Activism / Christianity / Church / Religion / Usury

Payday loans – a Christian perspective


First, here’s a parody of the Wonga commercial.

The facts

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WongaLoanDump

      • The pitch (above): Screendump from the Wonga offical webpage, showing Interest & fees £40.45 on a £111 loan!

In November 2011, MP David Morris sponsored an Early Day Motion in the House of Commons reading:

That this House notes that wonga.com is currently advertising a typical interest rate of 4214 per cent. and that this is not the only institution offering a similar service; further notes that these high interest rates are often paid by the poorest in society; believes that all financial institutions have a right to make a profit but that these companies are adding to poor families’ financial problems; and further believes that the time is right to restrict the level of interest that can be charged on loans.

The EDM received cross-party support from 31 MPs.

In May 2012, Justin Welby (then Bishop of Durham) made his first comment on Wonga. calling its high interest rates “shocking” and “usurious“.

In January this year, The Guardian reported:

“Wonga’s latest accounts show the firm wrote off £76.8m during 2011 because thousands of loans proved to be “uncollectable”. The bad debt bill is equivalent to 41% of Wonga’s £185m revenues for the year and is almost four times the figure for 2010. Filings at Companies House spell out that an associated accounting impairment was “mainly related to customers who are in unexpectedly difficult economic situations”.

“A spotlight on the legion of financially distressed Wonga borrowers comes at a sensitive time for the booming payday loans industry. The company recorded pretax profits up £45.5m to £62.4m for 2011, and last summer . . . was reported to have held talks with bankers about a US flotation that could have valued Wonga at more than £1bn.”

By July 2013, Welby was Archbishop of Canterbury and a member of the Parliamentary Commission on Banking Standards, when he returned to the fray.  He said the church would help credit unions by providing premises and expertise.

The Financial Times pointed out that, despite denying involvement in payday lending, the Church Pension fund invested in venture capitalists Accel Partners which raised funds for Wonga in 2009.

In response, the Archbishop promised a review of the church’s entire investment portfolio to make sure “we are consistent between what we’re saying and what we’re doing”.

In October 2012 Wonga announced that they were sponsoring the football team Newcastle United for £8m a year. Several MPs spoke out against the deal and the leader of Newcastle City Council told The Guardian he was “appalled and sickened” that the club had signed a deal with “a legal loan shark“.

In July 2013 Papiss Cissé refused to wear the kit.

In 2012, Wonga.com sponsored ITVs Red or Black, which received wide criticism. In January 2013 it was announced that Wonga.com will sponsor the UK showing of American Idol on Channel 5 for Season 12.

A typical Wonga scenario:

Say someone wants to borrow £400. After thirty days they’ll have to pay back £531.21, made up as follows:£400 + Interest & fees £131.21  = Total to repay £531.21.

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On Usury

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During the current global financial crisis, usury is both the cause of the crisis, and its (short term) solution. In Biblical times, usury was a part of business, even though it was forbidden. But just as the Deuteronomic sexual prohibitions throw a light on the complex forms of Hebrew sexuality, the diktat against usury indicates that the practice was widespread. One does not legislate against things that never happen.

Jews were permitted to lend to non-Jews, a permission that post-Roman Christians turned on its head, by permitting only Jews to lend to Christians – who were nevertheless permitted to lend to non-Christians, with the ridiculous consequence that during the Crusades, Christian merchants were investing in the businesses of the Saracen enemy (Sidney Homer, A History of Interest Rates, Rutgers University Press, New Brunswick 1963, p. 71).

It is interesting that the Biblical injunctions apply to personal loans, because they caused pain to the borrower; the Hebrew term for usury, neshek, literally “a bite”, from its painfulness to the debtor. In the Talmud, exacting of interest was likened to the shedding of blood: the usurer “shall surely suffer death; his blood is upon him”.

By the time of Jesus, lending had become investing; in the parable of the talents: the lazy slave declares:

“Master, I knew that you are a hard man, harvesting where you have not sown and gathering where you have not scattered seed.

“So I was afraid and went out and hid your gold in the ground. See, here is what belongs to you.”

 His master replies:

“You wicked, lazy servant! So you knew that I harvest where I have not sown and gather where I have not scattered seed?

“Well then, you should have put my money on deposit with the bankers,”

(The word in the Greek text, trapezithj, is translated by Strong’s concordance as “one who exchanges money for a fee, and pays interest on deposits”.)

 “so that when I returned I would have received it back with interest.”

(Matthew 25: 24-26)

(It is interesting that Jesus characterizes the slave-owner as one who harvests where he has not sown; one is reminded of the words his brother James addressed to the rich: “The wages you failed to pay the workers who mowed your fields are crying out against you.” – James 5: 5. This, in its turn, reminds us of another Hebraic prophet, Karl Marx, who identified profit as being stolen from the workers who created wealth.)

Giles Fraser, who was forced to resign from his post in St Paul’s Cathedral because of his identification with the Occupy movement, has pointed out the very term redemption, defined in the Oxford English Dictionary as “deliverance from sin and damnation”, is a word “that the church has borrowed from the ancient financial services industry. . . the recovery of something pawned or mortgaged. In a world of slavery, that something can be one’s very life.” (The Guardian, July 26, 2013)

This no doubt relates to the Levitical tradition of the Year of Jubilee, when all debts would be remitted every fifty years:

 “And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof: it shall be a jubile unto you; and ye shall return every man unto his possession, and ye shall return every man unto his family.

“. . . The land shall not be sold for ever: for the land is mine; for ye are strangers and sojourners with me.”

(Leviticus 25: 10, 23)

Fraser also points out that the original word of the so-called Lord’s Prayer ( which was not actually a prayer, but private advice to his disciples on how they should pray unostentatiously) asked that God “forgive us our debts” (Matthew 6: 12). The word in Greek was ophelilema, which according to Strong’s Concordance, had the meaning “ὀφείλημα – that which is owed, a debt; ὀφείλημα – something owed, i.e. (figuratively) a due; morally, a fault”. In the Latin Vulgate the term is rendered “debita“, which has the same meaning.

He was no doubt reminding his followers of the Talmudic injunction:

“Remit and forgive unto all men whatsoever they have done against me.”

(Kadish, as translated by the Rev. John Gregorie.

Luke’s version of the prayer renders it more closely to modern usage – “forgive us our sins” (Luke 11:4, KJV); Strong relates this to a word meaning to miss the mark, so “trespasses” (treaspases, as used by Tyndale in his 1526 translation) is a reasonable application. Luke returns to the debtor theme in the rest of that verse: “for we also forgive every one that is indebted to us” (Strong: “figuratively, to be under obligation; morally, to fail in duty:

Paul used the same expression in his letter to the Romans:

3 For what saith the Scripture? “Abraham believed God, and it was counted unto him for righteousness.”

4 Now to him that worketh, his reward is reckoned not according to grace, but according to debt.

5 But to him that worketh not, but believeth in Him that justifieth the ungodly, his faith is counted for righteousness,

Romans 4: 3-5

The prohibition of usury in the Qu’Ran is well-known, it distinguishes between

During the primitive accumulation period of early capitalism, money-lending played an essential role in business, identified by Shakespeare in the character of Shylock. Though stigmatized by the Christian merchants for exacting his pound of flesh, he responds:

“If a Jew wrong a Christian, what is his humility? Revenge. If a Christian wrong a Jew, what should his sufferance be by Christian example? Why, revenge. The villainy you teach me, I will execute, and it shall go hard but I will better the instruction.”

(The Merchant of Venice, Act II, scene 1)

The basic instability of the capitalist system resulted in frequent banking crises from early in its history: eleven in the 18th century and in the 19th another eighteen. In 1866 the bill broker and discount banker Overend, Gurney & Co collapsed with debts of £11million (£122m in today’s money). The company’s directors were promptly tried for fraud, but not before they had triggered a financial crisis that saw some 200 other companies, including many smaller banks, go out of business. In 1878, the City of Glasgow Bank also collapsed, its £5.2m “deficiency of capital” reportedly ruining all but 254 of its 1,819 shareholders.

The Guardian comments on these crashes:

“These misadventures did, however, have the beneficial effect of prompting our nation’s leading financial institutions to behave with a shade more financial responsibility, notably by doing their accounts, underpinned by the establishment of the Bank of England as a lender of last resort.”

(Jon Henley, The Guardian, Wednesday 19 September 2007, http://www.theguardian.com/money/2007/sep/19/business)

29 verses in the Bible about usury

including the following:

Exodus 22:25

“If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him.

Deuteronomy 23:19

“You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest.

Leviticus 25:37

You shall not lend him your money at interest, nor give him your food for profit.

Luke 6:35

. . . love your enemies, and do good, and lend, expecting nothing in return, and your reward will be great, and you will be sons of the Most High, for he is kind to the ungrateful and the evil.

Leviticus 25:35-37

“If your brother becomes poor and cannot maintain himself with you, you shall support him as though he were a stranger and a sojourner, and he shall live with you. Take no interest from him or profit, but fear your God, that your brother may live beside you. You shall not lend him your money at interest, nor give him your food for profit.

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