Elizabeth Warren and Goliath

I had a most instructive conversation this week with Elizabeth Warren, the Harvard economist who is also the Chair of the TARP Congressional Oversight Panel. Warren has a way of cutting through the jargon and confusion of many economists and of this economic crisis -- right to the moral core of the issues at stake. I knew her for her keen insights, but I didn't know she was from, as she puts it, a "mixed marriage from Oklahoma" -- Baptist and Methodist -- and that she is a former Methodist Sunday school teacher. In the interview I did with her for Sojourners, her moral and even theological comments were as impressive as her economic analysis of our present crisis. She said the battle for financial regulatory reform is like the battle between David and Goliath. (You can read the interview in the April issue of Sojourners magazine, which comes out in early March.)

Warren's narrative of the U.S. economy, and the banking industry in particular, was very clarifying. For most of U.S. history, our country went through repeated periods of boom and bust, with all the consequences of those cycles. But after the Great Depression, a number of new financial regulations -- rules for the road -- were put into place that were designed to protect average Americans in particular from the continued abuses of the big banks and the often terrible results in bad times for ordinary people. Two important examples were the FDIC (Federal Deposit Insurance Corporation) to protect people's savings and the Glass Steagall Act of 1933 to prevent banks from speculating with depositors' money. And the new rules worked for several decades, creating both prosperity and security for many American families and an emerging middle class. But starting in 1980, the rules were first watered down and gradually removed, and banks were free again to engage in both the abusive and very risky speculative behavior that helped to bring on the Great Depression, and resulted again in the current Great Recession.

She explained how credit card and mortgage application forms used to be only a page or two and were both clear and understandable to the average person -- even allowing people to easily compare and contrast the deals offered. But now, as all of us know, these forms have expanded to 30 pages or more with lots of complications, hard to comprehend provisions, and "fine print" that cleverly hides a long list or traps, tricks, and a myriad of both exploitative arrangements and outright abuses that greatly benefit banks at the expense of borrowers and card holders. In clear moral terms, Warren described the current behavior of our biggest banks as deliberately deceiving, entrapping, and cheating unsuspecting customers into very precarious and ultimately disastrous financial positions. And with no more rules of the road, the banks were leading their customers into the financial ditch. An economic crisis has been the result with massive suffering and pain for millions of Americans.

We are now living in a "lawless" economic environment, according to Warren, where our biggest banks have become our most dangerous predators -- and with no protections for the rest of us against the "law of the jungle," as she puts it. The consequences for our economy, our culture, our families, and even our souls have been disastrous. This is not the way we should want to live, Warren says, and it is creating a world which we should not want our children to grow up in. She makes the urgent case for reform with the compelling analysis of a top economist, the family values of a grandmother, and the moral arguments of a person of faith. The sins of the financial world have become both a moral, and even religious, issue from the perspective of the Methodist tradition "which still shapes me."

Warren is the "mother" of the idea for a new Consumer Financial Protection Agency (CFPA),which is in the current financial reform bill recently passed by the House of Representatives, and is now slowly making its way through the U.S. Senate. But the big banks are aggressively fighting back, trying to prevent their own regulation only one year after the financial meltdown for which they were in large part responsible. There seems to be no remorse, let alone repentance, from the big banks -- only record new profits enabled by their taxpayer-funded bailouts, and enormous bonuses to the executives who made the very decisions that brought the economic system down on the heads and hearts of so many Americans. The biggest banks in America are giving shame a bad name.

Why are new rules, regulations, and protections necessary? Because of the human condition, the realities of human nature, and a biblically orthodox understanding of human sinfulness. Yes, the reasons we need the protections offered by a Consumer Financial Protection Agency are as theological as economic. And it is amazing to me how many of those who oppose any regulation of Wall Street also claim to be religious conservatives. They subscribe to what I label in my new book, Rediscovering Values: On Wall Street, Main Street, and Your Street -- A Moral Compass for the New Economy, "the myth of the sinless market." I am a conservative Christian too, conservative enough to have a healthy appreciation for human sins, human failings, and fallen-ness, and after witnessing the behavior of America's biggest banks during this economic crisis, an old theological term called human depravity. It is simply bad theology to trust large corporations not to pollute our waters, poison our air, or cheat their unsuspecting customers. They have to be prevented from doing so for the sake of the common good. Good financial and economic rules reflect, not only good economics, but also good theology. And the free market fundamentalism of Wall Street's defenders is, among other things, bad theology.

But as Elizabeth Warren, a good Methodist, warns, the banks are trying everything they can think of to kill financial reform. And we must not let them do that. In the name of a fairer economy, of family values, of moral values, and of sound biblical theology, the faith community must now make itself heard on the urgent issue of financial regulatory reform. We must hold our biggest banks accountable to the common good. So let our Senators not just hear from the bankers, but now also from pastors who see what such abusive banking behavior has done to their families and parishioners, to devastated communities with shuttered houses, to the prison of debt that more Americans find themselves in. People of faith across the land must now tell their elected representatives that we will be "watching and praying" to see what they will do about necessary financial reform. We don't have the money in our financial coffers that the banks do to finance their political campaigns, but we do have our voice and our votes which will be turned against them if they vote against the best interests of our people and for the greed of the bankers. Jesus said it well -- choose this day who you will serve, God or Mammon (Money). Let's now put that choice to our senators, who need to hear from us this next week while they are in their district offices during the Presidents' Day recess. Critical decisions are being made for or against critical financial reform right now.