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Florida Faith Community Comes to Capitol

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Payday Lending Expansion is Unacceptable, Usury Must End

Clergy representing the Florida faith community converged on the Capitol Building in Tallahassee this morning, calling on lawmakers to reject a payday loan expansion bill and instead to cap payday lending interest rates in the state, which are currently in the triple digits. The faith leaders were compelled to show up in Tallahassee after watching a harmful bill backed by payday lenders move through one committee after another despite its harmful impact being presented to lawmakers.

“Why is it that the people who stand behind me and who have been working on this for years have not been able to have a voice, while the payday lending industry has not only been heard, it is moving rapidly through the process?” said Rev. James T. Golden, of the AME Church of Florida. “While I do not begrudge any business from making a profit, I do not think that it is fair that most of the profit from this business comes from the backs of people who can least afford it. If you want to provide a service, provide it. But if you want to create a situation where people are just not able to get beyond where they are, the payday lending industry is for you.”

SB 920/HB 857 would allow payday lenders to make larger, longer debt traps at over 200% annual interest, adding another tool for predatory lenders operating in Florida. Payday lenders already extract over $300 million per year from the pockets of low-income families, and over 80% of payday loans in Florida go to people stuck in more 7 or more loans in a year.

Representative Tracie Davis (D-Jacksonville) joined the faith leaders at a news conference, and said, “This is a product that’s not needed at this time and I stand in solidarity with the faith-based leaders and the other organizations represented here today in opposition to this bill. Money matters and fairness in lending matters.”

Ingrid Delgado, speaking on behalf of the Florida Conference of Catholic Bishops, said, “The lending product proposed by SB 920 and HB 857 would cost consumers even more dollars in fees. This is a step backwards. However, one step in the right direction would be consideration of bills filed by Senator Baxley and Representative Bobby O, which would cap these loans at more reasonable APR rates as has been done in other states.”

“The wide span of the church, Catholics, mainline Protestants and the Black churches, have strong and clear teaching on biblical standards of economic fairness, said Rev. Dr. Russell Meyer, Florida Council of Churches. “Together we oppose these bills to create payday lending products that permit usury. Such lending takes food out of the mouths of children for luxurious wealth of the rich. It cannot be justified and to take funding from the industry is like accepting 30 pieces of silver – the price for selling out Jesus.”

“The three Abrahamic faith traditions of Islam, Judaism and Christianity all speak strongly regarding usury, the charging of excessive interest rates, and this bill brings with it annual percentage rates of 208%,” said Rachel Gunter Shapard, of the Cooperative Baptist Fellowship of Florida. “We have seen members of our congregations and those in the communities around them fall victim to the debt trap that this type of loan supported by this bill creates.”

Payday lenders claim they need a new product in Florida to avoid falling under a rule by the federal Consumer Financial Protection Bureau, which is meant to protect people from long-term debt traps. But the CFPB rule is under attack in Washington and may never take effect.

The bill is opposed by the Cooperative Baptist Fellowship of Florida, Florida Conference of Catholic Bishops, Florida Council of Churches, and 11th District Episcopal AME Church. Joining the faith community in opposition to this bill are Latino Leadership, Florida Prosperity Partnership, Florida Veterans for Common Sense, UnidosUS, Florida Hispanic Unity, Florida Legal Services, League of Southeastern Credit Unions, Catalyst Miami, Solita’s House, Jacksonville Area Legal Aid, Beaches Habitat for Humanity and a growing list of other organizations in Florida.

Payday Lending Bill Sponsor Makes Faulty Arguments At Florida Committee Hearing

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Testimony Clouds Debt Trap Nature of Payday Loans

Contending that a federal Consumer Financial Protection Bureau rule makes legalization of a new 200% interest payday lending product necessary, Rep. James Grant pushed HB 857 through the House Appropriations committee in the Florida legislature today. But the rule is under heavy attack at the federal level which puts its future in doubt, and it is not scheduled to take effect until August 2019.

Rep. Grant also claimed that Florida families are already protected from predatory payday lending, but the reforms passed in 2001 have not been effective in stopping the debt trap. An analysis of payday lending in Florida found that payday lenders still collect over $300 million per year from customers largely trapped in long-term cycles at annual interest rates over 200%.

The payday lenders depend on this long-term cycle, with over 83% of Florida payday loans going to people stuck in a cycle of 7 or more loans per year. Because these loans are so expensive, being unable to break free of that cycle leads families into financial devastation, causing them to get behind on other bills, lose bank accounts and be more likely to have to file bankruptcy.

Rep. Grant questioned the validity of using the APR, or annual interest rate, in evaluating payday loans, an argument the industry lobbyists have long used to hide the true costs of their products.

“Lenders are required to disclose the APR of their loans to prevent just such hidden costs, so that people can compare the true cost of one financial product to another,” said Alice Vickers, director of Florida Alliance for Consumer Protection. “Of course, APR matters in payday lending, and the fact that many borrowers are stuck in one loan after another after another for weeks, months, or years makes that true cost measure all the more relevant.”

The squabble over interest rates and the harms of payday lending came at a hearing where members praised Amscot and supported legalizing a new 200% interest loan in Florida, one that legislative staff and Office of Financial Regulation point out will cost borrowers considerably more than what is currently allowed. Rep. Bruce Antone pointed out the “if you get a $1000 loan, you’re going to pay back $345 (in fees) ninety days later. That is a huge amount of money!”

“This simply adds another 200% interest tool to the toolkit of a predatory business,” said Rev. Rachel Gunter Shapard. Shapard testified at the hearing on behalf of over 50 faith leaders who signed an open letter opposing the bill.

Calls to kill the bill also came last week from the Florida AARP, the Florida NAACP, more than 50 faith leaders from across the state, and the Archbishop of Miami.  The Florida Catholic Conference, National Association of Latino Community Asset Builders, Florida Prosperity Partnership, Florida Veterans for Common Sense, the Cooperative Baptist Fellowship of Florida, UnidosUS, Florida Hispanic Unity, Florida Legal Services, League of Southeastern Credit Unions and many others have also voiced their opposition.

HB 857 and its companion in the Senate, SB 920, would allow loans twice as large as the current limit, up to $1,000, with 60- to 90-day terms and annual interest rates over 200%. According to an analysis from the Florida Office of Financial Regulation, a borrower in debt for 60 days currently pays $110 in fees for $1,000, but would pay $214.68 under SB 920. And payday loans financially devastate borrowers because they are structured to keep them paying the triple-digit fees over months or years, whether they are short or longer-term loans.

Faith leaders and a former payday borrower spoke out in a press conference last Thursday

“On behalf of the millions of people that have actually been involved in this type of predatory lending, you start off as a customer but you eventually become a victim…I quickly found one $425 payday loan put me in a spiral to where when the next payday came the money that I had to pay to the loan would make me short somewhere else…It is just a treacherous trap and a juggling game. You are not borrowing from Peter to pay Paul, you’re borrowing from the devil to pay the devil.” — Elder Wayne Wright, Mt. Olive Primitive Baptist in Jacksonville.

“I serve in a community in one of the toughest hit areas of … I represent 236 churches throughout Florida where we have looked in our communities and found that payday lending is set up in communities least able to afford opposition to those lenders… This bill would not reform payday lending even though it is badly needed, but instead…it would add another type of high-cost debt trap payday loans to the toolkit of payday lenders.” — Pastor Lee Harris, Mt. Olive Primitive Baptist in Jacksonville.

“It is an injustice to punish those or to box persons in who find themselves needing assistance.” — Bishop Teresa Jefferson-Snorton, 5th District of the CME Church, Florida.

“I consider it an economic justice issue, it is a consumer protection issue for the poor and often the not-so-poor, who need a quick loan to cover some unexpected expense, but they’re invited to their own financial funeral and interment.” — Bishop Adam J. Richardson, 11th District of the AME Church, Florida.

“Why are Florida lawmakers listening to payday lenders and not to those of us who have our fingers on the pulse of the communities that are hardest hit by predatory lending?” — Rev. Rachel Gunter Shapard, Cooperative Baptist Fellowship of Florida.

“It seems it’s open season for vultures to take advantage of the most vulnerable members of our society…The payday lending industry raked in more than $300 million last year and we need to think of that $300 million as peanut butter and jelly sandwiches for our poorest children.” — Rev. Dr. Russel Meyer, Florida Council of Churches.

In a letter, civil rights attorney Benjamin Crump expressed opposition to the bill:

“Payday lending puts the burden of extremely high interest rates on people of extremely low means. And these loans offer no value but instead serve to systematically redistribute wealth from low-wealth communities to large, corporatized predatory lenders. And as with so many other issues, this is one that has a devastating impact to the fabric of Black and Latino communities… We cannot in good conscience let a sophisticated means of exploitation, especially one that can be resolved with such a simple solution, continue to destroy good and decent people. Florida lawmakers should reject this new product and instead pass a usury cap on payday loans – just as people across this state are asking them to do.”

Rev. James T. Golden, social action director of the AME Church in Florida, gave committee members an impassioned plea:

“The reality is that on a per annum basis, all of the products that have been produced for consideration by the legislature in Florida have triple-digit interest rates. While we debate this in the two hours that have been granted, there are people who have to live with this for six months, or for a year. And the reason we complain is that they live with this much longer than that because these products keep them in debt, keep them from being able to move beyond the sad state that they find themselves in….

…I find it very difficult to be sympathetic to multi-millionaires sitting in here saying to you, we need help, when you all know that the resources this preacher and I bring to bear on this situation doesn’t come with one campaign contribution. But it comes with a heartfelt plea to you to do the right thing by the people who couldn’t come here today. Do the right thing by the people who couldn’t lift their voices because they’ve been too busy paying off these loans they’ve gotten from the industry.

Faith Leaders Speak Out, Send Open Letter to Florida Lawmakers on High-Cost Payday Lending

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Lawmakers Should Listen and Put the Brakes on
Bill Expanding 200% Payday Lending in Florida

As Florida lawmakers move a bill legalizing a new 200% interest payday loan through legislative committees, faith leaders are urging them to kill the bill and get serious about reforming predatory lending in the state.
An open letter signed by 56 faith leaders from across the state, along with the AME Church of Florida (consisting of more than 400 churches), National Baptist Convention USA, Inc., Cooperative Baptist Fellowship, and Ecumenical Poverty Initiative, asks lawmakers to stand up for Floridians and against predatory lenders by voting against SB 920/HB 857. That proposal would let Florida payday lenders make larger, more expensive loans in addition to those that already flood low-income communities in the state.
As described in the letter:
Predatory payday lenders cause serious damage to our communities. They target and exploit those in the most vulnerable situations by giving them high interest loans. These loans, which often carry triple-digit interest, trap borrowers in an unaffordable cycle of debt. Often these borrowers come to our churches and community services after payday lenders have already drained all their financial resources and crushed their spirits. This is detrimental to both the borrowers’ financial security, emotional and financial strength of families, and our ability to provide aid to our community. 
In a conference call this morning, several of those leaders spoke out against the bill, citing cases where members of their congregations had been caught in the debt trap of payday lending. On the call were Rev. Rachel Gunter Shapard, Cooperative Baptist Fellowship of Florida, Bishop Adam J. Richardson, 11th District of the AME Church, Florida, Pastor Lee Harris, Mt. Olive Primitive Baptist in Jacksonville, Elder Wayne Wright, who has been personally impacted by payday loans, Rev. Dr. Russell Meyer, Florida Council of Churches and Bishop Teresa Jefferson-Snorton, 5th District of the CME Church, Florida.
The proposal would allow loans twice as large as the current limit, up to $1,000, with 60- to 90-day terms and annual interest rates over 200%. According to an analysis from the Florida Office of Financial Regulation, a borrower in debt for 60 days currently pays $110 in fees for $1,000, but would pay $214.68 under SB 920. And payday loans financially devastate borrowers because they are structured to keep them paying the triple-digit fees over months or years, whether they are short or longer-term loans.
A representative of Amscot, a large payday lender, testified at a committee hearing that his company needs the new law because the federal Consumer Financial Protection Bureau released a new rule impacting his business. That rule would require payday lenders to assess the ability of borrowers to repay their loans, something most lenders already do. The rule is not scheduled to take effect until August of 2019, and it is under attack by members of Congress and the new director of the Consumer Bureau, so it may not ever be put into place.
The FL NAACP, the AARP, the Florida Catholic Conference, National Association of Latino Community Asset Builders, Florida Prosperity Partnership, Florida Veterans for Common Sense, the Cooperative Baptist Fellowship of Florida, UnidosUS, Florida Hispanic Unity, Florida Legal Services, League of Southeastern Credit Unions and many others are among the many groups who oppose legalizing a product that would snare borrowers in a debt trap even deeper and more damaging than traditional payday loans.