Moral Reflections on the Financial Crisis

Fr. Vasile Catalin Tudora

For Mr. John Doe everything started with a dream, an American dream. John is a middle class American making an average yearly income. He is married and is currently renting an apartment. Although the apartment is big enough for his family he dreams of a home that he can own and improve as he sees everyday on the Home & Garden Television channel. Also he dreams of being able to sell his house for a profit in few years to help him boost his minuscule retirement account. However his current income does not qualify him for a conventional mortgage loan. But his dream stays with him day after day. At some point John decides to give in to the avalanche of sub-prime mortgage lenders mailings that offer him extremely low rates for the house of his dreams.

With no proof of income or securities needed John takes a loan for a house that he couldn't afford before, but now, taking advantage of the historical low lending rates, he can. He buys the house, move in and goes on with this life, or so he thinks. Few years pass and the variable rate he took 4 years back unexpectedly doubles. The monthly payments increase twofold and Mr. Doe starts struggling to meet ends meat. Realizing that he cannot afford his dream home anymore he decides to sell, hoping to recuperate his initial investment. To his surprise however he realizes that he is not alone: that other millions of people are in the same situation. Now, not only he profit is lost profit but he will also loose his house. By this time his dream has become a nightmare.

What happened to Mr. John Doe happened to many Americans. Blinded by the hope of a quick profit heavily advertised in the media, pushed by the financial institutions and a booming real estate industry, people bought houses bigger that they could afford with money they did not have. At their turn the lending companies in the hope for fast returns gave out loans to people they knew they could not pay back, selling then the mortgages to even greedier Wall Street investment banks. Nobody thought however that this bubble was going to burst and in the end someone will have to pay hard currency for all the virtual money thrown into the system.

This rat race for a quick profit engaged the whole society in a quest for the quickest and most rewarding investment. The greed that characterizes certain layers of our society infiltrated into our minds and made us dream of things that we have no need or use. We, as a society have forgotten that "the love of money is a root of all evils, of which some having lusted after, they were seduced from the faith and pierced themselves through with many sorrows" (1 Timothy 6:10).

The craving for money and for luxury has been transmitted to everyone and the true purpose of property has been lost. The justification of a house is to live in it, to provide a comfortable shelter from rain, heat and cold to all the members of the family. In this whole new axiological system homeownership has become a proof of social status and an object of pride. So we buy houses bigger than we require, with luxurious amenities that we don't actually need, paying prices that we cannot sustain. All for the love of vanity, for the sake of overhearing that little remark: look at John's house, he made it in life!

We see the Wall Street moguls seeking today for help, ironically, from the same people they have tricked into paying them unwarranted usury: the American taxpayers. Their fall is the direct result of their will to fly high, despite the odds, and, as Icarus of old, their wings of wax are melting now and they struggle in free fall. "O you who live on many waters, rich in treasures, your end has come, and the measure of your unjust gain" (Jeremiah 51:13). Their mistake is clear: "A rich man who crushes the poor is like a sweeping rain which leaves no food" (Proverbs 28:3).

To better understand what went wrong we should appeal to our usual source of wisdom: the Bible, trying to discover how good, Christian investments should have been made to avoid disaster. Although the Scripture does not give us a manual for safe investments, it offers us several principles that promote a balanced life, both spiritually and financially. The two are intimately linked together; but not necessarily in the sense that more wealth means more spiritual gain. On the contrary we hear the word "blessed are the poor, for theirs is the kingdom of God" (Luke 6:20). Of course this doesn't necessarily imply that we shall all be monetarily poor to enter the heavens, but it points to a necessary adjusting of our focus point toward what really matters from the perspective of eternal life.

The first rule is simple: "Fear God and keep His commandments" (Ecclesiates 12:13). In anything we do we should seek to see if it fits the tradition of our faith. Are we stealing or cheating for the money? Are we hurting directly or indirectly other people? Do we show Christian love? If our conscience starts raising flags, it is time to stop.

Second, when considering an investment we should think of taking into consideration the following advise"…which of you, intending to build a tower, does not sit down first and count the cost, whether he may have enough to finish it "(Luk 14:28) This is the best financial advice one can get: build as much as you can afford, borrow as much as you can pay back, think carefully before you do anything. No other virtue is more appropriate to sustainable investing than prudence.

Third, we should reconsider our view of loans as profit making instruments and revert back to their understanding as instruments of mercy and a vehicle for the spreading of Christian love. "If you lend to those of whom you hope to receive, what thanks do you have? For sinners also lend to sinners, to receive as much again. But love your enemies, and do good, and lend, hoping for nothing in return. And your reward shall be great, and you shall be the sons of the Highest. For He is kind to the unthankful and to the evil" (Luke 6:34-35).

The bible speaks clearly against the practice of usury. The ever rising interests demanded by the lenders today do exactly the opposite. The word usury, or in Hebrew neshek, literally means a bite, in reference to its painfulness to the debtor that looses a portion of his loan as interest. The lenders are therefore "biting" in the incomes of many Americans that are dreaming too high without thinking or planning much and for that are now paying the price.

I don't want to be misunderstood. There is nothing wrong in wanting to improve ones financial situation, but to do this at the expense of others, and especially without labor, as most of the investment financial instruments promise, it is against the will of God. Usury creates for the lender excessive profit and gain without "labor" which is deemed "work" in the Biblical context. Saint Apostle Paul says clearly, "for even when we were with you, we commanded you this, that if anyone would not work, neither should he eat"(2 Thessalonians 3:10). Financial gain without labor is detrimental to the society because no one can make a profit out of thin air, and someone will have to pay in the end. It is a practice which diminishes the capital wealth of the needy and eats it up to the profit of the lender, leading to the financial crisis we are seeing today.

The Mosaic Law advises firmly about financial interest: "If you lend money to one of My people who is poor beside you, you shall not be to him as a money-lender, neither shall you lay upon him interest" (Exodus 22:25). Lending is looked upon in the Bible as a work of agape-love, a way of showing that you care for your brother in need and not a way to increase ones capital.

There are people that rightfully argue however that lending money to someone for a lucrative purpose warrants the demand of a modest interest since the loaned capital is going to increase the wealth of the borrower; so one could be entitled to ask for a share of this gain. One can argue the same thing for someone that needs money to buy luxury items like a yacht, a palace or the sort.

The Bible does not refer to this type of financial gain when it forbids interest. But if one demands interest when lending money to someone to be used for food or shelter, not looking to make any profit out of it, this is against the commandment of love we are called to uphold. It is therefore not about asking or not for interest, it is about asking for interest in a non-lucrative situation, asking for a share of a profit that does not exist.

Using this basic principle we can evaluate pretty well when we come across a real-life situation, whether a loan is productive or not; whether we are borrowing or lending for a productive purpose, for a charitable or luxurious one, or for one in every way unproductive. We should use therefore our moral judgment and think carefully before investing in the capital market, or lending money to someone. We should evaluate everything from a Christian point of view because we don't want to participate in, or encourage, practices that promote greed, unwarranted gains and exploitation.

The final point refers to the true Christian investments, the ones that do not devaluate with the first wind of change in Wall Street. "Lay up treasures in Heaven for yourselves, where neither moth nor rust corrupt, and where thieves do not break through nor steal" (Matthew 6:20). Our true investments are the spiritual ones; investments in faith, hope, patience, Christian love. These safe funds will ensure a full life for eternity, not just for a few years after retirement. Because when the moment to leave this world will come we "shall lay up gold like dust, and among the rock of the torrents of Ophir" and "the Almighty shall be our gold and silver" (Job 22:24-25). No treasure of the earth will matter anymore and the true meaning of our spiritual gains will be revealed.

In its race for the next available profit our society has forgotten its good yet deemed old fashioned Christian roots. We try to expel God from our lives and the more we do it the more disastrous are the consequences. The current crisis is just one of many. It is maybe time to start reapplying our Christian traditions and use them as a medium of change for the world around us. Basic wisdoms like moderation and good judgment joined with the Christian virtues of sacrifice and love should become fundamental principles that we can utilize in any aspect of our everyday life. In them we can find the insights that can guide us toward a sound life, both spiritual and financial, realizing that the only true treasure we can accumulate and sustain for eternity is not here but in heavens.

source: http://www.orthodoxytoday.org/articles8/Tudora-Moral-Reflections-On-The-Financial-Crisis.php