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Subprime Lending and Social Justice: A Biblical Perspective

William C. Wood


Although credit markets affect the welfare of everyone in a modern economy, there is cause for special concern about the effects of their operation on the poor. Examination of Old and New Testament teaching on the subject shows a strong biblical presumption against credit transactions that cause permanent impoverishment. New Testament teaching goes further than Old Testament teaching, including Christs call to believers not only to love their neighbor, but to loveand even lend totheir enemies. In this context, Christians cannot be complacent about credit markets even if they appear to be economically efficient as voluntary transactions. The transactions of special policy concern to Christians lie between the clearly illegal (not requiring further legislative action because they are already outlawed) and clearly ethical subprime lending that accurately incorporates the higher risk of subprime borrowers into interest rates. In this middle ground of unethical but not strictly illegal lending, three possible remedies are proposed: (1) legislation that regulates information or actual terms of loans to the benefit of subprime borrowers; (2) provision of free credit counseling by Christians in partnership with others; and (3) more broadly, measures to reduce poverty through community-group action, financial education, and lending by believers without hope of repayment.

William C. Wood, "Subprime Lending and Social Justice: A Biblical Perspective," Journal of Markets & Morality 11, no. 2 (Fall 2008): 189-203

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