Usury, Banking, and People of Faith
While Christianity, Judaism, and Islam all teach that usury is wrong, their members apparently cannot get enough of it.
What else explains the following?
The First Premier Bank has offered a credit card with 59.9% interest rate readjusted from 79.9% complete with a $45 processing fee to open the account, an annual fee of $30 for the first year, a $45 fee for each subsequent year and a monthly servicing fee of $6.24.[1]
Over 700,000 Americans signed up for the card and the bank receives 200,000 to 300,000 new applicants monthly for the card.
Mexico, too, faces a variant of interest rate predators that many would argue should shock the conscience. Wal-Mart stores south of the border issue credit cards that have a 69.9% annual interest rate. Costco’s Mexican division offers a credit card at a 53.31% interest rate, financed by Citibank. [2]
But these are low interest plans when compared to what goes on in Brazil. The Economist’s “Survey of International Bank” of May 20, 2006 reports that the average Brazilian interest rate on credit cards is 222%. While conservative commentators will point out the many benefits of capitalism’s contributions to our quality of living, a variant of capitalism exists that seems to do anything it can get away with.
That charging high interest is a sin (some will argue charging any interest at all) is a belief of these three religions.
Whether you read the New Testament, the Koran or the Torah, that is the meaning of usury. In the Book of Ezekiel one can find a passage mentioning usury as a transgression punishable by extreme measures: “where one man engages in filthy practices with his neighbor’s wife, another defiles himself with his daughter in law, another violates his sister, his own father’s daughter; where people take bribes for shedding blood; you charge usury and interest, you rob your neighbor by extortion, you forget all about Me. It is the Lord Yahweh who speaks … I mean to disperse you throughout the nations, to scatter you to foreign countries, and to take your foulness from you and so you will learn that I am Yahweh.” (Ezekiel 22:12,15-16)
Elsewhere in the Bible, the taker of interest is simply described as a “wicked man” (Proverbs 28:5,8), whereas the one “who does not ask for interest on loans” is a man who has the right to “enter Yahweh’s tent” and live on His “holy mountain” (Psalms 15:1-5). By the fifth century, the Church prohibited the taking of interest by both clergy and laity, and by the eighth century under Charlemagne usury was criminalized.[3]
Pope Leo XIII denounced usury as an evil “condemned frequently by the church but nevertheless still practiced in deceptive ways by avaricious men.” In 1311 Pope Clement V had issued a strict ban on usury and invalidated all secular laws allowing it. Of course, Luke 6:34 makes quite clear that Christians should not lend at interest. It reads:
“And if you lend to those from whom you expect to receive, what credit is that to you? Even sinners lend to sinners, to get back the same amount.”
In the Islamic world, many societies have developed a banking system to avoid usury.
The core theme of Islamic finance is the “equity shared partnership”. Rather than gouging interest from a borrower, the lender shares the risk as well as the ownership of the business or property.
In the United States, in a banking system dominated by Christians and Jews, this is simply not done. In fact, the banking industry in the United States has historically endeavored to make entrepreneurs dependent on usury by lobbying for tough laws to make it cumbersome, expensive, and legally dangerous to sell stock to the public (thus avoiding having loans to pay back).
Law professor Paul G. Mahoney of the University of Virginia presented the reasons why states regulate securities sales so strictly. He traces Blue Sky laws as a researcher of economic as well as legal history and discovered that a major impetus for securities regulation was the influence of small banks fearful of losing deposits from the competitive economic opportunities offered by securities investments.
This is classic dirty pool on a very significant scale. The bankers used their political influence in the first quarter of the 19th century, when virtually every state enacted a Blue Sky law, to freeze out investment opportunities by lobbying for a heavy handed state over regulation of securities offerings. Not only did they deprive investors of freedom of choice as to where to place their money, but they also hurt the entrepreneur seeking to raise money to provide goods and services, innovation and jobs to the public.
It was the economic self interest of the banks to force entrepreneurs to borrow from them and pay the interest to them, rather than to float equities and they have succeeded in a way that survives today, where small entrepreneurs can rarely raise equity capital without running afoul of a complex maze of state and federal securities laws.
Fast forward to 2011. America is dealing with a mortgage crisis of mammoth proportions. A quarter of America’s homes have mortgages greater than their value.
Millions of homeowners have lost their houses to foreclosure.
This has been the result of a system based on usury.
Lenders had no qualms about lending at “subprime” rates (high interest) and borrowers were so desperate to get those high interest loans (that they could not possibly keep up with) that many lied to get them.
The ripple effect hit the derivatives market precipitating losses that some say will exceed a quadrillion dollars, or at least in the trillions. [5]
Thus the “reward” of a usury based banking system has been financial disaster.
Americans could try a banking system based on Biblical laws, incorporating the prohibitions against usury and the benefits of equity shared partnerships.
Meanwhile, Americans face harassment and litigation when they are unable to repay the issuers of the plastic Shylock in their wallets.
But recently, hope came to millions of usury oppressed credit card customers when a Salem Massachusetts Superior Court judge, Robert Cornetta ruled that Citibank’s interest rates, (which climbed to 54%) were so “outrageous that they should not be enforced [6]. He declared also that any interest rate beyond 18% was unconscionable.
Mainstream media virtually ignored the story. Even the legal community has little knowledge of the decision.
Although there are many “Christian” commentators, politicians and evangelists in America, very few comment on the usury issues presented by credit cards or other lending practices.
Did you ever hear Ann Coulter or Sean Hannity talk about credit card interest or usury? Did you ever hear Pat Buchanan or Laura Ingraham talk about credit card interest or usury?
How many ministers, priests, or rabbis discuss the issue? I’ve asked rabbis and even a rabbinical court to get involved, no favorable responses.
Usury is rather a social and moral issue affecting an individual’s opportunity to participate in the economy without suffering an oppressive result. I know that usury destroys families, drives people to substance abuse, foreclosure, bankruptcy and even suicide.
Simply put, one need not be religious to know usury is wrong.
Individuals do not have to submit to the harassment and abuse of credit card companies, their lawyers or their collection agencies. People have the right to represent themselves in court, without lawyers, to challenge the plastic predators when they come for a part of flesh.
A little knowledge will go a long way.
About the author
David Grossack, a nationally prominent lawyer, is founder of the Citizens Justice Association which trains laypersons in the techniques of litigation. It is also concerned with the role of usury in the legal and currency system. More information is available from CJA Box 390979 Cambridge, MA 02139. Donations are tax-deductible.
NOTES
- See Associated Press, Dec. 17, 2009
- “Interest rates soar as credit tightens in Mexico” USA Today 11/13/2008
- A short review of the historical critique of usury. Wayne Visser and Alastain McIntosh. Accounting, Business and Financial History, July 1998
- The origins of the Blue Sky laws a test of competing hypothesis. Paul G. Mahoney. UVA Law and Econimics Research Papers No. 01-11
- San Diego Reader. Quadrillion by Don Baver. Sept. 17, 2008
- Gloucester Times, Jan. 6, 2011
