September 28, 2012

Church of England Blasts Bankers Over Libor Scandal

Anglicans advise ‘soul searching’ for broken banking system

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The British parliamentary commission investigating the Libor rate-fixing scandal and other banking misdeeds has recently been handed a mission from God. Investigators requested a public comment period about Libor goings-on, and received—among many others—input from the Church of England, which calls on financial industry officials to repent.

The Wall Street Journal’s Total Return Blog reports that in its submission to the committee, the church points out that banking is necessary for society to flourish, but that banks in recent years “have been championing a free market ideology whilst claiming exemption from its rigors”—leading the financial sector to violate “some of the fundamental principles of the free market economy,” including open competition, the freedom for banks to launch and fail, and “independence from external subsidy.”

“Those violations of the principles of capitalism—combined with enormous bailouts and massive bonuses awarded for failure—have shattered the public’s trust in the integrity of bankers, says the statement from the church,” according to the blog.

While the violations are decidedly of this world, the church’s recommended solutions are not.

“In response, the church’s statement says, the financial industry must look within and search its soul,” the blog reports, before waxing, “if it has one—but we editorialize.”

The church then calls for two “striking steps.”

First, bankers should seek to build “a culture of the virtues” that would enable anyone working in finance to answer the question, “What would it mean to be a good banker?”

Second, the financial industry needs to apologize and repent.

The post then concludes by offering up a little theology of its own:

“One insight from the Christian tradition of penitence and forgiveness is that is often not enough to put matters back to where they were before things went wrong; some demonstration of a change of heart by means of restitution and a visibly robust refusal to let the same failings occur again is necessary before a bad situation can be made good…. To achieve this is not just a matter of technical “fixes” but may require public, corporate contrition for past failings … and possibly some symbolic steps to assure the public that the corporate culture has changed.” 

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