by Fr. Ernesto Obregon
I have posted before on the subject of usury. There was once upon a time when usury was not simply illegal in the USA, but the USA defined what was considered usury. You should know a couple of facts:
In 1980, because of inflation, Congress passed the Depository Institutions Deregulation and Monetary Control Act exempting federally chartered savings banks, installment plan sellers and chartered loan companies from state usury limits. This effectively overrode all state and local usury laws. …
In the 1996 Smiley v. Citibank case, the Supreme Court further limited states’ power to regulate credit card fees, extending the reach of the Marquette decision. The court held that the word “interest” used in the 1863 banking law included fees, and, therefore, that states could not regulate fees. …
Some members of Congress have tried to create a federal usury statute that would limit the maximum allowable interest rate, but the measures have not progressed. In July, 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act, was signed into law by President Obama. The act provides for a Consumer Financial Protection Agency to regulate some credit practices, but does not have an interest rate limit.
The bottom line is that banks can do whatsoever they like with regard to interest. That is, as long as consumers pay it, there is nothing to stop them. For those of you who are Orthodox, you need to know the following:
The First Council of Nicaea, in 325, forbade clergy from engaging in usury (canon 17). At the time, usury was interest of any kind, and the canon merely forbade the clergy to lend money on interest above 1 percent per month (12.7% APR). Later ecumenical councils applied this regulation to the laity.
Most of you know that today’s interest rates violate the canons of Nicea. Most of you do not realize that the Western part of the Church was even stronger against usury than the Eastern side of the Church. In 1179, within about 100 years of the schism, the III Lateran Council forbade the sacraments and Christian burial to those who charged interest. While that attitude no longer holds in the Roman Catholic Church, it is the Roman Catholic Church that has led the drive to forgive the foreign loans incurred by Third World countries–particularly those incurred under previous dictatorial governments–largely on the grounds that the amount borrowed has long been repaid by those countries. In other words, part of the argument is that “Christian” First World nations still have those loans only because of the compound interest they charged, and that this is abhorrent to the Catholic view of usury and how one treats the poor. I would heartily agree.
Canon 17 of the First Council of Nicea reads as follows:
Forasmuch as many enrolled among the Clergy, following covetousness and lust of gain, have forgotten the divine Scripture, which says, He has not given his money upon usury, and in lending money ask the hundredth of the sum [as monthly interest], the holy and great Synod thinks it just that if after this decree any one be found to receive usury, whether he accomplish it by secret transaction or otherwise, as by demanding the whole and one half, or by using any other contrivance whatever for filthy lucre’s sake, he shall be deposed from the clergy and his name stricken from the list.
For those of us who are Orthodox, should that not mean that we should be quite against interest rates above 12%? After all, this is a canon of and Ecumenical Council. For those of you who are Roman Catholic, your opposition to today’s climate of interest and fees should be equally strong, if not stronger. Remember, it was pointed out that this canon was extended by later councils to all Christians, not just the clergy.