Faith and Financial Reform

Congress is working on passing financial reform right now, in an attempt to ensure that the conditions that brought the economy to a screeching halt will not occur again.  The House and Senate have both passed bills, and the conference committee members were just named.  President Obama would like to have a bill by the time he heads to Europe for an important economic meeting, so we’re looking at June 24th for a final vote.

I was just reading the Senate Financial Reform bill summary (it’s long and boring, but here it is) and happened across these words:

The Economic melt down was driven by an across-the-board failure to protect consumers.

This struck me as interesting because it’s arguable that a failure to protect consumers was what caused this failure.  While it might be easy to point fingers at people that purchased houses with loans they could never hope to pay off, the reality is that the system is much more complicated than that, and thus a failure to protect consumers is not the sole reason for the melt down.  Rather, this melt down was caused by the greed of traders and corporate executives working a system that they did not fully understand in order to make a quick profit.  That’s one reason for regulating derivatives (disclaimer: I do not profess to be an expert of financial instruments), which the current structure allowed to be traded between agents that cared only about profit and not whether or not the derivative was quality or not.  In simple terms, this melt down was caused by people acting like people within a complicated system with big consequences for failure and misunderstanding.

This led me to reflect on the societal institutions that have failed Americans of late.  Our energy companies are destroying the environment.  The captains of industry and finance don’t really know what they’re doing.  This may be the first generation of American’s that will not live as well off as did their parents, leading to the decline and perhaps destruction of the American dream.  Government must certainly play a role in regulation of the economy, which contrary to some will not work out all of its problems with its invisible hand in a manner conducive to living a planet of 6 billion people without wide spread social chaos, but it cannot solve every problem we face, as we see from its failure to fully prevent oil spills, financial melt down and international conflict.  In essence, our faith in many of the civic and economic institutions of society is being systematically destroyed.  This begs the question, what is left for society to have faith in?

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3 Comments on “Faith and Financial Reform”

  1. Nikki Says:

    Good thoughts, and good question! I am not entirely pessimistic in pondering the fate of our society because I have faith in faith 🙂

    Thanks for the blog, have a nice weekend!

  2. Andrew Says:

    Jesus Christ.
    I’m serious. We are fooling ourselves if we think that faith in any human institution will be a solid foundation for living. I’m not going to defend the Christian faith here, only to say that peace, which is so desired yet so rare in these chaotic days, is found in the cross and resurrection.

    I will say that I would prefer the “chaos” of the free market to the other extreme of iron fisted government control, which has some pretty sad examples across human history (see: Zedong, Mao, and Stalin, Joseph). Not that I would compare the US government to these dictators in ANY sense, I’m just making a philosophical argument.

    I’m pro-free market because it has proven to be more effective than government action at raising life-expectancy and standards of living. I think it is good for the downtrodden and impoverished, and that small community organizations that spring up when not crowded out by government are more effective at decreasing poverty. However, I am not a complete libertarian, and recognize that the free market is not perfect, and agree that some (though I’m guessing I would like less than you would) regulation is necessary in order to enforce “rules of the game”. The fact that the bill describes us as “consumers” also freaks the heck out of me. Scary. I really would prefer my identity not to be entwined with consuming things. (see Wendell Berry for a better critique of consumerism)

    Finally–I don’t put my faith in the institutions of humanity to end suffering completely– it isn’t going to happen. Yet I remain optimistic about the future, knowing that man is made in the image of God, and is therefore capable of some good despite his depravity.

    • jayen6 Says:

      Thanks for the commentary. I left that post open ended specifically because I thought you’d probably state this point much more eloquently than would I.

      I look at public service as the second most sacred duty that a person can chose to participate in, behind religious involvement. I believe that the more people are engaged in their government and their communities, the better we will be able to manage the problems that we encounter. At the same time, poverty and crime certainly won’t be eliminated, unless we someday find ourselves in a Star Trek-Esq utopia where neither energy nor resources are limited in quantity (unlikely).

      I’m a proponent of centralized leadership. I believe that it is often times critical to fostering widespread societal change, and that the inspiration and the motive for change needs to start at the top. As one of the only organizations in American culture that spans the entire scope of our country, the government is better positioned to form comprehensive strategies to solve some problems, such as national defense, financial regulation and health insurance provision (we might disagree on that last one), than the market may be. That being said, the power of the market and especially local forces reacting to local problems should not be discounted. People need to have a say and a stake in making changes to their community. We definitely won’t be able to solve everything, but we can certainly make the best of the bad situation we find ourselves in morally, economically and socially.

      And with all due respect to those who believe that the government needs to get out of our lives, we need to recognize that we are no longer living in an 18th century agrarian society with no military and limited international financial obligations. What each of us does affects somebody else, and its time that we owned up to it. The whole must be greater than the sum of the individual parts. If you want to call that socialism, than so be it.

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