Church Lending Money?

[Saracen]

Thats the trouble in a nutshell.

Do the likes of Wongas interest and/or fees excessively exceed costs and some profit?

I, personally, think some of the problem is that theyre required to provide an APR, for something that isnt repaid over more than a month, and so people just point at it and get hysterical "look look 5000%!!!"

....

That is indeed part of it, as is the point that people using the likes of Wonga are typically those that don't gave access to more traditional firms of finance, be it bank overdraft or credit card, and are therefore often those with credit problems, and so inherently high risk.

I wouldn't have thought credit unions and payday lenders lent to the same customer type.

[bytejunkie]

brilliant news this morning. the church of england apparantly helped finance wongas setup!!!!

[Saracen]

brilliant news this morning. the church of england apparantly helped finance wongas setup!!!!

I know. It's utterly priceless, isn't it.

But to be fair, the Church pension fund invested a very small part of it's assets in a US venture capitalist that invested in Wonga. But oh, it's funny as hell, and proof-positive that the Universe, or God, has a sense of humour, and endless ways to ensure we each keep a little humility.

[kalniel]

Its nothing new, the Church "invests" in weapons firms too, or at least did a few years ago, and was quite happy doing so.

It's not happy doing so, and the practise was stopped in 2001 I think. There's an ethical committee that rate investments and they're not meant to invest in companies primarily involved in these things. The discussion on the radio was what they meant by primarily etc. and the point was made that in the real world you can't guarentee that a company you invest in isn't going to have some kind of link with something you don't want to invest in - the example was of a clothing manufacturer having their socks bought by an army. Still, the intention is to invest companies whose business is primarily ethical. But mistakes are made. If you're saying that only an organisation made up of 100% perfect people has the right to try and make things better for other people then you'll be waiting a long time!

Thats the trouble in a nutshell.

Do the likes of Wongas interest and/or fees excessively exceed costs and some profit?

Yes.

I, personally, think some of the problem is that theyre required to provide an APR, for something that isnt repaid over more than a month, and so people just point at it and get hysterical "look look 5000%!!!"

Surely though, the church should be doing its job and directly supporting the poor and needy, rather than just assisting people to get into more, albeit possibly more manageable, debt.

They are directly supporting the poor and needy as well, as best as they are able. The question is what else can they do to help that? And this support of credit unions is another new way they are attempting to do this - at the moment those that need pay-day loan companies don't have other options - now to be clear - a professionally run pay-day company like Wonga is much much better than an illegal loan shark - which is why you have to be careful about regulating them out of existence. But if you offer alternatives, like credit unions, then you are genuinely improving things for the poor.

brilliant news this morning. the church of england apparantly helped finance wongas setup!!!!

Nice of you to join us, better late than never (PS what's brilliant about it?)

[Phage]

Good interview with Welby this morning. Funny bloke.
Admitted to it being 8/10 on the embarrassment scale, but understood how it happened with a portfolio in the multi-billion range.
Also admitted to being momentarily irritated with some of his staff and investment managers. I'd have loved to have been a fly on the wall at that meeting. That big crozier looks like it could be useful in hand-to-hand combat

[peterb]

Good interview with Welby this morning. Funny bloke.
Admitted to it being 8/10 on the embarrassment scale, but understood how it happened with a portfolio in the multi-billion range.
Also admitted to being momentarily irritated with some of his staff and investment managers. I'd have loved to have been a fly on the wall at that meeting. That big crozier looks like it could be useful in hand-to-hand combat

Yes, I listened to that too - refreshing to hear someone hold up their hands and say that it was a mistake. Hope a few politicians were listening.

I'm sure he will be 'putting some crozier about'

[Saracen]

Yes, I listened to that too - refreshing to hear someone hold up their hands and say that it was a mistake. Hope a few politicians were listening.

I'm sure he will be 'putting some crozier about'

As did I, and yes, he came across very well.

[Saracen]

..... - refreshing to hear someone hold up their hands and say that it was a mistake. Hope a few politicians were listening.

.....

A politician both listening to something other than their own voice, AND admitting to their mistakes???

What next? World peace? Moon on a stick? Cure for cancer? The Tooth Fairy hosting Newsnight?

Not that I think your expectations might be a tad unrealistic there, Peter, but a politician that listens? Really?

[kalniel]

http://www.newsbiscuit.com/2013/07/2...to-save-souls/

[Saracen]

Oh, that's superb. Priceless.

Somehow, I suspect His Archbishedness is beginning to wonder how his wheeze went to badly pear-shaped, quite so quickly.

[kalniel]

Somehow, I suspect His Archbishedness is beginning to wonder how his wheeze went to badly pear-shaped, quite so quickly.

I don't think it has to be honest. It's got a lot of people talking and thinking about an otherwise fairly forgotten portion of society, pay-day loan companies and lack of alternatives, what credit unions are and how they can help, and it also helps address people who say the Church should be getting more involved in community issues ontop of what they already do.

Even the hypocrisy fail has done some good as it's got people talking about what ethical investments actually are, and it looks like at the end of it the Church's investments will be more ethical than they were before he said anything.

[Saracen]

I don't think it has to be honest. It's got a lot of people talking and thinking about an otherwise fairly forgotten portion of society, pay-day loan companies and lack of alternatives, what credit unions are and how they can help, and it also helps address people who say the Church should be getting more involved in community issues ontop of what they already do.

Even the hypocrisy fail has done some good as it's got people talking about what ethical investments actually are, and it looks like at the end of it the Church's investments will be more ethical than they were before he said anything.

True enough, kal, true enough.

I'm all for credit unions. Blooming good idea, good principles, and more power to them. And if the Church can help by making access to facilities cheaper, easier and more widespread, that's good too.

But I'm not convinced it'll address the fundamenral problem(s).

First, the current metric, APR, isn't really an appropriate way to judge payday operations because of the way it's calculated. Even the CodE reckoned it could lend at "only" 80% or so .... and they already have the premises so have zero costs from that.

And for all sorts of reasons, I have grave doubts that that estimate is realistic, or that the Church has the expertise to assess actual costs.

Second, payday lenders have a legitimate role IF used the way they're supposed to be, which is short-term bridging. But those using it that way aren't paying the sky high rates because they aren't rolling over, and that, primarily, is what causes the penalties, escalation of costs and ridiculous APR figures.

The problem is, as I understand it, to get loans from a credit union you have to first, be a member, and second, have savings and a savings history. Surely, those that are going to get clobbered by rollover charges are exactly those that won't have savings and a track record at a credit union?

The only thing I can see eliminating the extreme escalation of charges caused by repeated rollovers is legislation, which so far, government seems unwilling to do, and even if they did do it, the risk is they'd drive those desperate enough to do use payday lenders that way out of using payday lenders straight into the clutches of underground loan sharks, which may well be a cure worse than the disease.