Bishops oppose expansion of payday lending

Bishop Joseph Kopacz of Jackson and Bishop Roger Morin of Biloxi sent the following letter to Mississippi Governor Phil Bryant on Wednesday, May 11, opposing an expansion of payday lending in the state. The governor has until the end of the day Friday, May 13, to take action. The Catholic Church in Mississippi is urging him to let this bill die.

May 11, 2016

The Honorable Phil Bryant
State of Mississippi
P.O. Box 139
Jackson, MS 399205

Dear Governor Bryant:

Thank you for your dedicated service to the people of Mississippi. We are writing to express our concern with Senate Bill (SB) 2409, titled the Mississippi Credit Availability Act. This bill runs counter to Catholic social teaching as well as biblical and legal traditions calling for restraint against usurious lending practices.

SB 2409 would allow an expansion of existing predatory loan practices by payday and car title lenders through the creation of a new dangerous long-term loan product. The long-term installment loans allowed for in SB 2409 would carry a nearly 300 percent annual percentage rate (APR) on loans as large as $2,500 that can last for up to a year. These long-term loans with exorbitant interest rates would be available in addition to the existing short-term payday and car title loan products that already have trapped thousands of low-income Mississippians in a cycle of debt. In fact, the longer terms of the loans allowed for in SB 2409 would increase the likelihood that the payment will become an unsustainable burden especially for low-income consumers who often have volatile income and expenses.

This type of lending exploits those in need and our Catholic tradition warns against such modern day usury. The Vatican’s Compendium on the Social Doctrine of the Church states, “Usury is a scourge that is also a reality in our time and that has a stranglehold on many people’s lives.” Scripture warns strongly against abusive lending to those in desperate circumstances saying, “If you lend money to my people, to the poor among you, you shall not deal with them as a creditor, you shall not exact interest from them” (Exodus 22:25) and “Do not rob the poor because he is poor” (Proverbs 22:22). Our U.S. Catholic bishops have also expressed to Congress the need to protect low-income families from extremely onerous interest rates and fees as in payday loans.

Many other states have outlawed triple-digit interest rates such as that allowed for in SB 2409, including Ohio and Arizona. In 2006, the U.S. Congress established a 36 percent cap on annual interest rates for payday loans extended to members of the U.S. military. It is my sincere hope that you also will consider ways to protect consumers from harmful lending practices, rather than expand the menu of allowable products predatory lenders are able to offer. Please do not hesitate to contact us with any questions.

Respectfully yours,

Joseph R. Kopacz
Bishop of Jackson

Bishop Roger P. Morin
Bishop of Biloxi