A new study co-written by a U professor found that a higher number of payday lenders exist in conservative Christian states, including Utah.
Payday lenders normally offer a loan in exchange for a personal check, which the lender agrees not to cash until the borrower’s next payday. However, people must pay a steep interest rate to get a loan.
According to the study, the finding is unusual because traditional biblical beliefs condemns usury, the practice of lending money at exorbitantly high interest rates. Additionally, laws prohibiting usury exist in many states because the practice, used by short-term lenders who charge interest rates in excess of 400 percent, is seen as exploitative of people who most need the money.
“We’re talking about a $40 billion-a-year industry, and there is a significant social cost that must be paid for by all members of society,” said Steven Graves, an associate professor of geography at California State University, Northridge, who co-wrote the study. “For some people payday loans are a debt trap. A lot of people don’t just take out one or two but 13.”
Graves and Christopher Peterson, a U law professor, said they started the project hoping to find more information about the spatial location of payday lenders and were surprised when a pattern emerged reflecting a correlation with the American Bible Belt and Christian Mountain West.
“Per capita, Utah has the ninth highest density of payday lenders in the nation,” Peterson said. “South Salt Lake has the distinction of having the ZIP code with the worst payday lending problem in the state, and that’s ZIP code 84115.”
The study will be published in an article about the spatial location of payday lenders in the Catholic University Law Review this spring.
The article examines the payday lending problem on a state-by-state basis now that there is increasing involvement in politics by the Christian right, Peterson said. He said that many Christian leaders receive large donations from those in the credit industry.
“It does seem that in recent years conservative Christians have aligned themselves with powerful pro-business Wall Street interests,” Peterson said. “Consumer protection law, including usury, became a neglected issue in the 1980s and early ’90s because it was a point on which those two groups had traditionally disagreed. So, in order to preserve that political alliance, usury law has become a secondary issue.”
Peterson said the study hopes to give lawmakers and church leaders insight into the problem of payday lending.
“Our findings should serve as a wake-up call, reminding Christian leaders of the biblical duty to expel usurious money changers from their flocks,” he said.