Dog-Collared Lucre Brokers
Glen Newey
To pardonable glee from the press, the new archbishop of Canterbury, Justin Welby, has got his crozier stuck in a cowpat, after suggesting that the Church of England could set up in business as rivals to payday lending firms. The church commissioners, who nurture the Church of England’s £5.5 billion-odd of assets, ‘manage a well-diversified investment portfolio’; in pursuit of this diversity they forked £75,000 to Wonga – generally seen as a ravenous great white among loan sharks, which last year was caught charging students interest at over 4200 per cent.
Still, seventy-five grand out of five and a half billion is barely a drop in the font.
And Welby has noted, reasonably enough, that morally we’re all in it up to our oxters anyway. Welby’s own pre-clerical career in the oil biz included five years with Elf Aquitaine, the petro-behemoth ‘at the heart of the French state for years’, as Loïk Le Floch-Prigent, Elf’s CEO during François Mitterrand’s epically venal presidency, put it at his corruption trial in 2003. Elf’s oil interests in the Congo were also central to Françafrique, the French state’s exploitation of sub-Saharan assets to enrich the metropole after the formal end of colonisation; profits were channelled into the slush fund used by Elf barons to bankroll French and African politicians. Elf also proved a less than deft investor, shredding $150 million in the ‘great oil sniffer’ scam of 1979.
In Welby (Eton and Oxbridge before he took to oil) the prime minister has created a primate in his own image. Welby has opposed the naming and shaming of high-rolling bankers as ‘lynch mobbish’. Usury is OK as long as it’s charged at a fair rate of extortion. And Welby’s proposal to sweat the C of E’s assets by rebranding its 16,000 churches as credit union branches surely incarnates Cameron’s big society project, even if the government itself has gone cold on it.
By his own account, Welby got through to Wonga’s head Errol Damelin by his fluency in talking shark: ‘We’re not in the business of trying to legislate you out of existence, we’re trying to compete you out of existence.' One reason why Wonga’s rates are high enough to leave someone who borrows money for a toothbrush with a debt the size of Greece’s is that the loans are unsecured. Not-for-profit credit unions look attractive but are under-capitalised and have to steer between charging usurious interest rates and covering uncollateralised bad debts.
Sharks are great survivors. Welby’s vision of a new and sleek breed of vegetarian shark fit to out-compete its entrail-ripping cousins seems as double-minded as the church itself is, in repudiating worldly goods while going on about God’s ‘kingdom’, ‘power’, ‘glory’, ‘riches’ etc. It remains to be seen if the enterprise will cover toxic debts by hiking up rates for virtuous repayers or by scooping that well-diversified investment portfolio. Will defaulters be met not with the loan firms’ tontons macoutes but with moral blackmail about improvidence? Will dog-collared lucre brokers quiz hapless proles about whether they’re going to blow their £50 loan on pious works or fags and be told, in response, to stick their queries up their chasuble?
Comments
Well, perhaps, but I can't imagine Cameron is terribly flattered by the image he sees. Welby's outspoken opposition to the government's welfare reforms, for example, suggests that he knows his own mind and is perfectly prepared to be a turbulent priest when the situation demands it. Nor is the church all of one mind when it comes to several of the key issues here (Aquinas and Luther though usury was always evil; Calvin - and Giles Fraser, for that matter - think it's okay within limits). There are different theological traditions at work, and different personalities too. Welby's predecessor, Rowan Williams, was high-minded and beloved, but widely seen as vacillating and ineffectual. Justin Welby, by contrast, is a hard-headed evangelical who is as shrewd as the Biblical serpent, as well as gentle as a dove. You may think that's "double-minded" of him, but - as they say - not as the world gives does the Church of England give.
The beauty of the doorstep model is that it doesn't make loans in the sense that there is a loan outstanding that accrues interest. What they actually do is sell a lump sum of money in exchange for a series of payments of money. There is no "interest" involved. However many payments you miss you will never owe more than the number of payments agreed at the beginning less the number of payments you have made. The business model assumes some payments will be missed (whereas the APR calculation doesn't, in extremis the APR is actually 0%). In practise if you don't pay you will struggle to get another loan; but the beauty of the system is that the borrower always knows exactly how much they owe and it can never grow.