Wednesday, October 01, 2008

The Financial Crisis from One Christian's Perspective (Part 1)

Only those willing to be seduced are seduced.

Nobody persuaded into doing the wrong thing can credibly argue, "He tricked me," or, "She jumbled my thinking," or "The devil made me do it." The evil all around may pull at us, but we are the ones who cave into our inborn tendency to do the wrong thing, no matter what the wrong.

Believe me, I know. I do things that are wrong and, in the end, I realize I only have myself to blame.

Only those willing to be seduced are successfully seduced. I've been thinking about that a lot lately as the nation grapples with the financial crisis. It was caused, it's said, by the reckless policies of major lending institutions. Obscene compensation and benefits packages given to corporate CEOs and other company hot shots made things worse.

It's all true, of course. And these realities are among the reasons that both Democratic and Republican members of the House of Representatives offer for not passing the $700-billion bailout or rescue package forged by the White House and congressional leaders over. "Why should we give $700-billion to these greedy corporate honchos?" It's a fair question.*

I hate it when legitimacy, such as that enjoyed by the captains of the lending industry in recent years, is given by the government. For several decades now, Democratic and Republican Presidents and Congresses have endorsed and allowed the practices of the big investment bankers and mortgage lenders. Presidents lauded the ever-increasing homeownership rates, ignoring the fact that this "progress" was a house of cards erected on financial quicksand, bricks and mortar stacked on onion skin paper. It's high time that the illegitimate practices of the big mortgage houses were changed.

But others' practices need to be changed as well: Those of the borrowing public.

Nobody forced people to get sub-prime loans. Nobody forced consumers to buy houses with no money down, with insufficient income to make loan payments, all on the less-than-shrewd bet that property values would inevitably increase and, borrowing from projected future value, they could refinance their way out of debt. And nobody forces consumers to use their charge cards as revolving loans.

The greed of the now-pilloried corporations was rewarded for the past twenty years by equally greedy consumers who were working the angles to get into houses, to own other things, to effectively steal their ways to more comfortable lifestyles.

Greedy lenders seduced people. But they couldn't have been successful without greedy borrowers who were willing to be seduced.

The Biblical bases for today's Our Daily Bread devotion is Proverbs 1:8-19. For those not familiar with the passage or with the Old Testament book of Proverbs generally, a little background is in order. The book is a collection of wisdom sayings given by God to King Solomon.** These specific verses underscore how important it is for young people to listen to the wisdom given to them by their parents. "Pay close attention, friend, to what your father tells you; never forget what you learned at your mother's knee..." It goes on to say:
Dear friend, if bad companions tempt you, don't go along with them...[when they say]...We'll load up on top-quality loot. We'll haul it home by the truckload."...Don't give [the enticers] a second look; don't listen to them for a minute.***
Then it concludes by saying that the greedy who want to haul in truckloads come to bad ends:
...they lie in wait--to kill themselves! And set an ambush--for their own lives! Such is the end of all who are greedy for gain; it takes away the life of its possessors."****
Here in Ohio yesterday, voters began deciding the fate of two state issues. One will reduce the interest that payday lenders can charge. The other will allow casino gambling in the middle of the state. Payday lenders are predatory, charging as much as 392% in interest rates and casino gambling rarely brings the economic benefits proponents trumpet, resulting instead, in low-wage jobs and in preying most on those who can ill-afford to part with their money. So, I intend to vote yes on limiting the payday lenders and no on casino gambling.

But, don't be mistaken, greed merchants can't make a sale if people aren't buying.

Tomorrow, a few thoughts on how we avoid the enticements of the greedy.

*Proponents argue equally fairly that the bailout is really for the entire economy, restoring liquidity so that deserving consumers and business owners can have the credit they need to buy homes, invest in inventory, and make payrolls.

**Solomon is an interesting case. He began his reign recognizing that to compensate for his lack of experience, he needed wisdom. God was impressed that, rather than asking for wealth or power, Solomon asked for the wisdom to do his job well. But Solomon came to a bad end. He didn't go to the poorhouse. But with his wisdom came the capacity to acquire lots of money, women, property, and power. He became so consumed by these things that he wandered far from God. He oversaw the conversion of Israel into a society of greed-merchants, everyone on the take. Shortly after Solomon's death, the nation divided and, eventually, was conquered by foreigners. When the major object of a nation is to acquire stuff that's of no use to us after we die, the nation, no matter how much it's been blessed, dies.

***This is from The Message's rendering of Proverbs 1:8-10

****This is from the translation in The New Revised Standard Version of Proverbs 1:18-19

[Go here for thoughts on the meaning of 'the American Dream.']

[A shorter version of this piece appears on The Moderate Voice.]


reader_iam said...

Great idea for a series, Mark. I'll look forward to following it, and I've linked it, as well.

You might be interested in this CJR article which touches upon some excellent points with regard to the history of the business side of the equation, as well as addressing issues have to do with the business press and coverage of the crisis.

Mark Daniels said...

Thank you so much.