Lifestyle & Belief

Church of England targets payday lender charging 5,000 percent interest

LONDON — Usury is a sin, Christian teachings tell us. "And in another lake, full of pitch and blood and more bubbling up, there stood men and women on their knees: and these were usurers and those who had taken interest…," reads the Apocalypse of St. Peter.

But heedless of the risks of eternal damnation, there are plenty of usurers about these days in Britain. The economy at the human level is still terrible for many. Payday loan companies are providing credit but at extraordinary rates of interest.

The best-known company, Wonga, recently increased its APR to 5,583 percent. (You read that correctly, more than 5,000 percent APR is what they charge). In the Middle Ages my people were burned at the stake for charging 8 or 9 percent interest — but in those days sins counted for something.

The Archbishop of Canterbury, Justin Welby, has decided to put the Church of England up against Wonga and its brethren in the payday loan business. 

Two days ago Archbishop Justin outlined plans that would allow non-profit credit unions to operate on church property. His idea is to provide 500 non-profit lending "co-operatives" with access to church property to build their membership.

The archbishop noted that the church has 16,000 branches in 9,000 communities

If that sounds like a businessman's perspective it is worth remembering that before receiving his religious calling, Welby was a senior oil company executive with French giant, Elf Aquitaine. He knows business.

He met Wonga's chief executive, Errol Damelin, recently and told him, according to the website Total Politics, “We’re not in the business of trying to legislate you out of existence, we’re trying to compete you out of existence."

As a former chief executive, though, Welby should have triple-checked his facts before he spoke. His admirable campaign to take on the usurers immediately came under fire when it turned out that the Church of England indirectly has a small stake in Wonga.

The C of E, which has holdings estimated at around £5 billion ($7.7 billion) has a few million invested with Accel Partners, a US-based venture capital firm. Accel is a key investor in Wonga.

The revelation of the church's connection has proved embarrassing to Welby. Friday morning he went on BBC Radio 4's flagship news program, Today, and took his ritual flogging from the show's host and grand inquisitor, John Humphrys.

The deeper question though, remains: how to challenge and contain the usurious part of the financial services industry; a sector that is thriving as the worst economic collapse since the Great Depression cuts millions off from what used to be their regular lines of credit.