BY: Samaria Bailey
The First Presbyterian Church of Germantown hosted a panel discussion focused on issues surrounding payday loan products on Sept. 29.
The Germantown-based One Less Foundation and the Pennsylvania Public Interest Research Group organized the event, which they said was needed to raise awareness of the high interest rates and resulting debt of payday lending.
The discussion was precluded by a brief showing of the documentary “The Ordinance,” which focused on the story of a group of Texas churches who fought to protect citizens from predatory lenders.
“The purpose of the panel was to provide … different perspectives of various groups all working on the same problem — payday loan products,” said Ingrid Shepard, One Less Foundation executive director. “Central to our work is ensuring that those we are working with have the resources available to them to create their own path without being trapped by products that ultimately hinder them from escaping poverty. So we advocate to keep these types of debt and poverty creation products out of our communities.”
Shepard added that within a three block radius of Germantown and Chelten avenues, “there are 10 check-cashing places. If we don’t work to keep payday lenders out of Philadelphia, we will have as many in a three-block radius as check-cashing places.”
The Rev. Gregory Holston, a panelist and the Economic Dignity team co-chair of Philadelphians Organized to Witness, Empower and Rebuild (POWER), said although such loans are supposed to be used for emergency situations, they are really covering everyday expenses for people who are struggling.
He stated that in the zip code his church is located in, 19140, the poverty rate “ranges from 40 to 50 percent. People in those situations are extremely desperate.” These circumstances, he added, result in payday loans being used to make ends meet.
Kerry Smith, a panelist and an attorney with Community Legal Services, said if payday lenders have a license from the state’s banking department, they can legally charge up to 30 percent annual percentage rate (APR) on a loan but that companies and lobbyists for payday lenders are working to raise them through national legislation.
“What they are trying to do right now is legalize a one-year high-cost loan. A draft bill we saw allows them to get 36 percent interest but also allows fees for any of their cost of doing business,” said Smith. “There’s no maximum cap on the fees that they get charged.That’s a loan that causes distress and we don’t want that here.”
Smith added that, including the fees and the 36 percent interest rate, a loan could result in a 200 percent APR being tacked on.
Holston said such practices just further debt, and in turn, poverty.
“We don’t need poverty by getting deeper into debt,” he said. “You would have to call them slaves because there is no way out of this debt trap. We can’t allow that to happen.” Holston continued that some of the responsibility of addressing the issue lies with faith-based groups.
“There is a similarity that runs through all people of faith,” he said. “There is a reference to not mistreating the poor and exploiting the poor with high interest rates. I believe that in this situation, it can be lifted up when moral people speak out.”
State Rep. Stephen Kinsey (D-201) said the presence of so many payday businesses reflects the community’s economic state. “In my district, money is an issue. Folks are looking for ways to get ahead and don’t look at the consequences,” he said.
Kinsey encouraged citizens to call their legislators if they are concerned about predatory lending or payday loan businesses in their community.
“There’s lobbyists and big money spent on legislation,” he said. “But folks need to come together to make sure their voices are heard. If it’s silent, somebody else’s voice makes the difference.”
Holston advised that when poverty is addressed, the circumstances that force people to use payday lending services would improve.
“Poverty is a money problem, so the way you end poverty is to raise the minimum wage. [So] anybody who works 40 hours a week can make a living wage. It would move … people out of poverty without having to do a payday loan.”
Smith and Shepard said citizens can visit http://stoppaydaypredators.org to find out more info on predatory lending.
