Usury = 800 paces on the Sabbath?

That is one of the most ridiculous comparisons I’ve ever heard.

I know you can do better than that.

I was noticing that dozens of recently-defaulted borrowers were all resisting collection efforts and quoting to me the same chapter and verse of the Bible about usury and informing me that I was an evil corporation run by “Mormons going to hell”. (The part about ownership of the company by Mormons was verifiably true).

After a few weeks of hearing the same story, over and over, I noticed a definite pattern and a lot of scripted responses. Eventually, our company found that an entire congregation of a local Pentecostal Church had taken the loans all in the same month, and all at the behest of their pastor who had herself taken out a loan months earlier but quit paying, warning us that we would “suffer wrath” if we continued usury against her. I believe their crime should have warranted felonious RICO status, and, as I tried to point-out, violated God’s law against theft. But most of these people were unrepentant and just continued on about how evil and powerful Mormons were, and they were just merely trying to balance the power!

My employer was one of the bigest and best in Utah but eventually closed its doors for good in bankruptcy.

The new crop of payday lenders came after some easing of lending laws that allowed new companies to be profitable.

Usury is usury, but usury hasn’t been banned since the law of Moses. Today it’s as moral as walking 800 paces on the Sabbath. The church has paid interest and owned businesses that charge interest rates that reflect the risk of getting the money back.

We read, “Payday lenders filed so many lawsuits that they accounted for 51 percent of all small claims cases along the Wasatch Front during the past three years, and 58 percent of those filed just last year, the Morning News study shows.”

Further we read that people who get the loans sign an agreement to show up in a particular small claims court, even if it isn’t anywhere near their residence.

“Peterson, the U. law professor, says such agreements mean loan recipients may ‘have to travel a long way and find lodging, so even showing up in court could be more expensive than their original loan. People who take out these loans frequently are on the verge of falling into poverty, so traveling across the city or state is much less likely for them.’”

If I were out of other financial options, I think I’d rather take out a payday loan than ask the church or my family for money if I thought I would be back on my feet quickly. I know that wouldn’t be the best financial option for me, but I’d be sure I wasn’t putting someone else out or taking advantage of their generosity.

“I study the effect that the availability of exceptionally high-interest consumer loans (payday loans) has on individual welfare by using natural disasters as an exogenous shock to communities’ financial condition. Utilizing a propensity score matched, triple difference approach, I find that communities with payday lenders show greater resiliency to natural disasters. For three of the four welfare measures considered – foreclosures, births, and alcohol and drug treatment admissions, – the estimates suggest that payday lending enhances the welfare of communities. I discuss whether this effect is limited to individuals facing personal disasters or applies in general.”