Wednesday, September 17, 2008

GREED or HUBRIS?

We are witnessing a major financial meltdown in our country. Investment banks, insurance companies, normal banking institutions, lending institutions are collapsing. People are loosing homes through foreclosure. Why? We're being told be people on both sides of the aisle that the culprit is greed. Does that surprise anyone? It has always been true that for most people, the more you have, the more you want.

Reinhold Niebuhr writes of the root of human sin:

Man is insecure and involved in natural contingency; he seeks to overcome his insecurity by a will-to-power which overreaches the limits of human creatureliness. Man is ignorant and involved in the limitations of the finite mind; but he pretends that he is not limited. He assumes that he can gradually transcend finite limitations until his mind becomes identical with the universal mind. All his intellectual and cultural pursuits, therefore, become infected with the sin of pride. (Reinhold Niebuhr: Theologian of Public Life, Larry Rasmussen, ed., Collins, 1989, pp. 136-137).


Listening this morning to NPR and watching a bit of news on CNN and MSNBC, it seems that we're talking about people who in the pursuit of wealth entered into investments or sold investments that no one understood and besides that no one seemed to care about. We have a government that decided to let the "markets run free," without any oversight, assuming that the markets would take care of things. Well, greed and hubris both seem to have stepped in and now the economy is at risk. Niebuhr would call this, I believe, sin.

5 comments:

Anonymous said...

As a banker for a major US bank... this is a subject I know something about.

It never ceases to amaze me how much greed and pride play a part in people's lives. I have watched people make more in one day than they will make in a lifetime... then turnaround and "invest" it all.. only to lose it all. The thought is, this is what rich people do, so I need to do it.

Does it impact us? Absolutely! We need 3,000 sqft or we need a 4th bedroom. Maybe a garage instead of parking outside.

Since many of our discussions are political, I think both sides are showing how AWFUL they are in handling this. Obama and Biden blame Bush.. great, real helpful. McCain says we need a task force, wow, helpful in like three years to tell us what all the academics will already be telling us as to what went wrong. Frankly, I will give Sen Reid credit..he said today "we don't know what to do." Thats honesty and not a bad answer b/c frankly most people don't and politicians DEFINITELY don't!

As a banker.. who do I blame? EVERYONE! Bankers got too lax as all our loans paid on time. (happens every time and now we will be too tight!) Politicians.. BOTH sides.. remember Bush telling us to spend after 9/11. I also remember the dems pounding on banks to lend more to poor people to buy homes and have the American dream. The reality we all now see is.. frankly, not everyone needs a house. I finally blame the consumers. Bigger, better was the rule.. and then greed kicked in with spec homes, beach houses, and knowing a greater fool would pay more money than we did.

Sorry for the rant.. and happy to add more.. but this is an important and timely issue for the nation and our souls. Capitalism is essentially build on "greed". Its not a bad system, but as Christians we much check ourselves or fall into the pit.

Pastor Bob Cornwall said...

I agree with your statements by and large. I think that the presidential candidates are pressed to let us know they'd do something. Obama must say -- well the previous regime was asleep at the wheel, which is true. McCain has to say -- well we need to do something different from what the guys in my party did so I can do something differently.

From what I've been hearing much of this problem is due to doing exactly what you've said -- trying to sell a dream we can't afford.

We just bought a house this summer -- after 25 years of marriage. We have the savings for the down payment and bought a house we could afford. In California we rented because buying was out of our reach. Too many people tried to overcome that dilemma by buying with no money down and interest only loans. When the time came to face the music, they couldn't do it. But we were told, let this be an ownership society.

The reality is -- you can't buy a home if you don't have the cash. And sometimes that means moving to a different part of the country.

Note that while Michigan has a high foreclosure rate it is for a different reason than the other areas of the country. The houses here aren't all that expensive -- if you have a job. That's the issue here!

In California it wasn't the job situation so much as not having enough money to pay bills.

It is strange to watch the bank we had banked with for years, a bank we had even invested in (WAMU)now stand on the brink of default. Just 2 years ago it was considered one of the biggest and best. It was a good bank for us, but had we stayed in California we might be looking for a new bank.

Greed and Hubris along with a bit of ignorance can cause a lot of trouble! Thanks for the thoughts.

Anonymous said...

Bob you are right on.. and have a great grasp of the realities.

First.. we live in a "yes" culture. To even suggest "you can't afford it" is elitist, racist, you pick the word. However, it is reality. The great lie of the American culture is the idea of the American dream. Companies don't hire for 20 years, home prices definitely don't always go up, and easy credit is NOT a good thing.

You also hit the nail on the head in regards to the banks. Most mortgage companies were located in California. Lenders are people.. and assume that the real estate issues in their area are the same across the country. As you state.. Cali has a price issue, Mich has a job issue or cash flow issue etc. Large, nation wide banks use one size fits all lending.. and it doesn't work in different regions. After being burned.. banks are now down to the zip code on how they will lend.

Bankers will also point to politicians.. and they must be held accountable for forcing banks to lend to more and more people. Community reinvestment sounds great and its a great slogan.. but the reality doesn't work.

Pastor Bob Cornwall said...

This is just a thought. Is some of what is happening today a result of changing the laws that allowed for nationwide banks. Now, I don't know if this is the issue, but I do remember when banks were limited to one state. Now, we have nationwide banks and not everyone knows what's going on in each locale. On the other hand, liquidity is very helpful. I'm not suggesting we go back, but perhaps a bit more state involvement might be helpful.

Anonymous said...

Its a great question and observation. The elimination of the cross state line rules allowed the creation of the regional and national bank. The good news is you can use an ATM across the country without a fee and the bigger banks can service bigger loans and spread the risk. (so its thought) From a shareholder perspective, its really been a disaster. Just look at First Union and Wachovia.. Bank of America is building an empire while the stock suffers.. Citigroup is another. The flip side is..small community banks have popped up all over the place.

In my humble opinion, the first problem is there are too many banks chasing too few loans. Banking is essentially a commodity business. One bank may have nicer people or a cooler website, but they all keep your money and give you a loan. Banking is also a mature business, so banks keep lending and lending to stay viable. Now comes the consolidation as the weaker players get gobbled up or go out of business. In business, failures aren't a bad thing. Like a tree, it weeds out the dead branches. We all want everyone to make it, but its good for failure as it makes everyone more cautious!

Finally.. I cringe at more regulation. Banks are overly regulated as it is. Its not unusual for regulators to sit in offices for weeks at a time reviewing files.

Sorry.. I can go on and on.. but happy to answer questions. To put a Christian spin on this.. there are some similarities to the church. The mega church may be good in the pooling of resources, but we know it loses touch with the lives of the individuals. On the flip side, I have been in a town of 2,000 that close to 100 churches to fit everyone's needs.