Rachel Anderson
Rachel Anderson

Rachel Anderson is director of faith affairs at the Center for Responsible Lending in Washington, D.C. 

Posts By This Author

How to Practice Safe Banking

by Rachel Anderson 01-04-2016
From churches to the FDIC, there's a new financial environment where responsible lending can flourish.
Jeff A. Moore / Shutterstock

Jeff A. Moore / Shutterstock

PAYDAY AND CAR-TITLE loans are marketed as a quick fix to help struggling families through a financial emergency. Advertised as “EZ Cash” and “24-7 Finance,” the perils of payday loans, with exorbitant interest rates upward of 300 percent, trap households in long-term debt.

The Christian witness on lending encompasses both a prohibition against exploiting the poor with excessive interest as well as a call to steward God-given financial resources. The launch of a diverse Faith for Just Lending coalition in May challenging predatory payday lending, recent state campaigns seeking to cap the rate on payday loans, and the Consumer Financial Protection Bureau’s announcement to establish rules for payday, car-title, and high-cost installment loans all signal important public steps toward the first goal: stopping unscrupulous businesses from preying on those who are poor.

Now we must examine how to steward a financial environment where responsible lending will flourish. Many of the same groups who have opposed predatory lending are now addressing how to offer credit that empowers their neighbors rather than preys upon them. In Minnesota, Exodus Lending extends low-interest loans to help individuals pay off their payday loans. In Louisiana, the Church for the Highlands partnered with other churches and a local credit union to pay off loans when the borrower cannot. (So far, no one in the program has defaulted.) Catholic Charities of Northern Kansas hosts a loan repayment pool and invites clients into a peer mentoring relationship for financial counseling.

While churches and congregations offer a uniquely relational and holistic form of lending, other institutions can also play an important role. In Mississippi, the New Roots Credit Partnership helps employers offer low-cost loans through their payroll system. Texas’ Community Loan Center of the Rio Grande Valley offers a similar program. Employer-based programs can offer a scale and an infrastructure that keep costs down.

Some have proposed converting the U.S. Postal Service into a postal bank to provide access to simple financial services, prepaid card services, and responsible small-dollar loans. Advocates see it as a “public option” for financial services built on the existing USPS physical infrastructure and repository of public trust, though it’s an option that ultimately relies on partnership with traditional banks.

Banks and credit unions will continue to be critical players in the large-scale financial services market. They are also the ones largely to blame for gaps that exist in the small-dollar credit market. Rather than finding ways to help customers manage their cash flow and build up savings, banks lie in wait, benefitting when customers trip up. Many banks and credit unions maximize their income through carefully designed overdraft programs, which account for about 60 percent of bank fee revenue. These banks assess $35 overdraft fees each time someone overdraws an account, essentially providing a high-cost form of credit that can cost households hundreds of dollars per year. For low-income households, especially those with uneven income and work hours, this amounts to one more poverty penalty.

Consuming Our Way to Compassion

by Rachel Anderson 02-04-2010

"Help us raise $10 million for Haiti!!!"

My friend Laura forwarded me this e-mail along with a note: "the subject line enticed me. Then I realized that it was a credit card offer."

Who Has Ears to Hear at Davos?

by Rachel Anderson 02-01-2010

A Broken Trust

by Rachel Anderson 01-01-2010

Congress must rein in abusive lending.

A Moral Mandate for Financial Reform

by Rachel Anderson 10-14-2009
After all the financial turmoil that 2009 has already brought, one would think that it would somehow be logical and practical to bring accountable reforms to the same banking institutions whose re

Integrity and the Economic Crisis

by Rachel Anderson 09-21-2009
The economic crisis that started last fall and was remembered last week brought to light a lot of things: the vulnerability of

A Pre-Consumption Prayer

by Rachel Anderson 11-28-2008

"Consumption" isn't a bad word. Even as we watch the excesses of the consumer economy crumble and collapse around us, we should remember that the word "consume" also means "to eat."

Thinking Thankfully About Money

by Rachel Anderson 11-25-2008

When you are giving thanks this week, why not give thanks for money? Sound crass? It shouldn't be, because that's what could empower a household economy based on gratitude rather than one driven by greed or guilt.

'Impossible' Barriers Breached

by Rachel Anderson 11-11-2008
Last September, Randy Pausch, a computer science professor at Carnegie Mellon University became a source of inspiration for many Americans.