The Evangelical Lutheran Church in America has played a key role across the country in efforts to cap interest rates on short-term loans.
In several states, ELCA has fought the payday loan industry in state legislatures, ballot boxes, and in trying to educate consumers about loans. Christian groups against high interest lenders argue that loans victimize the poor and go against the teachings of Jesus.
But in South Dakota, where voters will decide this year on a ballot measure that caps interest rates on short-term loans at 36%, ELCA remains on the sidelines. Efforts to recruit the church, which is one of the state’s most influential religious organizations, have failed.
Supporters of the cap say they know why: The lawyer representing ELCA’s South Dakota Synod in Pierre also represents the payday lending industry.
In addition to representing ELCA and payday lenders, Brett Koenecke, a prominent lobbyist and lawyer for the Pierre May, Adam, Gerdes & Thompson law firm, last year formed a voting committee to support the industry. payday loans.
Koenecke also attends Memorial Lutheran Church, the same church where South Dakota Synod Bishop David Zellmer served before his election in 2007 as bishop.
Two of the sponsors of the 36 percent rate cap, Steve Hickey and Steve Hildebrand, personally lobbied Zellmer for his support on the ballot issue last year. Hickey described Zellmer as a “cold fish” with regard to the matter.
In an interview this month, Zellmer said he heard them. But he said he was not given direction on the issue of the South Dakota Synod Assembly.
“I don’t work for Steve Hickey. I don’t work for Steve Hildebrand, ”Zellmer said.
The failure to gain support from official Lutheran authorities extends beyond ELCA. Lutheran social services have also refused to approve the ballot measure, although the group has supported attempts by the legislature to impose caps on money lenders in the past. Zellmer is a member of the board of directors of Lutheran Social Services.
Betty Oldenkamp, chief executive officer of Lutheran Social Services of South Dakota, said her board would not take a position on any of the voting measures in this year’s election. Lutheran Social Services offers a debt counseling service, and Oldenkamp said payday loans are a factor for some of LSS’s clients who are struggling with debt.
In 2011, Oldenkamp testified in favor of a bill introduced by then-state legislator Hickey that also allegedly capped interest rates at 36%. The bill ultimately failed, which is why supporters brought the issue directly to the people.
Oldenkamp said there is a difference between testifying for a bill and supporting an election measure.
“There is no opportunity on a ballot initiative to make a testimony statement that gives more depth or perspective on what our position is,” she said.
Oldenkamp was not the only one who testified on the 2011 Hickey Bill. Koenecke did the same, except he testified against the bill, representing the Community Financial Services Association, a group that includes payday lenders. Koenecke’s customers in the breakdown service industry include Advance America.
Zellmer said he asked Koenecke eight years ago to be ELCA’s ears at the State Capitol. He knew at the time that Koenecke represented the payday lending industry, as well as a number of different entities.
“He does it on a voluntary basis,” Zellmer said. “I don’t pay him. He is mainly there to keep me informed of laws that would have a direct impact on our congregations.
Koenecke said he couldn’t comment on his role, citing attorney-client privilege.
“Whether I volunteer or not, I’m still a lawyer and I do legal affairs,” he said.
Pastor Jeff Sorenson of the Messiah New Hope Lutheran Church in Sioux Falls has publicly supported a rate cap, arguing it is a matter of “justice and protecting our neighbors.” But Sorenson sees no problem with Koenecke’s involvement with ELCA – which preceded Zellmer’s debut as bishop – or the friendship between the two.
“I would completely trust Bishop Zellmer to be above these kinds of questions,” Sorenson said.
Sorenson added that Lutherans are commanded to make the best interpretation of what others say or do and not to assume the worst.
“I think we tend to be too suspicious of this stuff,” he said.
ELCA and affiliated Lutheran groups have a long history of advocating on issues of social justice, including racism, access to health care, and acceptance of people regardless of their sexual orientation.
There is a debate about the role of payday lenders in poor communities. Opponents of the industry claim that loans with interest rates and fees that can exceed 500% trap some poor borrowers in a cycle of debt. But others argue that people are free to choose whether they want such a loan, and they say eliminating the industry would shut down one of the only sources of finance the poor can access.
The Chicago-based national ELCA did not respond to interview requests.
But several synods across the country have campaigned against payday loans because they view the loans as predatory.
In Minnesota, five synods have passed resolutions against the industry, said Tammy Walhof, who heads Lutheran Advocacy Minnesota. A survey of campaign finance reports by the Star Tribune found that a payday lender was spending hundreds of thousands of dollars on donations to state lawmakers, which opened a window into the industry’s influence in Minnesota, Walhof said.
Lutheran Advocacy Minnesota is planning an educational campaign with churches this year in an effort to pave the way for legislation restricting the industry in 2017.
“We’ll probably try to make it a big deal next year,” Walhof said.
In South Dakota, Zellmer said he received his “marching orders” from the synod assembly on issues to be defended. The assembly is made up of about 475 to 800 people and pastors chosen from various congregations. It meets in June.
Last year, the assembly passed a resolution supporting the expansion of Medicaid. Zellmer followed up with a letter to Governor Dennis Daugaard describing the support of the South Dakota Synod.
“The problem is, the way we do advocacy comes from our synod assembly,” Zellmer said. “It’s a specific subject. A specific resolution must be adopted.
But Hickey says Zellmer has the power to speak out on issues in the absence of a resolution from the assembly. As evidence, he cites the letter Zellmer sent to Daugaard earlier this year, urging the governor to veto a bill requiring transgender students to use the toilet of their biological sex.
“His moral outrage is oddly selective, and we’re not stupid as to why he’s silent about South Dakota loan sharks,” Hickey said in an email.
Will there be a resolution on the matter when the assembly meets in June? Zellmer said he hadn’t heard from anyone who made a resolution. But if there is one, it will be debated and voted on.
Even if there is no synod action, that does not mean that individual pastors cannot speak out on payday loans.
Pastor David Wildermuth, senior pastor at Trinity Lutheran Church in Yankton, said there had not been much discussion on the matter and that he had heard of no one trying to make one question at the June assembly.
“Regarding the congregation issue, I haven’t really heard much,” he said. “Personally, I think they rip people off. I think we should definitely have a cap.
Sorenson also hasn’t heard of anyone coming forward with a resolution supporting a cap. But if there is, he added, “I would fully support him.”
Follow Jonathan Ellis on Twitter @argusjellis.