An activist New Jersey pastor has decided to take his economic-focused gospel across the country. Rev. Dr. DeForest Soaries, senior pastor of the 7,000 member First Baptist Church of Lincoln Garden in Somerset, NJ is launching a national effort against one of the most predatory lending products: payday loans.
This church-based movement was inspired by hundreds of contacts and phone calls Soaries received following his appearance in a 2010 CNN documentary, Almighty Debt. Hosted by Soledad O'Brien, the documentary shared the financial struggles of Lincoln Garden members facing foreclosure, finding student financial aid and adjusting to long-term unemployment.
According to CNN, the documentary also became the network's second-highest rated program that year with 13.8 million viewers. Now in 2012, what began as a 90-minute television program has become the impetus for a year-long advocacy effort with four specific objectives:
â–ª Education – information distributed through churches, barbershops, community centers;
â–ª Direct Action – coordinating a series of protests in front of payday stores;
â–ª Alternatives to payday loans – identifying viable alternatives available through credit unions, minority banks and other lenders; and
â–ª Public policy – working with local leaders to initiate actions to restrict payday and other predatory practices.
In the January 2012 edition of the American Bar Association's journal, Pastor Soaries said in part, "Too many Americans find themselves in the perfect storm of diminishing economic opportunity and legal predatory financial practices that have a reverse Robin Hood effect – stealing from the poor to benefit a few voracious enterprises."
"What is needed is a national campaign that addresses the aggressive efforts of promoting payday lending and luring customers into their web of debt", continued Soaries.
Over the past decade, the ills of payday lending have been a focus of the Center for Responsible Lending. Through a series of state-based efforts partnering with local advocates, 17 states and the District of Columbia have enacted payday reforms, saying 'no' to triple digit interest rates and downward spiraling debt. Additionally, federal law protects military members and their families from the typical 400 percent interest rates of payday loans.
In recent years, however, the growth of new versions of small-dollar, short term loans — Internet and bank payday loans — threaten to circumvent all of these hard-fought consumer victories. In particular, bank payday loans lead to 175 days of indebtedness for the average borrower – twice as long as the maximum length of time the Federal Deposit Insurance Corporation has advised.
With many banks allowing up to half of a customer's monthly direct deposit income, or up to $750, an average 44 percent of a bank payday customer's next deposit is used to repay bank payday loans. For older borrowers already living on fixed incomes, the average bank payday loan repayment from a Social Security check was 43 percent. Senior customers are also 2.6 times more likely to have used a bank payday loan than bank customers as a whole.
Even without bank payday loans, more than 13 million older adults are considered economically insecure, living on $21,800 per year or less. One-fifth of older households have annual incomes below $50,000 but report spending more than 40 percent of their income on debt payments.
CRL research has shown that communities of color are particularly vulnerable to payday loans. Across the country, the concentration of storefront lenders is typically greater in black and brown communities. Additionally, Missouri is the only state outside the Deep South with the greatest number of payday stores per capita.
Persons and organizations desiring to join the advocacy effort are advised to contact Pastor Soaries at: [email protected]
CRL is ready and willing to work with Pastor Soaries, other clergy and community leaders across the nation to eliminate the financial degradation wrought by payday loans. Let 2012 be the year our community is freed from this 'almighty debt'.