Is 10% Enough? Beginning the Dialogue
n the past year, over 200 B’nai Jeshurun members have sought assistance as they struggle with
unemployment. This, however, is not the only source of financial strain. People all over the country are hurting because of crushing debt and exorbitant interest rates brought on by, among other causes, irresponsible lending practices. We don’t often talk about these private matters in the public sphere, but how many of our relatives, neighbors, friends, and fellow BJ members are struggling with crippling interest rates and experiencing difficulty navigating the complicated terms of credit card agreements? Are you affected by this issue?
We have heard a lot about the big lenders and their troubles in the economic crisis. However, most of us are not lenders—we are borrowers, and it is through that lens that we experience the lending industry. The average American household has nearly $8,700 in credit card debt.
Add to that mortgage payments, home equity lines of credit, student loans, small business loans, car payments, and it becomes clear that our collective experience in the economy is primarily as borrowers. The terms under which we borrow money—interest rates, fees, period of repayment—dramatically influence our financial security.
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Interest rates have reached new heights; credit cards regularly charge interest rates upwards of 30%. And in poorer communities payday loans charge an annualized interest rate of over 300%. The question is: what is enough?
Is 10% Enough? Beginning a Dialogue
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This year Congress took steps toward credit card reform by creating some guidelines around fees, notifications, and payments. However, local community leaders from congregations from around the country have said that this is not an adequate response to what is a more far-reaching problem, and they are calling on our nation’s leaders to reinstate usury laws by capping interest rates at 10%.
Limiting interest rates is not a new idea. Until laws against usury were repealed in this country three decades ago, interest rates were capped, with some exceptions, at 9%. A series of laws passed in the 1980s and 1990s fundamentally changed the nature of lending in the United States.
Communities across the U.S. have started to come together to say 10% is enough.
Why that amount? Because 10% interest is enough for our nation’s banks to operate profitably without exploiting borrowers. Obviously, the lending industry and its employees make a significant contribution to our society. They provide needed resources that allow our families or businesses to thrive. In addition, banks have rights, as well as economic exigencies. The idea is that 10% puts proportion and equity into the relationship with the borrower and restores our capacity to form right relationships. Also, moral and civic prohibitions against usury stretch back deep in our religious and national history. By speaking out, we are saying that we don’t have to be economists or financiers to see abuse and name it. Borrowers must be accountable for their own finances and for
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By beginning to tell this story, and at the same time, discussing the shared teaching of the Jewish, Christian, and Muslim faiths against usury, we elevate the public discourse and we learn about each other.”
accepting loans within their means. Part of this campaign is to educate people to be informed borrowers and to encourage people to live within their means as best they can. Still, as a primary driver of our economy, the lending industry could be held to a higher standard.
There is an exciting coalition working on this issue. It includes 17 of Metro IAF’s (Industrial Areas Foundation) broad-based citizen power organizations from all over the country as well as member organizations in the United Kingdom. Affiliated coalitions in the New York area include: Manhattan Together, East Brooklyn Congregations, South Bronx Churches, Long Island CAN, Empowering Queens United in Action, and Leadership. B’nai Jeshurun is a member of Manhattan Together, and through Panim el Panim, BJ’s organizing and advocacy initiative, we are able to work with other congregations and nonprofits from across New York City on issues of justice and common concern.
Congregations that are part of Metro IAF have begun to conduct surveys and host small group meetings to assess the kinds of high-interest debt people in our communities are accruing. Some members were surprised to realize how much of their budget went toward paying down interest on usurious loans. Have you ever spent time while paying bills contemplating how much easier it would be to save money or make
In the past year, over 200 B’nai Jeshurun members have sought assistance as they struggle with unemployment. This, however, is not the only source of financial strain. People all over the country are hurting because of crushing debt and exorbitant interest rates brought on by, among other causes, irresponsible lending practices. We don’t often talk about these private matters in the public sphere, but how many of our relatives, neighbors, friends, and fellow BJ members are struggling with crippling interest rates and experiencing difficulty navigating the complicated terms of credit card agreements? Are you affected by this issue?
We have heard a lot about the big lenders and their troubles in the economic crisis. However, most of us are not lenders—we are borrowers, and it is through that lens that we experience the lending industry. The average American household has nearly $8,700 in credit card debt.
Add to that mortgage payments, home equity lines of credit, student loans, small business loans, car payments, and it becomes clear that our collective experience in the economy is primarily as borrowers. The terms under which we borrow money—interest rates, fees, period of repayment—dramatically influence our financial security.
Interest rates have reached new heights; credit cards regularly charge interest rates upwards of 30%. And in poorer communities payday loans charge an annualized interest rate of over 300%. The question is: what is enough?
This year Congress took steps toward credit card reform by creating some guidelines around fees, notifications, and payments. However, local community leaders from congregations from around the country have said that this is not an adequate response to what is a more far-reaching problem, and they are calling on our nation’s leaders to reinstate usury laws by capping interest rates at 10%.
Limiting interest rates is not a new idea. Until laws against usury were repealed in this country three decades ago, interest rates were capped, with some exceptions, at 9%. A series of laws passed in the 1980s and 1990s fundamentally changed the nature of lending in the United States.
Communities across the U.S. have started to come together to say 10% is enough. Why that amount? Because 10% interest is enough for our nation’s banks to operate profitably without exploiting borrowers. Obviously, the lending industry and its employees make a significant contribution to our society. They provide needed resources that allow our families or businesses to thrive. In addition, banks have rights, as well as economic exigencies. The idea is that 10% puts proportion and equity into the relationship with the borrower and restores our capacity to form right relationships. Also, moral and civic prohibitions against usury stretch back deep in our religious and national history. By speaking out, we are saying that we don’t have to be economists or financiers to see abuse and name it. Borrowers must be accountable for their own finances and for accepting loans within their means. Part of this campaign is to educate people to be informed borrowers and to encourage people to live within their means as best they can. Still, as a primary driver of our economy, the lending industry could be held to a higher standard.
There is an exciting coalition working on this issue. It includes 17 of Metro IAF’s (Industrial Areas Foundation) broad-based citizen power organizations from all over the country as well as member organizations in the United Kingdom. Affiliated coalitions in the New York area include: Manhattan Together, East Brooklyn Congregations, South Bronx Churches, Long Island CAN, Empowering Queens United in Action, and Leadership. B’nai Jeshurun is a member of Manhattan Together, and through Panim el Panim, BJ’s organizing and advocacy initiative, we are able to work with other congregations and nonprofits from across New York City on issues of justice and common concern.
Congregations that are part of Metro IAF have begun to conduct surveys and host small group meetings to assess the kinds of high-interest debt people in our communities are accruing. Some members were surprised to realize how much of their budget went toward paying down interest on usurious loans. Have you ever spent time while paying bills contemplating how much easier it would be to save money or make ends meet if you didn’t have high-interest debt? I certainly have!
Since this campaign began, a series of events has taken place, with concerted efforts on July 22, 2009, in Washington, DC (100 people), New York (275 people), Durham, NC (50 people), Chicago, IL (50 people), Boston, MA (100 people), London, England (200 people), and on October 2, 2009 in Charlotte, NC (500 people). Small groups representing these large assemblies requested meetings with Bank of America, Wachovia, Citigroup, JP Morgan Chase, Boston Federal Reserve Bank, Royal Bank of Scotland as well as with New York Attorney General Andrew Cuomo. It is not every day that ordinary citizens from communities of faith walk into a bank and say, “We would like to begin a dialogue on your institution’s lending practices and their impact on our communities.” Additionally, IAF has initiated conversations with US Senators and other elected officials with whom we have built relationships over many years working on issues as diverse as affordable housing, public education, the living wage, health care, and the environment.
This is a great opportunity for members of B’nai Jeshurun to work with the other congregations of Manhattan Together on an issue of common concern, because I suspect that we are all affected. But first, we need to begin the conversation right here at B’nai Jeshurun. The Panim el Panim Task Force began by having one-onone conversations this summer, to see how the issue resonated with our lay leaders. We were surprised how readily stories of personal experience with the problem emerged. The discussion clearly energized our lay leaders. And now, Panim el Panim will be working to initiate these conversations with a broader cross-section of the community. We want to talk to everyone. We want to talk to those who have experience as borrowers, as well as people who work in finance and understand the complexities of the lending industry. We want to get a handle on how much our particular community is affected.
We can look to Jewish texts for wisdom on the relationship between borrowers and lenders. The Torah says: “You shall not take interest on him” (Exodus 22;24). Sefer HaChinuch, a book created to explain the ideological basis for the Commandments, says, ”According to the normal morality of the world, one should be entitled to charge for the use of one’s money. However since the whole purpose of the mitzvot is to purify the soul, God instructed us to give up that which is acceptable by normal moral standards.” By the Middle Ages the complexities of the market led the Rabbis to create a form called Heter Iska by which interest could be charged while controlling possible abuses. We could say that as vegetarianism can be considered the highest degree of kashrut, a free loan would be the highest degree of loan. If that is not possible, limits must be in place in order to benefit the borrower and not to generate more poverty, thereby necessitating more need for tzedakah. In order for our community to engage in a real dialogue, we must study and learn together. Then we can bring our own teachings to the table for interfaith study with our partners in Manhattan Together.
I’ve used the term “usury” a lot here. The history of discourse on the Jewish community and “usury” has been complicated and, at times, anti-Semitic. Panim el Panim leaders who participate in the strategy team of Manhattan Together have already brought this issue to the discussion. If the Jewish congregations of Manhattan Together and other IAF affiliates are going to have a public voice on the issue, then we must learn about this history together. At one meeting, a leader from an African American church in Queens said, “What history? You guys have baggage too?” And so we started to tell our story about the history of Jews being restricted to the Pale of Settlement, about restrictions on land ownership and professions, about the role of some Jews as lenders. We told of the stereotype of the Jew as usurer perpetuated in Eastern European by government and Christian authorities alike, a stereotype that has hurt Jews at times all over the world. But, by beginning to tell this story, and at the same time, discussing the shared teaching of the Jewish, Christian, and Muslim faiths against usury, we elevate the public discourse and we learn about each other. That is what it means to do interfaith work for justice. We need not be held hostage by this history; we can take a stand on this issue if we decide as a community it is important to us, because it affects our neighbors and ourselves.
B’nai Jeshurun alone can have no impact on an issue of national concern like usury. But through strategic action, by engaging our leaders and public officials, and building relationships in coalition with communities like ours all across the country, we can make change happen. This is the foundation of all of our social justice work. In each of our Panim el Panim campaigns, from Marriage Equality to Domestic Workers’ Rights, we partner with other organizations to make change in our city and state, and now our country.
This is just the beginning of a conversation. Panim el Panim would like to ask BJ members, are you affected by this issue?
— Channa Camins, Director of Social Action/Social Justice
To get involved, contact Channa Camins at x259.
Quoted Sources:
http://www.federalreserve.gov/ econresdata/releases/statisticsdata.htm
http://www.10percentisenough.org/sites/ default/files/documents/History of Deregulation.pdf
http://www.10percentisenough.org/sites/de fault/files/documents/Metro IAF background paper.pdf
http://www.10percentisenough.org/
IAF’s experience building Nehemiah Housing in NYC means that they bring hands-on experience to the table, providing credit for low-income homebuyers. Nehemiah houses have a remarkably low rate of foreclosure in the midst of this economic crisis. For more information, http://www.npr.org/templates/story/story.php?storyId=113931948.
