Many states, as well as the Consumer Financial Protection Bureau (CFPB), have been tackling the pressing issue of payday loans that affects millions of Americans. But after Thursday’s meeting, White House officials may take a personal approach to take on the multi-billion-dollar payday loan industry.
White House officials met with top religious leaders in the country Thursday to talk about payday loans. The faith leaders represented several organizations, including the Southern Baptists and Reform Jews. Both the religious community and the White House were in agreement that there is a “moral obligation” to rein in the payday loan industry.
President Obama aides Valerie Jarrett, Cecilia Munoz and Jeff Zient listened to “heart-wrenching stories” from faith leaders’ congregants. They told situations of how their lives were destroyed because of short-term, high interest loans. At the end of it, White House aides concurred that there was an issue of morality to end the practice of abusive payday lending actions.
No longer is the payday loan conversation including terms such as “usury” or “illegal.” It has transformed into a discussion of “sin,” “morality” and ethics.”
“What emerged was a common, powerful theme: that we have a moral obligation as a country to do something to stop payday lenders from preying on consumers by trapping them in an endless cycle of debt,” the White House aides wrote in a blog post.
They added that there is often “stiff resistance” from special interest groups that support or are in direct connection to the payday loan industry. This happens, they write, even when there is widespread abuse that stems from the payday loan sector and the public is displeased.
The aides did state that the CFPB has been working closely with President Obama since 2015 on this issue. After Thursday’s meeting, however, it seems something greater will come out of this.
In March 2015, the U.S. president delivered remarks at Lawson State Community College in Birmingham, Alabama on protecting consumers from unscrupulous payday lending standards. He outlined a series of steps the CFPB has been taking to address payday loan practices.
It should be noted that the meeting comes one day after a new survey suggested that Christians are in overwhelming support to end predatory lending practices that has been allegedly embraced by the payday loan industry.
According to LifeWay Research, 77 percent of Christians in states without instant payday loans regulation say it’s a “sin” to lend someone money that could potentially harm them financially. A lot of Christian respondents described payday loans a “expensive” (62%), “harmful” (37%), and “predatory” (33%). A majority (55 percent) of survey participants said the maximum annual percentage rate charged on payday loans should be 18 percent or less. Nearly all of the Christian respondents said there should be regulations to protect consumers from payday loan stores.
Religious officials do say that payday loans provide short-term relief, but often lead to long-term problems.
“A payday loan may look like an answer to prayer—a way out of a financial crisis,” said Galen Carey, vice president of government relations for the National Association of Evangelicals, in a statement. “But too often, payday or title loans lead to long-term indebtedness, making a small problem into a large problem.”
Proponents of payday loans say the product allows consumers to cover unforeseen expenses, adding that it’s the consumer’s choice to use the service. Critics say interest rates are too high and the principal sum is often hard to pay back, which places users into an endless cycle of debt.