The Cooperative Baptist Fellowship and the Southern Baptist Convention are among a coalition of faith groups applauding the recent repeal of a government rule they say expanded predatory lending.
Opposition to payday loans and other forms of high-interest lending to low-income people is at the center of faith to lend justly, an unusually diverse group that includes Catholic Charities, CBF, SBC Ethics and Religious Liberty Commission, Faith in Action, National Association of Evangelicals, National Baptist Convention USA, National Latino Evangelical Coalition, Church Episcopal Church and the United States Conference of Catholic Bishops.
On June 30, President Joe Biden enacted a measure that repealed the “true lender” rule enacted by the Office of the Comptroller of the Currency in the final days of the Trump administration. That administration — and many of its Republican allies in Congress — had sought to undo several previously enacted protections against predatory lending.
In short, the last-minute rule passed in October 2020 allowed payday lenders to collaborate with out-of-state banks and thereby avoid bans on predatory lending in states that had banned them.
Eight state attorneys general had sued the federal government to prevent the rule from taking effect, arguing that it sanctioned “high-cost loan programs designed to evade state usury laws.”
“Payday lenders will no longer be allowed to overturn existing state laws and exploit vulnerable people with outrageous interest rates on short-term loans.”
The Senate was the first to pass the bill to overturn the rule, which she did by a vote of 52 to 47 in May. The House of Representatives passed the bill by a vote of 218 to 208 on June 24.
Of both houses of Congress, only four Republicans backed the repeal effort, which was favored by all Democrats. The four Republicans who voted to repeal were Senator Susan Collins of Maine, Senator Cynthia Lummis of Wyoming, Senator Marco Rubio of Florida and Representative Glenn Grothman of Wisconsin.
The passage of the bill to repeal the rule is “great news,” said Stephen Reeves, who leads advocacy efforts for CBF and has worked for several years to educate congregations about the dangers of payday loans.
The repeal of the rule “is a welcome change, and we are grateful to Congress for passing this legislation and to President Biden for signing it into law,” said Daniel Patterson, acting chair of the SBC Ethics and Religious Liberty Commission. Baptist Press. “Payday lenders will no longer be allowed to overturn existing state laws and exploit vulnerable people with outrageous interest rates on short-term loans.”
For his part, Biden said the short-lived rule would have allowed lenders “to prey on veterans, seniors and other unsuspecting borrowers, … trapping them in a cycle of debt.”
Payday loans and other similar products often carry effective interest rates of 400% or more. They also typically trick desperate lenders into schemes that force them to rollover loans from payday to payday, often with no viable exit to what could have started as a loan of a few hundred dollars.