MERIDIAN — Living in a very Christian state, most Mississippians should remember the biblical proscriptions on usury.
Here’s one: “Thou hast taken usury and increase, and thou hast greedily gained of thy neighbors by extortion, and has forgotten me, saith the Lord God.” (Ezekiel 22:12)
Many Mississippi leaders have forgotten.
Once Mississippi’s maximum annual finance charge was 8 percent. Anything over was usury.
Indeed, such usury rules were the law of the land through most of the 20th century. Starting in the 1980s, Mississippi and other states began to relax these rules. Lately, Mississippi has caved in to special interests.
The 8 percent maximum charge remains in law today, but the Legislature has added exception after exception. Today, every special interest has its own rule allowing higher rates.
Market forces tend to keep rates for credit-worthy borrowers reasonable. For the least credit-worthy, however, market forces tend to evaporate. Reasonable finance charge caps are their only hope for fair rates.
Mississippi Today reported 18 states, including Arkansas, Georgia and North Carolina, prohibit extremely high lending fees, with movement underway in Alabama to do the same.
Contrarily, economic freedom apologists funded by the wealthy Koch brothers’ network — e.g., Mississippi State University’s Institute for Market Studies — strongly push a worldly view that there should be no caps at all.
State caps on bank finance charges are 10 percent or 5 percent over the federal discount rate for traditional loans, 10 percent or 5 percent over the 20-year U.S. bond rate for mortgage loans and loans financed by stock, and 1.75 percent per month (21 percent annually) for credit cards.
Caps on closed-end credit sales charges are 24 percent and on loans over $2,500 15 percent, or 5 percent over the federal discount rate. There is no cap for mutually agreed upon finance charges for loans of more than $2,000.
Caps on rates for used car refinancing range from 18 percent to 28.75 percent and for mobile home financing from 15 percent to 25 percent based on amounts financed.
The top rate for pawn shop charges is 25 percent.
The top rates for small loan companies used to range from 14 percent to 36 percent based on the size of the loan. In 2016, the Legislature added an “alternative” finance charge cap of 59 percent for loans over $4,000.
Getting kind of high? Well, consider the following levels for the least credit-worthy.
Payday loan companies can charge up to $21.95 per hundred dollars for 30-day loans up to $500, an annualized rate of 263.4 percent.
Title loan companies can charge 25 percent per month for a contract up to $2,500, an annualized rate of 300 percent.
And, since 2016, there are “credit availability” installment loans with finance charges up to 25 percent a month plus a 1 percent origination fee for six- to 12-month installment loans up to $2,500. That’s an annualized rate of up to 297 percent.
Mississippi’s Catholic bishops called such rates “predatory.” Clarion Ledger columnist Jimmie E. Gates called for “more stringent regulations on the amount of interest and fees they can charge.” Greenwood Commonwealth Editor Tim Kalich called the practice “sinful.”
Faithful Mississippians should think about these things as next year’s elections approach. Should our policy be to pray for the poor, or to prey on them?
• Bill Crawford is a Republican former state lawmaker from Meridian.
