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Archbishop Welby aims to compete with major payday lender

Archbishop Welby aims to compete with major payday lender

From the BBC:

The Archbishop of Canterbury has warned the online lender Wonga that the Church of England plans to force it out of business – by competing against it.


The Most Rev Justin Welby told Wonga boss Errol Damelin the Church planned to do this by expanding credit unions as an alternative to payday lenders.

The plan is to create “credit unions that are… engaged in their communities”, he said.

Read full story here.

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brsholl

Thanks for this info Sarah. Very helpful!

Brian Sholl

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Sarah Lawton

General Convention touched on this issue last summer in a resolution addressing payday loans. The resolution originated in the Standing Commission on Social Justice and Public Policy when several commission members noted that payday loans, along with housing foreclosures, were devastating the families in their (primarily poor or working class) congregations.

The resolution, which did pass, focused on public policy, and authorized our Office on Government Relations to work on this issue by pushing for financial reforms such as capping interest rates at non-usurious levels.

What the Archbishop of Canterbury is doing is the other side of that--offering a better alternative to usurious credit schemes. What a good idea, if it can be brought to scale. I would also like to see congregations, particularly in our working class communities that are still bearing the brunt of the financial and jobs crisis, offer financial education classes for their members, along with engagement in community organizing and advocacy for financial and credit reform--as encouraged by our General Convention last summer.

Here is the resolution we passed, A081:

Resolved, the House of _______ concurring, That the 77th General Convention

of the Episcopal Church commit to working towards usury laws that consider the

following principles:

• Reforming interest rates such that debts can be repaid in a timely manner

without crushing the debtor;

• Creating stricter usury laws which continue to establish the idea of a fair

repayment schedule;

• Eliminating a carve out of usury laws and other regulations for the most

egregious of loans; and

• Working towards a lowering of the maximum interest allowable by law to

12.99%.

And be it further

Resolved, That the 77th General Convention of the Episcopal Church encourage

The Episcopal Church’s Office of Government Relations to speak on behalf of The

Episcopal Church’s commitment that interest rates and usury laws need

reformation in our society; and that the Episcopal Public Policy Network assist

local Bishops, Dioceses and Public Policy Networks with this issue at their

federal, state and local setting.

EXPLANATION (from the Standing Commission):

Usury is excessive interest. Rates have been consistently going up since the creation of the United States. The founding of our country set interest rates at 6% and in the 1970s the interest rate was 10%. Now, our nation’s legal interest rate is 39.99%. That means a credit card can charge you $39 to borrow $100 legally. Furthermore, loan products such as payday loans, check cashing fees, rapid refund tax return schemes and other car-title

scams are exempt from usury laws, and their interest can amount to over 100%. Prohibitions against usury go back centuries, even back to the Bible. Prophets decried usury, our founding fathers decried usury. Usury laws put proportion and equity into the relationship between the lender and the borrower. They allow for repayment capacity. They allow for a production of long-term wealth, instead of an economy based on the financial misfortune of others. We must reconsider our usury laws, strengthen them, and allow interest rates that help the debtor be able to repay and the creditor continue to be able to lend.

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Juli Mallett

I'm with Tom! And it's so trivial and cheap to set up a Credit Union, this seems like something that should just be done.

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Tom Sramek Jr

I've often thought, given the role of various Episcopalians in the banking industry, that this is a vastly underutilized "mission field." I know that the Diocese of Los Angeles has a credit union, but given the expertise of the Church Pension Group, the Episcopal Church Foundation, TENS, and other groups, why not take that credit union nationwide? I would certainly be interested!

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