sub-prime mortgages II: the moral/ethical angle (from a Christian perspective)

From Joel Belz at World on subprime mortgages as "sin"...

To say that the recent troubles of the U.S. market in home mortgages are the result of human sinfulness will strike some folks as overly moralistic, accusatory, and judgmental. But it is the case—on at least two fronts.

We're uncomfortable, of course, calling these things "sin."…But subprime mortgages, by definition, are loans written on behalf of borrowers who really can't afford them. That means that at least two forms of sin are occurring: First, someone is coveting a house that he shouldn't yet be thinking about buying; it's beyond his means. Second, someone who should be looking out for the weakness of his neighbor (the customer), and helping protect him against that weakness, is instead sucking him right into destructive behavior.

The first person is trifling with the Tenth Commandment. The second person is trifling with the whole Second Table of the Law—the commandments that Jesus summarized as teaching us to love our neighbor as much as we love ourselves.

And then broadening the application to society as a whole...

But before we start feeling too judgmental and superior toward the first sinner, the one trifling with the Tenth Commandment, we need to remember how much a picture of our whole society that person has become. We are a nation of coveters. We spend our whole lives trying to figure out how to have what God has not yet given us…

There are laws that hold such bartenders accountable. Right now, the main laws holding lending institutions accountable are the laws of the market, and they've exacted some pretty severe penalties in recent weeks as reminders that you can't play games with financial realities.

And oh, yes. There are also God's laws. Godliness, with contentment, is great gain. And even in your business dealings, treat your neighbor the way you want him to treat you. Anything less is subprime.


From Chuck Colson in his September 10th Break-Point on morality and markets (hat tip: Linda Christiansen):

More regulation may be necessary, but what's at the root of the current crisis is imprudence—on the part of borrowers and lenders—a sad reminder that in financial matters, like all the rest of life, there's no substitute for virtue.

The sub-prime market is for people who cannot qualify for conventional mortgages, many because of their credit histories, others because they want to borrow more than they can truly afford. So why would mortgage lenders make such risky loans?

Well, some years back, Wall Street came up with a clever way to increase profits. They could buy mortgages from banks, package them into what are called mortgage-based securities, and sell them to clients….

Once again we see worldviews really do matter. The worldview that says live for the moment, get whatever you can, always leads to disaster. The Christian worldview, on the other hand, teaches behaving responsibly, living within your means, and deferring gratification—all of which are requirements for sustaining personal prosperity and the free-market system.

Economist Michael Novak said it best: Free, democratic capitalism is like a three-legged stool, supported by economic freedom, political freedom, and moral restraint. Today's sub-prime mortgage crisis, which could threaten the American economy, shows what happens when you forget that third leg of the stool—moral restraint.