Exploitation of Borrowers

Financiers have a duty to lend profitably, but they are not to profit from the vulnerability of borrowers.

You shall not lend them [people in difficulty] your money at interest taken in advance, or provide them food at a profit. (Leviticus 25:37)

In other words, a lender should not exploit the “difficulty” faced by a potential borrower in order to gain profit or force onerous terms such as collecting interest in advance. The passage as a whole speaks specifically to the requirement to lend to kin (Leviticus 25:35), but once a decision has been made to lend for whatever reason, the obligation not to exploit the borrower’s difficulty applies to everyone.

The moral issue arises from the imbalance in power between the lender and borrower. The lender has plenty of money, but the borrower is in a desperate situation. Even in many market-rate situations today, the lender is more powerful than the borrower. For example, a bank generally has far greater resources, information, legal knowledge, legislative influence, and geographic presence than a customer taking out a loan. Sometimes laws prevent certain kinds of exploitation in lending, but even when exploitative lending is legal, it is wrong. In any case, no industry can thrive over the long term by exploiting its customers. One contribution Christians can make in finance is to use whatever influence we have as depositors, employees, investors, directors, agents, and voters to reduce the exploitation of vulnerable people.