Monday, April 26, 2010

Doing God's Work?

The injunction of Jesus to love others as ourselves is an endorsement of self-interest.
Lord Brian Griffiths, a Goldman Sachs advisor and vice chairman

We're doing God's work...We’re very important. We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It’s a virtuous cycle. We have a social purpose.
Lloyd Blankfein, CEO of Goldman Sachs

When he heard this, he was shocked and went away grieving, for he had many possessions. Then Jesus looked around and said to his disciples, "How hard it will be for those who have wealth to enter the kingdom of God!"
Mark 10:22-23

This week, financial regulation is the topic on the table in Washington. Democratic Senators are attempting to keep "too big to fail" banks accountable. It's about time. The $700 billion bipartisan financial rescue plan (TARP) was a year and a half ago and these institutions are back to the same risky "investment" strategies that led to the economic crisis as we know it. Since then, millions have lost their jobs and houses and millions of others would have lost their jobs and houses if not for the federal government's efforts: TARP and the $787 billion stimulus plan (and, yes, the federal government could have done a lot more to alleviate both issues).

No American really understands derivatives, like credit default swaps, the instruments that have allowed Goldman Sachs to profit $3 billion this year. They are side bets. And a company that bundles together securities and sells them to investors can actually bet against them, just as Goldman Sachs did at the outset of the housing crisis. That would be like a high school teacher being allowed to make bets that certain students were likely to fail...and give them the grade in the end. Isn't this why Pete Rose isn't in the hall of fame?

Derivatives do nothing for our economy except make wealthy bankers more wealthy. Or if these derivatives go sour, they lead banks towards collapse which leads them to stop lending money which leads the federal government to rescue the banks with taxpayers' money which leads, quite quickly, to the banks getting back on their feet and trading derivatives again which leads to ever-larger profits which leads to higher pay and bonuses for CEO and managers.

How can this possibly be good for anyone? And, of course, how is this doing "God's work?" Banks exist to lend (at a reasonable interest rate) to families and individuals so that they can afford homes, cars, tutition and starting/expanding businesses. When banks do this responsibly, they make reasonable profit, but more importantly, they give people opportunity to be more productive citizens of our society and experience more of this life. Instead, de-regulation from the 1980s onwards has led to an unfettered free-for-all that gives banks an opportunity to make boatloads of profit with the always possible "external cost" of collapsing the economy as we know it and with more and more families and individuals who are strapped with sub-prime mortgage payments and eventually foreclose (2 million more this year).

A "Christian" justification for massive profits that produces an increasing divide between the rich and the poor is blasphemous. Only an "antichrist" would claim that the unleashed pursuit of self-interest without taking responsibility for those deeply affected by risky policies qualifies for love of neighbor. We American Christians must be honest with ourselves and denounce our collective pursuit of wealth to the neglect of "the least of these." Our current system produces uber-wealthy individuals who claim that their wealth production is somehow making the US more prosperous.

Our political leaders in Congress should be prodded to protect middle and lower class Americans from the risky ventures of the Blankfeins of our economy. We cannot afford another year without these basic policies:

1. Wise oversight of the derivative market through a creative blend of taxes, rules and regulations.
2. A consumer protection agency that regulates predatory lending.
3. The creation of a clear "exit strategy" for the federal government to break up or rescue big banks when they fail.

Of course, EasyYolk passionately believes in a movement that does not only speak truth to powerful interests (both big banks and big government), but also one that calls upon individuals, families, businesses and faith communities who can act as a leavening agent to our society. All of our actions can make a difference in the aggregate. We can refuse to buy stock in banks and investment firms who continue to play the daring, selfish game of casino capitalism. We can even move our money into credit unions which exist for families and small businesses, not skyrocketing profits.

Pastors and other Christian leaders should criticize powerful leaders like Blankfein and Griffiths who equate "how deep and high and wide and long is the love of Christ" with the unregulated self-interest of free-market fundamentalism. Christian leaders who justify, downplay or remain silent about these statements are false prophets who, like the rich young man, walk away from the Jesus of the Gospels. Those who are really doing "God's work" are undoubtedly those who protect the most vulnerable and marginalized in our society from the Powers who will do just about anything to keep their edge.

--Theological Autopilot

1 comment:

  1. Tom,

    Parts of this post really made me cringe.
    How can you say that no American really understands derivatives and then go on to explain them via analogies to betting, grading, and baseball? Derivatives, while certainly complex, are not so complex that they are out of the realm of understanding. Would it be more accurate to say that most Americans do not really understand derivatives? Do you understand them?

    And then you claim that “derivatives do nothing for our economy except make wealthy bankers more wealthy.” This is an interesting statement since many derivatives have nothing to do with bankers at all. Care to qualify your statement?

    I agree with you that justifying one’s actions as “doing God’s work” ought to be subject to intense scrutiny. But that sounds like the same justification that is being used for managing our economy.

    PS – What is your definition of predatory lending?