What to Do With Moral Bankruptcy

A response to: Setting Salaries

Dear Editor,

The Social Doctrine of the Church makes this insightful statement that applies to the free market system: “One of the fundamental tasks of those actively involved in international economic matters is to achieve for mankind an integral development in solidarity” (No. 373).

The key word solidarity should mean that every citizen ought to share in the responsibility in the fair distribution of a nation’s wealth. Fr. John Flynn is correct in pointing out that the recent extravagant executive salaries on Wall St., at a time when the government has approved a huge corporate bailout package, are an indicator of the total disconnect with the harsh difficulties being experienced by those who have lost their jobs, their houses and are facing an uncertain future. It’s not the way a nation’s citizenry tries to meet the important requirements in developing solidarity and in building the common good.

However, the problem goes much deeper. The moral question that should and has not been asked during this world financial crisis is, why did the central watchdogs, the regulating agencies like Moodys, Standard and Poor’s and Fitch Ratings give triple A ratings, this is the top evaluation possible, to all the packaged asset-backed commercial paper, sub-prime mortgages and collateralized debt obligations (CDOs)? These so called structured investments were in fact neither properly nor honestly rated because they’ve turned out to be worthless. What this entails is that some institutional financial advisors, with the help of professional regulators, were able to invent an investment scheme that amounted to financial alchemy. What’s too good to be true should not be believed, but greed all too often gets in the way of the truth.

As a result, the financial wizards managed, with their make-believe assessments, to fool just about all the experts by defrauding many individuals and institutions of billions of real dollars. How could this happen? It’s simple; we neglected to practice at least three commandments: One, Seven and Eight. Of course we need to fix this financial collapse, but the more pressing question is, can we fix our moral bankruptcy? People can surely solve the first issue, but only by humbling ourselves and turning to God can we address the second and more serious ethical question.

Thank you,