For those of you who have just finished pondering the alleged correlations between Mormons and depression, and Mormons and Bankruptcy, here’s a new one for you – Mormons and payday loan joints. According to the Consumer Law and Policy Blog, a new study is showing disproportionate numbers of payday lenders in the Bible Belt and in the Mormon West. The study will be outlined in a forthcoming issue of Catholic University Law Review, but is available for download in PDF format from the Social Science Research Network here (all 97 pages of it).
For those unaware, a “payday loan” is a small, short-term loan that is intended to cover a borrower’s expenses until his or her next payday. Typical loans are between $100 and $500, on a two-week term and have interest rates in the range of 390 percent to 780 percent (APR). The loans are also sometimes referred to as cash advances, though that term can also refer to cash provided against a prearranged line of credit such as a credit card. Very often such operations are quietly funded by established financial institutions like Wells Fargo or US Bank. As you can imagine, loans with that kind of interest rate can get out of control in a hurry. Miss one payment, and it triples. It’s pure robbery that preys off of the misfortunes and desperation of the vulnerable in society.
The authors express some surprise that such predatory lending establishments should be so much more prevalent in areas known for their commitment to the Bible – which strongly condemns “usury” (see Gen 22:25; Lev 25:35-37; and Ezek 22:16, 20-22 for a few examples). But they suggest that the connection has more to do with politics than religious ethics (since both regions share a very similar political stance). Furthermore, the prevalence of payday loan operations in these states may be due to lax lending regulation at the state level. Using Utah as an example, the authors note:
Utah retains no consumer credit price limitation – either in a general usury law, a small loan law, or in its payday lending authorization legislation. Nevertheless, the Utah legislature has passed a payday lending authorization statute. This legislation includes a variety of essentially cosmetic rules that do not meaningfully impede or change payday lending business practices within the state. Some of the rules simply echo federal law in force irrespective of the Utah statute.
This legal environment has facilitated the development of a powerful payday lending industry both in Utah’s sparsely populated desert areas as well as the rapidly growing capital city. Utah has about 383 payday lenders, which for its small population is quite a lot. Per capita, Utah has the 9th highest density of payday lenders in the nation. Its payday lender to bank ratio is also far above the national average – 8th highest in the country – giving Utah a composite total rank in the top 10. All of Utah’s U.S. House districts have above average densities of payday lenders, the worst of the three being Rob Bishop’s 1st district which ranks 45th out of 435 House districts for overall payday lending activity.
The authors present further grim breakdowns for senate districts, counties, and zip codes noting that “by way of comparison, Salt Lake County has more than twice the number of payday lenders than the entire state of Minnesota.” And apparently 10 other Utah counties are even worse than Salt Lake once you adjust for population and commercial activity (with Tooele and Uintah topping the list).
Apparently the band of Gadianton is doing well in Utah. Puts me in mind of 3 Nephi 24:5 – “And I will come near to you to judgment; and I will be a swift witness against… those that oppress the hireling in his wages… saith the Lord of Hosts.”
Not much to add to the study, except to wonder how Mormons working in the payday loan business can answer the temple recommend interview questions with a straight face. This stuff is serious bad mojo and makes Amway salespeople look like the latest Girl Scout Cookie fund drive.