In 2009, Reverend Danielle Ayers was approached by a member of her church who said he was stuck. He had taken out a payday loan for a few hundred dollars, and he couldn’t pay it back.
Ayers is the justice pastor at Friendship-West Baptist Church, and she was confused: How could a small loan be such a big deal?
âI was like, ‘Can you bring me your loan documents?’â She recalls. âI think, I don’t know, two pages for a little loan. I wasn’t thinking of anything extensive. And it was a thick package.
Ayers was flabbergasted by what she read: exorbitant fees and terms that seemed designed to trip people up. The man had already refinanced the loan several times, accumulating more and more debt.
âI just knew something was wrong with this lending practice,â Ayers said.
Ayers began to hear more and more from church members struggling with payday loans and auto loans. She spoke to pastors from other churches, and they were hearing the same stories.
As she drove through Dallas, Ayers became aware of the number of payday lending and securities lending stores.
âBringing them together in our neighborhood is intentional,â she said, âthis saturation of payday loans and car loans in communitiesâ¦ where people are already struggling to access services. banking â.
In Texas, payday loans generally carry annual percentage rates above 600%. here are the highest rates around the country, nearly 40 times the APR of a typical credit card.
Auto title loans are cheaper – still with rates above 300% – but they are also riskier: they use a car title as collateral, so the car could be repossessed if a borrower does not repay the loan. on time.
A 2010 study by the American Association of Retired Persons found that one in four Texans aged 44 to 64 who were underbanked and unbanked had taken out a car loan. This was the case for more than one in five people over the age of 65 who lived in communities without adequate access to financial services.
So Ayers and Friendship-West Senior Pastor Freddy Haynes began researching and organizing. They joined a statewide campaign to call on the state legislature to curb the industry’s most predatory practices.
In late 2010, Friendship-West partnered with three other predominantly black churches in South Dallas to organize a march on Camp Wisdom Boulevard in South Oak Cliff.
By this time, Reverend Gerald Britt had started to learn about payday loans and he joined the march.
It was amazing to see the economic decline of the area around the Redbird Mall which was once a thriving black trade center in Dallas. Loan stores cannot be entirely blamed for the decline, he said, but he saw their sheer prevalence as part of a pernicious cycle that made setting up other essential businesses unattractive.
âThe lack of economic health and vitality has become palpable when you walk around and see payday loan stores next to auto title loan stores next to payday loan stores,â Britt recalled.
Britt, a third-generation pastor in Dallas, was working for the nonprofit CitySquare at the time.
And a large, city-wide anti-poverty coalition, made up of faith-based groups, service agencies and philanthropists, had all tackled the same problem in early 2011.
Organizations that aim to reduce poverty in Dallas, said Britt, âhave found that we are all spending a tremendous amount of time, money and people. [other resources] trying to get people out of these loans, âhe said. âBy program, it exhausted us. “
When it became clear that the state legislature was not going to regulate the industry, the coalition turned its attention to passing a city-level ordinance.
The coalition found its champion on city council in Jerry Allen, a former banker who represented Lake Highlands and other wealthy enclaves in northeast Dallas. n his first term he was troubled by the less affluent areas of his neighborhood which were also saturated with high-risk loan stores.
âThe troubleshooting guys would sit there and I was arguing about them, and they were like, ‘No one else is going to lend to these people,’â Allen remembers.
Allen said he needed allies like Gerald Britt and Friendship-West and other coalition members to help build public support. He wasn’t sure they would be able to tackle the powerful industry, with their powerful lobbyists.
Some board members had received donations from these companies, Allen recalled. A year earlier, the board passed a resolution honoring Ace Cash Express as a good corporate citizen.
âWhen you’re going to take on giant corporations like Ace and Cash America, you’re basically going to be in a dump dog fight,â Allen said. “And you better have people next to you who won’t blink.”
The coalition launched a petition campaign, collected data and organized people to testify in front of city council and tell their stories: teachers who took out payday loans because they had to buy supplies for their class, parents who needed extra money when school started, people who had broken down cars who had to get to work.
âIf a tornado hit Dallas and you decided to charge people $ 75 for a sheet of plywood or $ 10 for a bottle of water, you would be arrested. [for price gouging]”Britt said.” We’re talking about people facing personal financial disasters and saying it’s okay to charge them 300% interest. “
These stories helped shift the narrative from individual personal finance failures to systemic issues with payday lending, Britt said.
And with a presentation from black religious leaders and congregations around Dallas – as well as other coalition faith groups – Britt said the coalition has successfully reframed the payday loan debate around ideas of morality and justice.
Danielle Ayers of Friendship-West said black churches like hers follow a prophetic tradition that places this type of activism at the center of the church’s mission. Tracing a lineage going back to the founding of black churches, she said the church is not only concerned with the spiritual development of individuals, but is called to help improve the material conditions of the community.
âThis is what makes the black church the black church,â she said. âThat’s why black people are still here. It was organized as a protest movement against slavery, and in every era we always organized [through the church]. “
In the end, the coalition succeeded.
Two ordinances passed unanimously, one in May 2011, the other a month later. Taken together, they limit the degree of concentration of payday lenders in neighborhoods, make loan terms more manageable, and cap loan amounts to what people can reasonably afford.
The rules don’t cap the high fees people pay – only the state can – but Ayers said they’ve leveled the playing field, at least a little.
âIt didn’t stop people from getting loans, it just meant they weren’t being exploited,â Ayers said. âIt’s just that the operating practices decreased, and we were able to track that. “
Since 2010, 45 cities have followed Dallas’ lead and made similar loans. Today, about 10 million Texans live in cities that limit payday loans.
Do you have any advice? Christopher Connelly is KERA’s One Crisis Away reporter, exploring life on the financial limit. Email Christopher at [email protected] You can follow Christopher on Twitter @hithisischris.
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