ELCA South Dakota Synod to Consider Resolution Opposing “Usurious” Payday Loans

Fundie Pastor Steve Hickey may get his wish for reinforcement from South Dakota’s mainstream Lutherans in his war on usury. At its synod assembly in Watertown next weekend, the South Dakota branch of the Evangelical Lutheran Church of America will consider a “Resolution on Predatory Lending in South Dakota.” The document appears to synthesize three resolutions from the Sioux Falls-area Crossroads Conference, the Bear Butte Conference covering the western third of the state, and the ELCA-SD Hunger Task Force.

The resolution calls on ELCA members and Bishop David Zellmer to advocate for Initiated Measure 21, “which puts a 36% APR limit on payday loans, car title loans, and installment loans,” and to oppose Amendment U, “which changes the State Constitution to allow unlimited interest and fees on these loans.” Bishop Zellmer has declined to take a public position on either the real grassroots 36% rate cap or the payday lenders’ decoy amendment intended to sabotage the rate cap movement.

Dana Ferguson reports that Rod Aycox’s Georgia-based Select Management Resources, parent company of North American Title Loans, has spent $2.4 million so far to promote Amendment U and challenge Initiated Measure 21. Rev. Hickey and his compadres have spent just over $20,000 to promote their real 36% rate cap.

The resolution deems interest rates greater than 36% “usurious”, supporting my mnemonic of “Amendment U for Usury.” The resolution supports that statement with these whereas clauses:

…Scripture, Martin Luther’s writings, and the principles found in Lutheran ethical teaching expressed in our ELCA social statements warn about gaining wealth through exploiting the poor and direct us as Christians in society to advocate on behalf of the poor, the powerless, and those who suffer, and effectively address the causes of poverty…

…the US Congress, at the request of the US Department of Defense, limited the interest rate on loans to active-duty military members and their families to 36% APR; and fourteen states and the District of Columbia have enacted strong state laws that effectively enforce a rate cap of 36% APR or less, as part of a nation-wide effort to reform predatory lending practices…

…many high-cost small-dollar lenders engage in predatory practices, charging annualized percentage rates (APR) on loans in excess of 300%, with payday loans averaging 574% APR in South Dakota, causing significant harm to the economic wellbeing of some of the most financially vulnerable South Dakotans, ensnaring borrowers in a debt trap that can last for months or years, which reinforces a cycle of poverty, and frequently leaving borrowers less able to provide for themselves the necessities of food, shelter, and medical care… [Bear Butte Conference, Crossroads Conference, and Hunger Task Force of the South Dakota Synod, ELCA, proposed resolution, posted May 2016, to be considered at Synod Assembly, Watertown, SD, June 3–4, 2016.].

The resolution calls on SD-ELCA congregations to “become trusted sources of information” on the payday-lending ballot measures, which of course means they should all read and share Dakota Free Press. Alas, the resolution does not include this blog in its bibliography (and if you think my lovely pastor wife is going to offer an amendment to that effect, you’ve got skunk-eye coming! ;-) ), but it does mirror this blog in citing Martin Luther’s own blistering words for the “miser-bellies” who prey on the poor. Consider this passage from the resolution’s well-documented “Background Information”:

Martin Luther himself railed against usurers as “tyrants and robbers.” He wrote,“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 up him and be his slave as if he were God.” In his 1524 treatise, On Trading and Usury, Luther wrote, “There are some who not only deal in little sums, but also take too much return – seven, eight, nine, ten percent. The rulers ought to look into this. Here the poor common people are secretly imposed upon and severely oppressed” [Supporting information, SD-ELCA proposed resolution, May 2016].

Seven to ten percent is “too much return”?! Holy cow! Luther would say we’re letting the miser-bellies off easy at 36%. Rod Aycox, Chuck Brennan, you should consider IM 21 a reasonable compromise.

The draft resolution concludes with “Voices of South Dakotans,” statements from unnamed payday loan victims, a caseworker, and a former payday lending employee:

“I borrowed $400 for tires. I think I paid $400 about 4 different times. It seemed like forever to get that dumb thing paid off!”

“I borrowed $1700. I’ve been paying $200 a month for two years. They just told me I still owe $1100.”

“I took out an auto title loan on my van for $450. My payment schedule is $135 a month for two years.”

“They keep you borrowing more.” – Man who owed $550 on a $200 loan he took out a few months before.

“It took my whole childhood for my mom to pay off her loan. And, we were hungry.” – Young adult man

“These loans are horrible. Many people end up getting evicted or utilities cut off trying to keep up. Then they can’t afford to buy food, but your paycheck may be too much for food stamps. They don’t want to lose their car to get to work, which is why they took out the loan in the first place.” – Caseworker at a helping agency

“[One loan client] was not going to be able to buy her medicine anymore. I couldn’t stand it any longer. I quit the next day.” – Former employee at a payday loan business [Supporting information, SD-ELCA proposed resolution, May 2016].

South Dakota’s ELCA Lutherans have Scripture, Luther, and the suffering of their neighbors making clear the action they should take: educate our neighbors, support Initiated Measure 21, and reject Amendment U.

Bonus Web Wonder: You can watch the discussion and decision on this proposed resolution live online! The South Dakota Synod will live-stream its statewide assembly here.