A rather depressing article in the NY Times about how late charges, penalties, post-judgment interest, and garnishments leave many debtors treading water in spite of significant payments towards their obligations on their modest wages. These payments get eaten up by interest charges, late fees, and all the other tricks of the trade.
Whatever happened to the widespread condemnation of usury? This doctrine of Christianity, widely held by everyone from Hilliare Belloc and Henry Ford to the Pope and FDR 75 years ago, has apparently fallen into complete disuse, even among Catholics and liberals ostensibly concerned with the poor. Is the fear of being labeled anti-Semitic so great that unjust practices get a pass? A mealy-mouthed discussion at Catholic Answers suggests the uncertain rates of return in the 13th Century were the root of the condemnation and the condemnation of usury is today rather narrow, viz., “In some market situations—apparently the ones prevalent in the thirteenth century—the likelihood of growing money through investment was seen as greatly uncertain. But in contemporary market situations, investment growth is virtually assured.” How quaint! As always with “changing values,” we should never forget that social life and its problems are not new. People were not simply “mean” or “stupid” in the old days. The old-fashioned prejudices and attitudes often were borne of hard experience and will re-emerge as modern fads and fashions are discredited by experience, such as our recent collective experiences with “interest only loans,” high levels of debt (labeled “leverage”), low banking reserves, financial “engineering,” moral license, disunity, and all the rest.
Times have not changed for the poor. The injustice of usury has not changed either. Modest interest rates in situations of created and secured wealth–as in real estate lending–have long been allowed, even in the Middle Ages. But charging interest for consumables is economically unwise for the borrowr, morally unjust for the lender, and the high interest rates charged can grind down the wealth and motivation of people too unsophisticated and impulsive to know better. In other words, the poor and working classes would be better off without the credit cards, payday loans, and all the rest. And the laws should give them more than the binary choice of paying down their debts or declaring bankruptcy. Their debts could be paid, but for usury.
Just as condemning usury went out of fashion, the recently dominant faith we all had in banks, experts, money-lending, and markets is fast becoming passe. On Good Friday in particular, Catholics should remind themselves what the Catechism says about the usury so central to the modern, unstable economic order of the entire world: “The acceptance by human society of murderous famines, without efforts to remedy them, is a scandalous injustice and a grave offense. Those whose usurious and avaricious dealings lead to the hunger and death of their brethren in the human family indirectly commit homicide, which is imputable to them. (CCC 2269)”