls, and this map, showing just a few of the payday lenders in Sioux Falls.

These shops are not strategically placed where the rich live, but rather where the desperate do.

In an article written for the Daily Kos, Greywolfe359 teases out the long-standing religious tradition against usury. Greywolfe writes that:

Calvin saw that if you allowed the rich to lend to those who were worse off at interest, the rich would take advantage of the fact that it's usually the poor who need money RIGHT NOW. They're the ones who are often in unfavorable situations where they will agree to anything in terms of long term consequences because they're often facing dire immediate consequences such as starving to death or being homeless.  These dire words are not a stretch.

A petition for an initiated measure has sprung up in South Dakota, one that, were enough signatures to be gathered by November 9th, 2015, would place an initiated measure--effectively changing South Dakota law--on the November 2016 election ballot asking the voters to cap the rate for payday loans at 36%.

I believe that Christians ought to be gathering petition signatures hand over fist.

Just as strongly, I believe that clergy ought to be at the front lines of this initiative.

See, lay or clergy, when we realize that interest rates can legally be without restriction; when we become aware that, every day, thanks to existing laws and loopholes, the poor become exploited again; when we understand that suffering in the lives of the impoverished is not decreased but is rather increased in the cycle of payday lending; and when we know the outcry against usury in our Scriptures and our traditions, we become complicit in the cycle if we do not speak up.

Theologian Carter Lindberg makes the case that "Luther...approached the topic of poverty not as an economist, sociologist, or politician, but as a theologian proclaiming God's promise and judgment." (137).

Poverty, for Luther, had certain economic, sociological, and political dimensions, but was fundamentally about God's intentions for humanity and our relationship with God.

This is why, says Lindberg, "Luther's social ethics are aptly described by the phrase 'the liturgy after the liturgy.'"

This idea was central to Luther, and the German language helped him make his case. 'Worship' in German is Gottesdienst, which literally means "to serve God." With that in mind, hear Luther (as quoted by Lindberg) now:

Now there is no greater service of God [dienst gottis; Gottesdienst = "worship"] than Christian love which helps and serves the needy, as Christ himself will judge and testify at the Last Day, Matthew 25. (LW 45:172, as quoted in "Luther on Poverty," Harvesting Martin Luther's Reflections on Theology, Ethics, and the Church. Timothy J. Wengert, ed. [Grand Rapids: Eerdmans, 2004], 134-151 [137]).Trouble is, usury isn't as sexy as, say, sex.

And it's more subtle than outright homicide.
> Luther understood this too, when he wrote, "God opposes usury and greed, yet no one realizes this because it is not simple murder and robbery. Rather usury is a more diverse, insatiable murder and robbery....Thus everyone should see to his worldly and spiritual office as commanded to punish the wicked and protect the pious." WA 51:422,15-432,2, as found in Wengert, 144.

It's hard to get all politically agitated about something that has no sex and has no blood.

But make no mistake: payday lending does cost lives; emotionally, spiritually, financially, physically, and corporally.

I have often said that Christians are to be ambassadors of salvation, of soteria, of health, healing, and wholeness.

Payday loan stores are ambassadors of many things, but none of them have to do with salvation. Instead, they offer increasing debt and profound despair.

Scripture and tradition has a clear history of compelling us, inviting us, even demanding us to act behalf of the poor: not on behalf of the rich, and not to sit idly by while the rich prey upon the poor.

Here are three simple ways you can, right now, do just that:

1) Sign a petition to get the initiative on the ballot. We need 21,000 signatures. If you see someone at a fair, on a street corner, at their desk with a petition in front of them, put your name on it. Do NOT be confused by the petition wanting to cap the rate at 18%: it is a decoy petition that actually allows payday lenders continued free rate reign.

To put my money where my mouth is, if you want to sign a petition, I'm willing to drive the petition to you to make that happen. This week, my kids and I are happy to buzz over to your location (ice cream shops and bakeries would be fine...) from 12-4 p.m. on Wednesday August 19th. Email me at if you'd like the Madsen-mobile to swing by your spot, and feel free to round up a few others to sign it at the same time. I'll post on my personal and OMG FB pages, and on the OMG Twitter page, when I'm available next week to do my drive-by.

2) Contact Cap The Rate SD to see how you can personally help. They are in need of financial donations and of petitioners. This link will bring you right to their volunteer sign-up page.

3) Simply enter in your name in the comment section below to indicate that you support capping the rate.

If you are a clergy person or rostered leader in the Church, please indicate that by referencing your title.

Additionally, if you are a person of faith, please contact me at if you are interested in becoming part of a religious coalition to speak out publicly in favor of capping the rate.

God bless the poor.

And God bless the usurers--not by blessing what they are doing, but by blessing them with the possibility of conversion.

And God bless us, we potential advocates on behalf of the poor, with the gift of beranklement, of being gewurmt enough to sign a petition, to circulate a petition, to lend our names and our titles and our unity on behalf of the poor, and to pass an initiative that protects the empty bellies from the Miser-Bellies. more

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