Cutthroat payday lenders like Wonga are unlikely to be overly daunted by bankers in the vestry. The formula for success at the controversial companies is that they can provide a credit decision within minutes after combing through all the information about the applicant that can be found online. Credit unions aren't nearly as fast. In 2011, the payday-lending industry lent the equivalent of €2.5 billion ($3.3 billion) -- in some cases to customers who could no longer qualify for credit with regular banks. Still, less than 10 percent of borrowers defaulted on the loans.
In contrast, British credit unions, which have traditionally been the banks of the poor, have only lent about £605 million (€700 million or $930 million) to their customers. Most suffer from a cumbersome bureaucracy and laws limiting the maximum interest rate on short-term loans to 26.8 percent. As large as this number sounds, even Bishop Welby admits that credit unions would have to charge rates of 70 to 80 percent for these types of loans so that high processing costs wouldn't eliminate their profits.
Now members of the coalition government want to examine how they can "work together to ensure credit unions can provide strong competition and a viable alternative to payday lenders," said British Secretary of State for Business, Innovation and Skills Vince Cable.
The proposal to tie the credit unions to the church is only Welby's most recent attempt to defuse the natural conflict between God and Mammon, the New Testament personification of greed, as well as to influence the reform of the British banking sector. Welby was also a member of the Parliamentary Commission on Banking Standards and helped develop its recommendations. Under those recommendations, bankers could go to prison for "grossly negligent behavior," and financial managers would have to wait up to 10 years for their bonuses to ensure that they had truly earned them.
But the financial angels in the Anglican Church are also not infallible. Less than 24 hours after Welby's declaration of war against loan sharks, the Financial Times revealed that the church's pension fund had a small amount of money, £75,000, indirectly invested in Wonga.
Translated from the German by Christopher Sultan