Tuesday, September 15, 2009

Gods Underwriting

My brother's are a talented bunch. One of them recently wrote an editorial and though the NY Times hasn't picked it up yet, I am proud to publish it here on my little blog for you all. Seriously, this is challenging and worth a read. So without further ado, the first of perhaps many guest pieces (footnotes are posted as the first comment in the comments section):

God’s Underwriting: Why And How Should We Lend?
By Matt Rule
In a year filled with financial uncertainty, there seems to be only thing that everyone is certain of: banks are not lending enough money. Americans, whether rich or poor, conservative or liberal, homeowner or renter, blue-collar or white-collar, have unanimously raised their voices to angrily condemn banks for their failure to loosen their purse string and lend more money. Perhaps we, as followers of Jesus, should be grateful that our fellow Americans are not reading their Bibles more. If they did, we may very well find their anger focused upon us.

God didn’t leave a whole lot of wiggle room on the subject of lending when instructing his chosen people, Israel. In order that the poor would not become alienated from community, God instructed his people (1) to lend and (2) to charge no interest. In Leviticus 25:35, God declared:

If one of your countrymen becomes poor and unable to support himself among you, help him as you would an alien or a temporary resident, so he can continue to live among you. Do not take interest of any kind from him, but fear your God so that your countryman may continue to live among you. You must not lend him money at interest or sell him food at a profit. I am the Lord your God who brought you out of Egypt to give you the land of Canaan and to be your God.

God’s instructions to Israel reveal to us God’s loving and redemptive heart, and challenge us to dramatically restructure our attitude towards our money.

God’s lending standards were driven by God’s desire that a person’s financial failures would not alienate them from community. God explained that He wants to permit those who have become poor “to continue to live among” us. We are commanded to lend so that those that lose their jobs, are overwhelmed with medical bills, or fall victim to their own poor financial choices, are not, in their time of discouragement and hurt, isolated from an encouraging, compassionate and honest community. A sudden loss of income can sadly lead to foreclosure and force a person to physically move away from their established community. However, income shortages can also force a person to work extended hours instead of attending small group meetings, trade family time for long public transportation commutes, or sacrifice valuable recreational and educational opportunities for their children to meet minimum credit card interest payments. This was not God’s plan.

God’s solution was that his people, the chosen people of God, lend to the poor. This was a command directed at each individual. We can safely assume there was no asset backed securitizations, no federal reserve, and no international monetary fund. I can only conclude that God understood, yes God even desired, that each loan would be a particularly intimate and very personal transaction . The risk of default would be born by the lender alone. The lender’s unprotected risk makes God’s discussion of interest even more startling.

God directed his people not to charge interest. This directive is difficult to accept for two primary reasons. First, these loans were directed at persons who were poor and were unable to support themselves. Persons meeting these requirements were high-risk borrowers in no position to offer adequate collateral or demonstrate sufficient cash flow to repay their indebtedness. They would be a modern day underwriters nightmare. Second, when lending to such a risky borrower, we would naturally expect to be compensated for our risk. If an individual can earn 2% in an FDIC insured checking account, why can’t they earn at least 5% from their jobless neighbor? Charging higher interest would only fairly compensate lenders for their risk. I believe that puzzling over these directions is only appropriate. They strain against everything we have been taught and belittle our financial intelligence . And therein, I believe, is the answer.

Lending our hard earned money interest free to high-risk borrowers forces us to demonstrate to the world by our actions that our faith means more than the security afforded to us by financially savvy decision making. We are called to be different; we are called to be countercultural. God’s instructions push us to redefine the framework we have been operating in: a high risk borrower is the only worthy borrower, a wise investment is traded for a God centered investment, monetary rewards are substituted for God’s promises. We are depending on God to reward those who lend freely to the poor (Deut. 23:20), to bless their children (Psalm 37:26), and to repay them for their kindness (Prov. 19:17). In sum, our actions will demonstrate that God’s kingdom priorities and promises are a higher priority than financial security and monetary gain.

As you look for opportunities to lend to the poor and out of work, here are a few practical guidelines to consider:

1. At the outset, limit your lending to costs associated with the (1) repayment of outstanding credit card debt, (2) mortgage payments and (3) health related expenses. This creates a bright line test that protects against you and the borrower from disputes arising over questionable discretionary expenditures.

2. Prior to lending, consult and pray with at least one follower of Jesus that is not a family member.

3. Pay the money directly to the indebted party rather than to the debtor. This will avoid any disputes about where the funds are being applied.

4. Lending is not an opportunity to control the debtor. Do not attach burdensome restrictions to your loans; doing so undermines God’s message of grace and love.

5. Lending is an opportunity to encourage the debtor obtain financial counseling. We should take the opportunity to have the debtor review their budget with a financially gifted friend, counseling service, or follower of Jesus.

6. Don’t expect repayment. While you should work with the debtor to equip them with the tools to repay the debt, and encourage them to work to satisfy their obligations, embrace the realty that the loan may not be repaid.

As we embark on this radical journey, let us be grateful for what we have been given, humbly acknowledge that we have failed to place restoration ahead of financial gain, pray that we have the strength to put our faith in God when doing so crashes against our financial intelligence, and celebrate that we still have the opportunity to work alongside Jesus to bring good news to the poor.

1 comment:

  1. 1.The ideal set forth by God is clear. However, whether or not charging interest was accepted by the Jesus of the New Testament is still the subject of much debate. In the parable of the talents (Matthew 25:7), Jesus did not prohibit charging interest, but rather acknowledged the practice without condemning it. The purpose of this article is not to condemn to practice of charging interest, or delve into a theological discussion on the implications of the parable of the talents, but rather to push followers of Jesus towards making no-interest loans to the poor as God instructed his people Israel.
    2. Although Leviticus 26:8 does not use the word “lend”, God’s instruction not to “take interest of any kind” implied that his people were to make loans to the poor, as opposed to giving away money. Wendy Amsellem, a faculty member of the Drisha Institute, proposes that the Torah purposefully communicates lending standards, as opposed to simply commanding the Jewish community to give, because the Torah is not just concerned about “fulfilling the day-to-day needs of the poor” but instead seeks to eradicate poverty through a system of mico-lending. Wendy Amsellem, “Can You Spare a Loan,” reprinted by the Hebrew Free Loan Association at http://hflaclev.org/sermons/. Wendy Amsellem’s sermon provided insightful guidance for this piece, particularly regarding debt forgiveness (discussed below).
    3. Kiva (www.kiva.org) is a non-profit non-religious organization that recognizes the importance of relationally driven lending. Kiva facilitates person to person non-interest bearing loans (usually 6-12 months) over the internet. The organization was started in 2005 and by February of 2008 it had disbursed over $22 million across 40 countries. The Only Nonprofit That Matters, Fortune Magazine, February 26, 2008.
    4. Economists will validly point out that, if lenders were forbidden to charge the poor interest, no lender would make loans to the poor. Charging interest allows lenders to be compensated for their risk and therefore facilitates the flow of credit to the poor. What economists overlook is that God is not trying to incentivize banks to lend make interest free loans to the poor; God is commanding his people to make interest free loans to the poor.
    5. Israelis were to forgive debts every seven years. Recognizing that they would be tempted not to lend as the date for debt forgiveness neared, God specifically directed them not to “clench their hands” at such a time. Giving, not repayment, was the focus. Deuteronomy 15:7-10; See also Amsellem, “Can You Spare a Loan”.