“If you make money by charging high interest rates, you will lose it all to someone who cares for the poor.” Proverbs 28:8
For the past three years, America has been reeling from an economic recession unrivaled by any similar economic downturn since the Great Depression of the 1930’s. As we desperately seek answers as to how we dug ourselves into this hole and how we will dig ourselves out, I encourage us to look to age-old principles of economic justice established through biblical norms. Upon closer examination of these ancient moral principles, we find that our circumvention of these very principles has, in fact, led to the national and global economic disaster we are witnessing today.
It is well known that the global recession is the result of the fallout of the American subprime lending market. Subprime lending is a category of lending aimed at families who have had trouble getting credit in traditional lending avenues. For a few low-income families this type of credit has been sporadically helpful, at times allowing for more opportunity to borrow money to finance emergencies or improve their long-term financial prospects. However, too many unethical lenders have aggressively marketed subprime loans with excessive fees that have stripped hard-earned equity from families, trapped borrowers in an overwhelming burden of debt, and devastated communities with a mounting surge of foreclosures. Many of these loans irresponsibly require little documentation of the borrower’s ability to repay the loan and have rate resets that are simply unaffordable, indeed a recipe for disaster. This abusive lending is referred to as predatory lending, and it is not new.
During biblical times, abusive lending practices were addressed by instituting standards even more strict than those commonly promoted by responsible lending advocates today. Throughout the Bible, abusive lending is associated with evil and corruption, while responsible lending is associated with virtue. Recognizing the predatory nature of excessively charging for a loan – particularly when exploiting the weak and vulnerable – Biblical tradition bans both charging interest to the poor and foreclosing on property mortgaged under abusive loan terms. (See Exodus 22:25-27, Nehemiah 5:3-11.)
Jesus affirms this standard of economic justice in many instances, including in the story of Zacchaeus the tax collector, whom Jesus commended for promising to repay the excessive fees he had exacted from the oppressed (Luke 19:8-9). Based upon passages such as these, the early church completely forbade charging interest until reformists such as Martin Luther and John Calvin advanced a relaxation of the blanket ban to more precisely condemn excessive interest.
In our modern economy, this ancient immoral practice has taken on a new and pernicious face. With the infiltration of deceptive interest rate “resets” (or adjustable rate mortgages) into the subprime lending market, the charging of unprincipled and uncontrolled interest has wreaked havoc upon families, communities, and even the world unprecedented in recent times.
When homeowners lose equity or even their home, the consequences can be devastating and lasting. For most families, home equity represents the greatest part of savings. Losing this wealth means lost opportunities – for example, the chance to send children to college and pass resources along to the next generation. With added financial stress, divorces are more likely to occur, while entire neighborhoods are further harmed as houses go into foreclosure and property values decline. The result can be a continuing chain of misery as neighborhoods deteriorate and families struggle with no real hope.
Predatory subprime lending has costs American households billions and the global economy trillions, but many of the costs have gone beyond dollars. Abusive lending practices devour the hard-earned fruits of trusting Americans, contribute to the erosion of the strong nuclear family, and exacerbate needs in communities of faith while siphoning away membership giving.
People of faith have stood for principles of economic justice for thousands of years. They have defended the cause of the fatherless, the weak, and “the least of these.” In this recent crisis, what was once perceived as a problem of the poor and the marginalized has indeed become a problem for us all. And as the world crawls out of the depths of the global recession, it is imperative that we again take the lead in advocating for moral and ethical practices in defending the least of these in our society. If we responsibly take up this mantle, we can indeed bring greater light to a murky world. If we fail to do so, our negligence could lead to an even deeper descent of our broken economy in years to come.
Originally written by Ansel Brown for the Center for Responsible Lending (www.responsiblelending.org) © 2004, updated and modified for blog.
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Ansel Brown is Assistant Professor of Political Science at North Carolina Central University, where he earned his Bachelor of Science in 1999. He earned his Juris Doctorate from Harvard Law School in 2002 and has since focused on economic and international policy. He is a licensed attorney in the state of North Carolina .
