A Cash Lure Cast From the Temple

http://www.nytimes.com/2013/07/30/world/europe/30iht-letter30.html

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LONDON — As the scriptures tell it, Jesus expelled the money changers from the temple to cleanse it of a “den of thieves.” With some discernible echoes, the newly appointed archbishop of Canterbury has initiated a comparable crusade against newer financiers charging enormous interest on what are called payday loans.

Unlike the biblical showdown, though, the outcome of this newest confrontation seems freighted with moral ambiguity, risk and potential ridicule.

The archbishop, the Most Rev. Justin Welby, made news last week by declaring what headline writers called war on Wonga, one of the biggest high-interest lenders whose name is derived from a slang term for money. His aim, the cleric said, was quite literally to drive the company out of business by throwing the church’s support behind small-loan institutions like credit unions with much lower interest rates. (Payday loans are short-term, unsecured loans for relatively small amounts — usually as much as £1,000, or $1500 — to be repaid from the borrower’s next paycheck.)

“The Lend is Nigh,” The Sun tabloid declared in wordplay on evangelical billboards foretelling Armageddon.

But, no sooner had the archbishop girded himself in his mantle against Mammon than the Church of England was forced to admit that the managers of its £5.5 billion portfolio had invested some £75,000 in a private equity group linked to, yes, Wonga.

“It’s very embarrassing,” the archbishop said, discussing an array of awkward issues about the church, its investment practices and the question of whether the distinction between good and evil could ever be relative, particularly for a body that casts itself as a font of moral authority.

“We can’t say that we tolerate bad things,” the archbishop said in a BBC interview. “But you’ve got to live in the real world, and living in the real world means life is often very complicated, and you can’t escape the complexity.”

The matter of payday loans had initially seemed clear-cut.

As the archbishop recounted in a magazine interview, when he met the Wonga boss Errol Damelin, he told him “quite bluntly: We are not in the business of trying to legislate you out of existence; we’re trying to compete you out of existence.”

Fighting talk, indeed. But that should not really have been a surprise.

Long before he took over this year as head of both the Church of England and the broader Anglican Communion of some 80 million souls, Archbishop Welby worked in an oil company as a financial executive — no stranger, thus, to hard-nosed business calls.

He is also a member of a parliamentary panel investigating the standards of Britain’s banking industry after the financial crisis of 2008 — no stranger either to the wiles of capitalism and the corrosive lure of lucre.

The archbishop’s aversion to payday loans has been shared by politicians of all stripes, although some analysts labeled the cleric’s ideas naïve, akin to what one critic called “Kumbayah capitalism.”

With tongue in cheek, the columnist Ally Fogg of The Guardian likened the archbishop’s Wonga warning to the tough-guy talk of the television mobster Tony Soprano.

“I was drawn to a reverie starring gangs of pepped-up curates descending upon Wonga shops with pool cues, systematically laying waste to fixtures and fittings, and then throwing a line to the terrified branch manager: ‘Hey, it’s nothing personal. It’s just competition — capisce?”’ Mr. Fogg wrote.

The less ribald question was whether the Church of England should seek to become an active player, rather than a supposedly principled and ethical investor, in such sharp-elbowed and worldly markets.

After all, the scriptures enjoin Christians to render “unto Caesar the things which are Caesar’s; and unto God the things that are God’s.” Was the archbishop, in other words, crossing a line between the spiritual and the temporal; or was he, as an editorial in The Financial Times put it, merely showing “how the church aspires to be a potent force for good?”

Even before the Wonga affair, the church’s investment principles seemed ambivalent, beset by what one analyst called “inconsistencies and absurdities.”

The church, for instance, may not invest in companies that make more than 3 percent of their profits from pornography or 10 percent from arms sales. For companies that profit from high-interest loans, the bar is set at 25 percent — a level the archbishop now says should be lowered.

Compared to the challenges facing Pope Francis over the scandals swirling around the Vatican Bank, an Anglican dabble in small-loan lending might seem innocuous. But for the usually poor borrowers, the price of quick cash to be repaid in short order is often painful, particularly for those who default.

Annual interest rates frequently exceed 5,000 percent. Those who do not repay their loans on time find themselves enslaved by ever-mounting, unpayable debt.

The spread of such high-interest lending is one more token of the broadening gap between the very rich and the very poor in Britain as austerity measures pare away benefits payments while conventional banks show little readiness to lend, even to those with sound credit ratings. The authorities estimate that about seven million people use high-cost credit. The payday loan business is valued at some £2.2 billion a year.

The archbishop’s proposal is that the Church of England should make available qualified volunteers and some of its 16,000 premises across the land to strengthen the smaller and far less lucrative credit union business — even if that does seem to invite a new kind of moneymaker back into the temple.

“There is a totally inadequate range of choice for consumers in deprived areas,” Archbishop Welby said. “I’ve seen it. I’ve lived in these areas and worked in them. I’ve had staff who’ve been caught up in it and have had to be helped and have had their lives destroyed by it. This is something that really matters to me.”