On Thursday, February 18, 2016, The Oklahoma Business and Commerce Committee passed SB 1314: The Flexible Credit Act. The bill is sponsored by Senator David Holt and creates a new product for Payday Loan companies. Known as “Flex Loans,” companies will be able to lend money to consumers that carry rates higher than 200% APR. According to the Center for Responsible Lending, if this bill passes, this means a $500 Flex Loan would be subject to $1,100 of interest and fees over the course of twelve months, plus a last balloon payment of almost $300. Borrowers will be worse off afterwards than they were before they took the loan.
Now, to be fair, proponents argue the bill will actually lower the current APR from 395% to 240%. While this is technically true, the question still looms to why such a high interest rate altogether? If legislators were serious about caring for the poorest Oklahomans, they would amend this current bill or bring another bill that lowers the APR to a reasonable rate. Something is amiss! Oklahomans need to unite and oppose such predatory legislation. Our state needs legislation that is not going to place our poorest citizens in a perpetual state of debt.
Baptist News Global reported last year that both conservative and moderate Baptists came together to oppose such predatory business practices. Known as the Faith for Just Lending coalition, associate coordinator of partnerships and advocacy for the Cooperative Baptist Fellowship, Stephen Reeves, stated, “It is time for a return to traditional lending practices that acknowledge usury as immoral and detrimental to communities.”
Russell Moore, head of the Southern Baptist Convention’s moral concerns agency, recognized the victims of such unjust business practices, “As Christians, we are called by Jesus, by the prophets and by the apostles to care for the poor, individually, and also about the way social and political and corporate structures contribute to the misery of the impoverished. Groups across this diverse coalition don’t agree on every issue in the public square, but I am happy to work together on this issue to stand against unchecked usury and work for economic justice, human dignity and family stability.”
It is astounding that Oklahoma legislators think this business practice is legitimate. Oklahoma residents are left wondering how can entrusted elected officials turn their backs on those they are called to serve. The Pew Charitable Trusts discovered the majority of Payday Loan customers are white, female, and between the ages of 25-44 years old. Other demographics reveal the poorest of our society are lured by these companies promising fast cash to fund ongoing financial needs.
Let’s examine the typical Payday Loan customer reported by the Pew Charitable Trusts, of which 69% of borrowers use the loans for everyday expenses. A young mother of two in Oklahoma, working for minimum wage, $7.25 per hour, has a mortgage/rent, utilities, car payment, grocery bill, children’s activities fees, and other life expenses mounting up. The bills become so overwhelming she feels as though she has no other option but to get a quick payday loan that is peddled as a financial fix. However, it quickly digs her into a deeper hole. Because of the extremely high interest rate she will be paying on the loan for years. The poor just get poorer.
When Jesus announced his formal start to ministry in the Gospel of Luke, he stood among the community leaders, unrolled a scroll at the synagogue in Nazareth, and read from the prophet Isaiah. Jesus claimed, “The Spirit of the Lord is upon me, because he has anointed me to bring good news to the poor. He has sent me to proclaim release to the captives and recovery of sight to the blind, to let the oppressed go free, to proclaim the year of the Lord’s favor.” Oklahoma, for those who truly believe in words of Jesus, then we must follow his ways. We must be champions for the poor, standing against unjust legislation and predatory practices.