Home arrow Articles arrow POWER FLOWS TO MANIPULATORS OF MONEY arrow PREDATORY LENDING
Home
Articles
Bible Studies
PREDATORY LENDING PDF Print E-mail
Written by Jim Jordal   
Friday, 12 December 2008

PREDATORY LENDING

By Jim Jordal

Woe to those who devise iniquity and work evil on their beds! When the morning is light, they practice it, because it is in the power of their hand. They covet fields, and seize them; and houses, and take them away: and they oppress a man and his house, even a man and his heritage. Therefore thus says Yahweh: "Behold, I am planning against these people a disaster, from which you will not remove your necks, neither will you walk haughtily; for it is an evil time.

Micah 2:1-3 (WEB)

He has shown you, O man, what is good. What does Yahweh require of you, but to act justly, to love mercy, and to walk humbly with your God? Yahweh's voice calls to the city, and wisdom sees your name: "Listen to the rod, And he who appointed it. Are there yet treasures of wickedness in the house of the wicked, and a short ephah that is accursed? Shall I be pure with dishonest scales, and with a bag of deceitful weights? Her rich men are full of violence, her inhabitants speak lies, and their tongue is deceitful in their speech. Therefore I also have struck you with a grievous wound. I have made you desolate because of your sins.

Micah 6:8-13 (WEB)

Predatory lending of the type recently seen in the sub-prime mortgage and credit card industries seriously violates God’s law concerning economic justice for members of society.

Predatory lending could be defined as the attempt by persons or groups with available money to further victimize the most economically vulnerable members of society by implementing lending practices based on deceit, impossibly-high interest rates, and difficult, often-changing conditions of repayment. This includes low "teaser" rates, "no documentation" loans, and seducing people who could qualify for better loans into accepting sub-prime loans. It also means falsified levels of income, severe pre-payment penalties for some sub-prime loans, and inflated market values of homes in order to obtain larger loans—and I’m sure I’ve forgotten some other "gems" of fraudulent or misleading lending behavior. In the credit card business this means raising interest rates arbitrarily, often without adequate notice; increasing interest rates of one loan based upon the performance of others (universal default); and increasing rates because of totally irrelevant conditions in the market place. Again, I’ve probably missed quite a few because I don’t lie awake at night thinking of ways to take advantage of the poor.

This form of lending is especially egregious because it preys upon those least able to protect themselves from economic harm. People with adequate economic resources do not need predatory loans—if they need extra money they can cash in investments or qualify for regular loans at much reduced interest rates. They do not live one or two paychecks from financial disaster as many of the victims of predatory lending do.

A major economic message of Scripture is that lenders should not victimize widows, orphans, the poor, and other vulnerable persons. Taking advantage of the helplessness of such persons to make extra profits is anathema to God, causing Him to pronounce judgment upon persons and societies perpetrating such practices.

In the first Scripture passage above the prophet Micah charges the leaders of his people with doing exactly what I mentioned earlier: Motivated by greed and covetousness they lie awake at night devising evil against the poor. They then put their nefarious strategies into play the next morning precisely because they have the position and power to do so.

In the second passage above Micah reveals the simple desires of God for reasonable human behavior. God expects from His people and their leaders justice, mercy and humility. But that’s not what happens. Instead, God finds gross oppression of his people by those having "treasures of violence in their houses." Micah defines this evil as dishonest scales and deceitful weights and measures. Back in his day that meant actual weights and measures for grain and other produce. Today it would mean dishonest, uncertain measures of value such as the fluctuating dollar, unfair wages for an honest day’s work, falsified real estate values, and the aforementioned predatory lending which takes advantage of people’s ignorance of market conditions and the fluctuating value of almost everything.

And what is the cost of such immoral, sinful behavior? It’s much more than the suffering of the poor, terrible as that is. It's really nothing less than the breakdown of the institutions and values of our culture and the seeming abandonment of our nation by God.

Perhaps the cost is too high. Think about it.