Usury and the Christian Response to Debt
“And that uncleanly image of deceit
Came up and thrust ashore its head and bust,
But on the border did not drag its tail.
The face was as the face of a just man,
Its semblance outwardly was so benign,
And of a serpent all the trunk beside.”
(Dante’s Inferno: Canto 17:7-12, Usurers in the Seventh Circle of Hell).
“How much do you owe?” he asked me.
His question hung in the air as embarrassment washed over me. I knew at some point I would have to tell my future husband about my student loan debt. Like quickly ripping off only half of a bandaid, I got the first part out. Then, I stopped. I feared his rejection, his criticism, or some other unknown reaction.
He asked again, “Ness, how much?”
OK, here we go. “$165,000.”
Silence.
You Shall Not Charge Interest
The basic premise for charging interest on a loan is to mitigate the lender’s risk. There are two types of risk that the lender evaluates: borrower risk and collateral risk. Lenders charge a higher interest rate if a borrower is deemed to be “high risk” (for example, if he or she has scant credit history or a poor track record of repayment) or if the value of the collateral (such as a home) is volatile, difficult to determine, or absent. This is why, for example, interest rates on payday loans, which are short-term, high-interest loans, are higher than mortgage loans.
Our modern understanding of usury is usually limited to the exorbitant rates charged to the poor, such as in the example of payday loans. However, Catholic teaching against usury is rooted in the Old Testament with the Dueteronomic law forbidding lending with interest to fellow Hebrews: “You shall not demand interest from your kindred on a loan of money or of food or of anything else which is loaned” (Deuteronomy 23:20). Notice that interest of any kind is prohibited, not just exorbitant rates to those who cannot afford it.
In Support of the Poor
In a chapter of the book “Business Ethics and Catholic Social Thought,” Jennifer Herdt, a moral theologian and the dean of academic affairs at Yale Divinity School, writes that our modern perspective on interest began with the radical transformation stemming from the growth of cities and technological developments.
Interestingly, the rise of the credit economy, which began to take hold in the late 15th century, was driven by the Franciscans. Alexander Lombard, provincial of the monastery in Lombardy, Italy, wrote a tractate on usury and outlined 12 cases in which lending at interest was acceptable and sometimes admirable. From there, a new banking system emerged: the Monte di Pietà. Herdt writes:
“As originally conceived, merchants donated money to the Monte to be lent at very low interest to the poor. In this context, moneylending was a form of charitable activity and service to the poor; the interest charged served only to cover the costs of the enterprise. This sort of moneylending … was framed as a public service, which helped to eliminate poverty by enabling the poor to establish small businesses.”
A Scourge of Our Time
To be sure, the Franciscans’ vision with the Montes was in support of the common good. And, if the vices of greed and the tendency to exploit others for selfish gain did not plague the human family, then such virtuous banking would be thriving today. However, as Pope St. John Paul II once pointed out, usury is a scourge of our time that has a “stranglehold on many [people’s] lives”.
The saint went on to describe a twofold slavery: on the lender’s part, slavery to the sin of greed, and on the borrower’s part, the chains of the debt that tethers them to the lender and the temptation to continue to borrow (either out of their own greed, rooted in a consumerist mentality, or out of necessity, to support themselves and their families). This situation is readily apparent in the United States’ $860 billion in credit card debt, $1.75 trillion in student loan debt, and $30.5 trillion in federal debt.
A Christian Response
It would seem that the simple solution is to forgive the outstanding debt. We might arrive at such a conclusion from the Lord’s Prayer—“forgive us our sins for we ourselves forgive everyone in debt to us” (Luke 11:4)—or the parable of the unforgiving servant (Matthew 18:21-34).
However, the debt is not the root problem. It is, rather, a symptom of the underlying problem, which is the exploitation of the human person for economic gain. Usury reduces the human person to a financial instrument with an anticipated rate of a return. As the Church teaches, “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” (Catechism of the Catholic Church 2269). It is for this reason Dante places usurers in the seventh circle of hell with murderers.
To be clear, the Church recognizes the value of the profitability of businesses; as St. John Paul II wrote in the encyclical “Centesimus Annus,” “When a firm makes a profit, this means that productive factors have been properly employed.” However, the Church is not blind to the risk of the abuse of the people involved: “It is possible for the financial accounts to be in order, and yet for the people—who make up the firm’s most valuable asset—to be humiliated and their dignity offended.”
The social doctrine of the Church is rooted in the twofold command of love of God and neighbor (Matthew 22:35-40), which captures a central tenet of Catholic social tradition: the principle of the common good. As the Compendium of the Social Doctrine of the Church states, “The sense of responsibility that arises from free economic initiative takes not only the form of an individual virtue required for individual human growth, but also of a social virtue that is necessary for the development of a community in solidarity.”
My student loan payment is more than my house payment with a rate that is nearly double my mortgage rate. After graduating from college, I was advised not to worry about my student loan because “the government would forgive it.” To a 22-year-old entering a tanked job market, that prospect was a huge relief. So, for seven years I let the thing accrue interest and patiently waited for the government to wipe my slate clean. Eight years came and went, and my loan accrued over $50,000 in interest.
Although my ignorance as a young adult may have mitigated my subjective culpability, from an objective standpoint, to expect others in my community to foot the bill for my decisions would have been a shirking of responsibility that perpetuates the very exploitation that I (and many others) was subject to.
I believe an authentic Christian response, then, is to stop the cycle of injustice by being accountable for our lending decisions while advocating for a virtuous credit system that serves the conning good, along the lines the Franciscans envisioned.
Vanessa Crescio is an accountant with Lipic’s Engagement. She earned an MBA from the University of Notre Dame, an MTS from Newman University, and worked in the real estate and banking industries prior to serving in business roles at the parish and archdiocesan levels. She is interested in thinking through co-responsibility in the Church and developing lay pastoral leadership programs to form Catholic leaders to serve the Church with not only their knowledge, skills, and abilities but with the servant heart of Christ. Read more of her writing at FRESHImage, and follow her on Instagram.