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Payday lending debated at church

A faith-based public policy group opposes payday loans because it says they exploit the poor and that borrowers are encouraged to repeatedly roll over loans.

"We care about all victims of poverty and exploitation, especially those that end up paying $793 in interest to borrow $365," said Nancy Summerlin, payday-loan issue coordinator for the Presbytery of the James.

But that figure is misleading, argues Reginald N. Jones, legislative counsel to Community Financial Services Association, a trade group for the biggest payday lenders.

"I wish the opponents would get their facts checked. For example, that $793 includes the original $365 loan," said Jones, who was recently dropped by the state's credit unions because some of them objected to his dual role as their lobbyist and an advocate for the trade association.

Payday loans "give people a place to obtain credit with dignity," he said.

Several dozen people heard the rationale for and against payday loans yesterday during a 90-minute presentation at Second Presbyterian Church in downtown Richmond.

Capping the loans at a 36 percent annual interest rate is a top legislative priority of the Virginia Interfaith Center for Public Policy, which includes 21 diverse faith groups, several faith-based organizations and hundreds of congregations and individuals throughout the state.

The lenders attract borrowers because, unlike banks and credit unions, they don't run credit checks. Payday lenders have flourished since Virginia was opened to the loans in 2002.

The 217th General Assembly of the Presbyterian Church approved a report on "A Reformed Understanding of Usury for the Twenty-First Century." Recommendations include supporting financial literacy as well as advocating for stricter interest limits and enforcement of laws protecting borrowers from excessive credit costs.

Jesus identified with the needs of the exploited, Summerlin said. Churches that are indifferent "make a mockery of Christ's ministry . . . and offer no acceptable worship to God."

Source : http://www.myfoxmemphis.com