LENTEN ETHICS

Anyone willing to look can see that ethical criteria for honest, clean, and trustworthy financial practices have spiraled downward to oblivion in the U.S.  The Goldman Sachs scandals are opening new depths of cognitive dissonance measured against ethical standards; the same with the banking industry, disgraced by robo-signing and sheer greed. 

The question is whether people of both faith and secular humanist traditions have the will to unearth and reconstruct a moral vision of justice and shared decision-making.  The moral vision is there in Christian, Islamic and Jewish roots as well as in egalitarian writings of the Enlightenment. The grand scale corruption of today’s common practice is both an intellectual and political problem.  The rationalizations that enshrine wealth as moral success beg for deconstruction; as does the so-called democratic practice of self-interested factionalism.  U. S. political practice keeps defeating itself by separating process from goals, turning the process itself into the supposed desired end; easy to do if you make millions doing it.       

As example, Goldman is making headlines almost every day. Last Saturday (3/14) the NY Times reported that federal prosecutors “have recordings of a Goldman Sachs executive leaking confidential information” about technology stocks to financial mogul, Raj Rajaratnam, now serving a twelve year sentence in federal prison for financial fraud.  Two other Goldman executives are reported under investigation for their roles  in a vast insider trading network. 

Of course it’s not surprising that a strong defense is being mounted on behalf of Goldman Sachs, exposed in last week’s blog for its “shameless” double-dealing in the proposed giant El Paso/Kinder Morgan merger. (Where Goldman persuaded El Paso to sell itself for far less than it was worth.)  Loyalty to profits count. New York’s Mayor Bloomberg made a special visit last week to offer condolences to Goldman CEO Lloyd Blankfein as he endured this new avalanche of criticism. It had grown even larger because of the spectacular resignation last Monday  (3/12) by one of Goldman’s own executives, Greg Smith. In a Times Op Ed Smith itemized Goldman’s toxic and destructive culture: clients are called Muppets, he said.  A “vampire squid culture” urges employees to “rip-off clients,” and “ rip out eyeballs.”    

 Mayor Bloomberg called the criticism worse than “ridiculous.”  But the fact is that Goldman is “a key contributor” to the Mayor’s wealth. NY Times Reporter Michael Grynbaum observed  that Goldman “leases thousands of Bloomberg terminals, sending tens of millions of dollars a year to the mayor’s private company [Bloomberg News].”

These seem like misdemeanors compared to the Wall Street Journal’s report of continuing corruption in the banking industry where a decimal point can destroy the lives of thousands of moderate income or unemployed families. Last Thursday the Journal reported on new research by the Federal Reserve Bank of Cleveland discovering that banks are ”systematically overvaluing foreclosure homes.” This makes it too difficult for under water homeowners to negotiate a loan modification, enabling banks to evict people sooner.  Nice! “The higher the lender thinks that the value of a home is, the less likely they are to offer a modification” that would enable families to remain in their homes.

Meanwhile the struggle to improve financial regulation is being fiercely resisted with big money lobbying from the same Wall Street industry. It has dug in its heels to water down the final stages of rule-setting for the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

This Sunday, in the Christian world, cognitive dissonance will be the order of the day as thousands of churches hear the Lenten lectionary reading from Jeremiah—“I will put my law within them, and I will write it on their hearts.”   And from the Psalmist, “Create in me a clean heart, O God, and put a new and right^* spirit within me.”  

When and if the people connect the dots, we’ll know that when we act.  Everything now hangs on whether we can grasp that the dreams, the language, the rhetoric no longer describe either our broken world or where we need to go. Will we articulate new visions for ancient values?     

Public Liturgies: Wall Street Theology

March 12, 2012

WALL STREET THEOLOGY

     Some readers are asking about God in relation to these blogs.  One way to begin that conversation is by listening to a Wall Street version of God talk.  In 2009, in the teeth of the Great Recession, the CEO of Goldman Sachs announced “I’m doing God’s work” on the caption page of a report to shareholders. Lloyd Blankfein said he helps companies raise capital which creates wealth “that allows people to have jobs that create more growth and more wealth.”  

     The inner mechanisms of this theology are illuminated by the February 29^th ruling by Chancellor Leo E. Strine, J. of Delaware’s Court of Chancery. A brief summary of Chancellor Strine’s 33 page ruling goes like   this:

In Scene One the big energy company, Kinder Morgan, wants to buy the giant oil production and pipeline company El Paso for $21.1 billion.  Behind the scenery Goldman Sachs, hired as an advisor on the deal, turns out to own a $4 billion dollar stake in Kinder. Working on both sides of the street, Goldman also takes an undisclosed $20 million fee from El Paso to advise them at what price it should sell itself to Kinder Morgan.

Scene Two: Douglas Foshe, CEO of this big energy company, El Paso, doesn’t tell his own board that after the merger he hopes to buy the production part [read oil production] of El Paso and he works behind the scenery to persuade Kinder Morgan to offer it to him at a low price.

Scene Three: “In other words,” says Chancellor Strine in his court order, “when El Paso’s CEO was supposed to be getting the maximum price from Kinder Morgan, he actually had an interest in not doing that.”

Scene Four: The Chancellor continues: “This undisclosed conflict of interest compounded the reality “that the Board and management of El Paso relied in part on advice given by a financial advisor, Goldman Sachs & Co., which [also] owned 19% of Kinder Morgan (a $4 billion investment) and controlled two Kinder Morgan board seats.” 

Scene Five: “Although Goldman’s conflict was known,” continues the Chancellor, “When a second investment bank was brought in [Morgan Stanley] to address Goldman’s economic incentive for a deal with, and on terms that favored, Kinder Morgan, Goldman continued to intervene and advise El Paso on strategic alternatives, and with its friends in El Paso management, was able to achieve a remarkable feat: giving the new investment  bank an incentive to favor the Merger by making sure that this bank only got paid if El Paso adopted the strategic option of selling to Kinder Morgan.” [emphasis added]

Scene Six: “In other words,” explains the judge-Chancellor, “the conflict-cleansing bank only got paid if the option Goldman’s financial incentives gave it a reason to prefer was the one chosen. On top of this, the lead Goldman banker advising El Paso did not disclose that he personally owned approximately $340,000 of stock in Kinder Morgan.”

     In a very telling comment by the NY Times business columnist, Andrew Ross Sorokin, he underlines that

“What’s even more surprising about Goldman’s role working for El Paso is that it came just six months after the firm issued a new set of guidelines by its “business standards committee.” The firm had just agreed to a $550 million settlement with the Securities and Exchange Commission over allegations that it knowingly sold its clients financial instruments meant to fail. In the guidelines, the firm pledged that its most important principle is that “our clients’ interests always come first.”  [Sorokin is a major source for this blog, in the Times of March 2^nd]

     In this context the question of theology and Blankfein’s God talk is of course quite frivolous and beside the point, which is the profound ethical violations, including fraud and victimization in the billions of dollars; including the sweetheart relationships between business and government regulatory agencies; including the absence of  relative absence of serious penalties and serious reforms in banking where their destructive impacts has registered at the top of the moral richter scale destroying the lives of millions of people in the U.S. and around the world.

     It goes beyond even that.  Money and materialism have guided leaders in both secular and religious life to tolerate destruction even when it is clearly predicted. We knew it was possible for nuclear power plants to melt down as in Japan and Chernobyl but we’ve built them anyway. We knew it was impossible to abandon manufacturing without destroying the social and economic fabric of whole cities and  regions, but the political will, the moral resistance—some would say the voice of God—was not spoken.

     

     The kind of regulation and needed social policy to protect all the people, lies in a direction condemned daily in the political campaigns. That direction is toward a re-engagement with social management for the common good, sometimes known as socialism.

     Lloyd Blankfein and his class of one-percenters are not phony believers. He may have stumbled badly in this case but his is the deeply-held belief shared by many in his dominant class. It has suffused the acquisitive, greedy human self with ideal outcomes. Their view is that fierce competitiveness in the marketplace, triumph and wealth is the formula of their own righteousness, and therefore it seems God cannot be far away.

     The first question to Wall Street is: are the outcomes ideal? What is fair about the global banking frauds uncovered in recent years but rarely prosecuted? Where is the fairness for millions in the U. S. who have become homeless and unemployed?

     The second question is for the ninety-nine percenters, at least half of them (to judge by polling results)  suffused by the same belief system. They’re Tea Partyers, conservative democrats, active Republicans, and they’re often loyal to the Blanlkfeinian dream that righteousness and wealth are members of the same family.

     Challenging the popular dreams of imagined virtue and its self-serving outcomes is the first step toward the often missing God talk which can really exist only when justice and caring among people—not money—is the subject.