Tuesday, October 7, 2008

More Fallout From the Meltdown

The moral dimension of the Wall Street meltdown took center stage yesterday, first in Rome and later in Washington.

In Rome, the Holy Father referred to the crisis in his opening remarks to the Synod of Bishops which began its deliberations yesterday. Referring to worldly things, Pope Benedict XVI said, “These seem to be true reality, but one day they will pass away. We see this now with the fall of the great banks. Money disappears, it becomes nothing. And thus all these things which seem to be real and upon which we can rely, are in fact of secondary importance. ... Only the Word of God is the foundation of all reality, stable like heaven. Therefore we must change our concept of reality. A realist is one who recognizes that the Word of God - this reality that appears so weak - is in fact the foundation of everything."

I do not think the Pope was indicting the desire to earn one’s daily bread or to provide for one’s family through the sweat of the brow. But, his observation that “money disappears, it becomes nothing” is more than a casual indictment of the world of high finance which have dominated modern, capitalist economies in recent years. Yesterday, the S&P 500 lost $384.4 billion of “nothing.” What exactly is lost when the Dow Industrials Average loses 800 points? It is the perception of the future worth of a company. A perception is lost. The Holy Father points to realities that are not just deeper, they are, well, more real.

“He has cast down the mighty from their thrones and has lifted up the lowly,” the Blessed Mother proclaims in the Magnificat. In Washington yesterday, we watched one such mighty thrown from his throne, the former head of the now bankrupt Lehman Brothers, Richard Fuld, Jr., testify before Congress about the collapse of his bank. He claimed to take “total responsibility” for the collapse, but was short on specifics. He could not say why, for example, in December of 2007, when he knew his bank was facing a liquidity problem, he nonetheless approved almost $5 billion in bonuses to himself and other employees. Nor could Fuld explain why he told analysts that his company was doing fine just five days before filing for bankruptcy.

What is the political consequence of all this? The desire for revenge against the titans of Wall Street is understandable and must be resisted, but the desire for justice can yet be redeemed. Either candidate or both at tonight’s debate could say that in addition to the $700 billion bailout passed last week, they will seek additional funds to prosecute any criminal wrongdoing by the likes of Mr. Fuld and to recoup any assets that can be legally garnished. The government routinely garnishes the wages of average workers when they owe back taxes or child support. Why not garnish the vacation homes of a few Wall Street executives?

Michael Sean Winters

No comments: