BOB ABERNETHY, host: As public outrage continues over Wall Street’s plans to pay multimillion-dollar bonuses to its top executives and traders, President Obama called such bonuses “obscene” and proposed a new tax on the country’s largest banks.  Meanwhile, the heads of the four largest investment banks were the first witnesses before a bipartisan commission investigating the causes of last year’s financial crisis.

A new book out this week called “Rediscovering Values” urges moral as well as economic reforms. Its author is Rev. Jim Wallis of Sojourners magazine. Jim, welcome. As you look back at the causes of the so-called Great Recession, what are the most important ones that you see?

REV. JIM WALLIS: Well, I’m talking about rediscovering values on Wall Street, Main Street, and our street. We can’t just look at Wall Street. We’ve got to start personally, and so we talk about families and choices and local churches and what we can do in our lives, our neighborhoods, our communities.

ABERNETHY: I want to get into that, but first of all, the causes. Who’s to blame?

WALLIS: Well, I think we all have to look in the mirror here. These new maxims — greed is good, it’s all about me, I want it now — we see that on Wall Street. We see these bonuses that are being announced this week are really, I think, a sin of biblical proportions, clueless about what’s happening in a place like my hometown of Detroit where there’s thirty percent unemployment. But also my Depression-era parents didn’t spend money they didn’t have for things they don’t need. So I’m seeing a whole reevaluation going on. Underneath this economic crisis there is a values crisis, and I’m hearing a conversation, already in this first week, around the country about how we need a moral recovery to go along with the economic recovery.

ABERNETHY: And in that moral recovery, talk about some of the things that other people have talked about, as well as you, which is the huge gap between the richest and the poorest.

WALLIS: You’re exactly right, and, indeed, I learned that the two peak moments of the great gaps were the year before the Great Depression and now the year before this Great Recession, when things get so divided it breaks social contracts and covenants, and things begin to unravel and spin out of control. We trusted the Invisible Hand, you know, of Adam Smith, the market, to make sure things turned out alright. But the Invisible Hand let go of the common good, so I’m saying values like “enough is enough,” it’s “we’re in this together.”

ABERNETHY: So we consume less, we conserve more.

WALLIS: And we find each other. Don’t keep up with the Joneses; make sure the Joneses are okay. That’s a very different kind of conversation. So I see a new kind of “let’s learn from this.” A crisis gives us a chance to reset some things, so I see that happening. I’m talking to community organizers, Wall Street people, pastors. We’re having dialogues around the country. This is the beginning of a new conversation. You know, this is a chance to learn from our mistakes and find a moral compass for a new economy.

ABERNETHY: So you want individuals and families to be more responsible about their use of money, going into debt, that kind of thing. But it’s also going to take, if what you want is going to come about, it’s going to take massive change in government policy, right?

WALLIS: You’re exactly right. Right. This is a structural crisis and a spiritual crisis.

ABERNETHY: And so how is that going to come about?

WALLIS: Well, we need new financial regulations, a real holding Wall Street accountable here. You know, [my wife] Joy and I just fired Bank of America, because they had all this money, and we gave them grace, you know, in the meltdown, and now they are extending no grace to people who are being foreclosed upon. There is more money in these bonuses, these bank bonuses, than would be needed to resolve the foreclosure crisis. So the banks say they’re too big to fail, I’m saying make them smaller, so a lot of people could move their money. There’s even a website, moveyourmoney.info. You move your money to community banks that are serving the community, I think that’s a practical thing that people can do. It empowers people. Congregations, denominations could move the Methodist $15 billion pension fund. That gets Wall Street’s attention.

ABERNETHY: It is said that the high salaries that are paid on Wall Street, and to CEOs generally, and to a lot of performers and athletes, that these encourage people to work harder and that if you don’t pay them somebody is going to go someplace else. Are you really, are you proposing then a tax on everybody, not just Wall Street, but a big tax on people who are making above a certain amount of money?

WALLIS: You know …

ABERNETHY: A bigger tax, I should say.

WALLIS: At some point you cross a line, and they’ve crossed some lines here. I mean, to go from a ratio of CEO salaries to average workers of 30 to one, which is what it was thirty years ago, to now 615 to one, come on, I mean, we’ve crossed some lines here, and so we have to — Joseph Schumpeter, the Austrian economist, said when you’ve got no moral framework for the market, no ethical sensibility, the market devours other sectors and finally devours itself. Gandhi said the seven deadly sins are wealth without work — two of them — and commerce without morality. So we’ve crossed some lines here. How do we come back to some of our most basic, oldest virtues here? And I’m hearing conversations on Wall Street and right in my own hometown of Detroit that say, “We’ve lost our way here, let’s try and find it again.” And I think, yeah, some structural accountability, but also some spiritual transformation at the level of our family life and time with kids and all the rest. That’s what’s coming out of this. I think that could be redemptive.

ABERNETHY: Jim Wallis of Sojourners magazine, many thanks.

WALLIS: Great to see you again.

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Reverend Jim Wallis is an evangelical minister, a writer and the editor of Sojourners magazine. Father Jim Martin is a corporate executive turned Catholic priest. He’s an editor of the Jesuit magazine America. He joins us from New York.

Father Martin, welcome. What are the religious principles that all of us should bear in mind as we try to evaluate the different proposals for getting out of this crisis?

Father JIM MARTIN (Editor, America Magazine): Well, I’d like to go from the general to the specific. You can start with the Jewish and Christian principles of caring for the poor, which is very important in both the Old and the New Testaments. Jesus speaks about that very forcefully. More specifically, the Catholic tradition in their social teaching documents talk about solidarity with one another and the common good. It’s not just every man in it for himself, or every woman. You know, we Jesuits talk about not making decisions in a time when you’re freaking out. So there’s a sort of discernment that’s needed. And then, finally, I think that the role of conscience needs to play in this. There’s a reason why people feel uncomfortable with so many people making money and with the bailout possibly helping only the wealthy, and I think the reason people feel that sort of uncomfortable feeling is conscience. I mean, it’s telling us that something’s wrong when only the wealthy benefits, so I think those are some of the principles.

ABERNETHY: But, Jim Wallis, whatever we do has to be something that, first of all, is practical, perhaps. Does it work? Does it work for the whole economy, and does it also work for the very poor?

Reverend JIM WALLIS (Editor-in-Chief and CEO, Sojourners Magazine): Well, I’m an evangelical convert to Catholic social teachings, so I’m going to agree with Jim about all this. You know, this crisis is structural and spiritual both, and this has come about because private gain, greed, has prevailed over the common good. We’ve lost sight of what the common good is, and it’s true, there’s a conversation going on about rewarding the people who are indeed most responsible for the crisis.

ABERNETHY: And lots of people are very angry about that.

Jim Wallis

Rev. WALLIS: And they should be. I think God’s angry at that. Someone suggested the other day, I thought it was a good idea, the CEOs should be paraded down Wall Street in sack cloth and ashes. I think that’s true. So rewarding them while you leave people in my hometown of Detroit — my brother has a $130,000 mortgage; his house is worth $60,000 now, so this is wrong. So the principle is common good and justice. But also I would say this is a moment, a teachable moment to talk about habits, practices, assumptions about greed that we’ve lost conversation about for a long time.

ABERNETHY: Father Martin, there’s also a question about power and putting a lot of power in one person’s hands. I gather that that’s being addressed, that there is going to be, in whatever comes out of the negotiations, there is going to be a serious effort not to have one person solely responsible for what to do with all that money.

Fr. MARTIN: Well, I hope so. I mean, I think that, you know, you speak even to the experts who say they’re not sure how the plan would work. They’re not sure how much money is required, and so to put one person in charge to me just, you know, based on sort of simple economics doesn’t seem to make a lot of sense. You know, I also want to agree on what Jim Wallis said. You know, I think it is kind of a culture of greed. You know, I was thinking the other day, you have TV shows like “Flip this House” on A&E, and, you know, it’s something that everyone seems to have been infected by, and I think getting back to that notion of the common good, that this bailout should not just be from the top down but from the bottom up as well, is really important. I think that the people that also need some lobbyists are the poor.

ABERNETHY: Yeah, but to both of you, there’s a need, isn’t there? I mean greed is an important motivator in the kind of economy we have. So it’s not just a question of greed is it, Father Martin? It’s a question of unregulated greed, and if the greed is controlled, if that can happen, then that’s better, isn’t it?

Jim Martin

Fr. MARTIN: Right. I mean, I still believe in the capitalist system, and as Adam Smith would tell you, self-interest is what motivates that. So I’m not saying that needs to be set aside. What I’m saying is that the capitalist system, as we’ve seen, is not perfect, and you do need regulation, you do need the government to step in and care for such things. You know, we look at education, and people are fine with the common good there. I think we have to expand our notion on what the government, on what society needs to do in terms of their responsibility to the poor.

Rev. WALLIS: I think government should encourage innovation, but it must limit greed. Self-interest and success is one thing. Losing sight of what is best for the common good is another thing. So capitalism run amok here is really what’s happening, and so restoring a sense of what’s good for all of us is, in fact, the best business model. So we’ve lost something here.

ABERNETHY: So, which is to say oversight by Congress and by the firms themselves?

Fr. MARTIN: Right.

Rev. WALLIS: Yeah, and social regulation is going to be necessary. But I would say self-regulation will, too. Jim is right. We’ve all got into this culture of greed, the culture extolling greed as a value. In D.C., property values have doubled in four years. So what do they say? Take your equity value and take a loan against that and buy another house, and then you can rent that and pay for your mortgage and then buy a third house. The prophets say you add house to house to house to house — the whole thing falls apart, and that’s what’s happened, from Wall Street right down to a lot of our own families.

Jim Wallis and Bob Abernethy

ABERNETHY: Father Martin, just step back just a minute and, quickly, what are the big lessons here about, maybe, things that go beyond just the bailout itself?

Fr. MARTIN: Well, I think one thing is that, you know, these assets were highly valued because they were risky. In economics there’s a risk-return relationship, and I think one of the things we see that hasn’t been commented on is just that the CEOs sort of lost the sense of personal responsibility to their investors and, you know, to the people they were giving mortgages to. I mean, you know, you check out a lot of magazines in the past few months, they were talking about the coming collapse. It’s not, you know, it’s not as if people didn’t know this was going to happen, and yet the investment was still being made. So I think there’s a certain level, I agree with Jim Wallis, of personal responsibility that needs to be accepted by the CEOs. So in other words what I’m saying is it points out is that, you know, people really do have the responsibility for making conscientious decisions in the workplace.

ABERNETHY: Jim Wallis, quickly.

Rev. WALLIS: I think there’s an opportunity here for redemption. If our congregations begin to look at these questions — we ought to have adult Sunday school curriculum on money and how to be responsible in our economic lives. That could be a real opportunity for the pulpit to get involved here and start talking about what Christians and Jews and Muslims ought to do in responsible ways about how they live.

ABERNETHY: Reverend Jim Wallis of Sojourners and Father Jim Martin of America magazine, many thanks to you both.

The post America’s Economic Crisis appeared first on Religion & Ethics NewsWeekly.

BOB ABERNETHY, anchor: Now, the financial crisis: more failures, fears, realignment, layoffs on Wall Street, with consequences around the world. Is anyone to blame? We explore the ethical issues underlying the financial meltdown with Rebecca Blank, an economist, a senior fellow at the Brookings Institution, and co-author of the book “Is the Market Moral?” Dr. Blank, welcome.

REBECCA BLANK (Senior Fellow, Brookings Institution and Co-author, “Is the Market Moral”?): Thank you.

ABERNETHY: So in the movie “Wall Street” we were told that “greed is good.” If that’s true, to what extent was greed responsible for all that’s happened?

Dr. BLANK: Greed is clearly partially responsible for where we are right now. But greed is good to most economists. It’s greed that makes people work harder, be more productive, and helps the economy grow.

ABERNETHY: Greed is good even though it’s a sin?

Dr. BLANK: Yeah, well greed has certain economic advantages. It’s hard for an economist not to say that. But there’s a level beyond which greed can go too far, and I, being greedy for more goods and to make another buck, can stop paying attention to the effects of my action on you, and that is when greed clearly becomes sinful even, I think, in the economic books and can lead to the sort of situation that we’re in right now.

ABERNETHY: And that’s what happened in these cases. People were, traders were encouraged to take big risks and not pay attention to all the costs that there would be for people down the line if those risks didn’t pay off.

Dr. BLANK: That’s certainly true in part, but I will also say that there was also a culture where what those traders were doing was what everyone in all the cubicles next to them were doing. And, you know, there’s always the question of to what extent is that an excuse — and a justifiable excuse? There were also a lot of people at the very beginning of this, the whole sub-prime crisis that started this off, who saw themselves as providing more funds for low-income families. They were doing a good thing. So motives here are very mixed. I think it’s hard to say this is all about greed.

ABERNETHY: What about justice? Was there injustice involved?

Dr. BLANK: So, you know, we love a world in which the people in the white hats get rewarded, and the people in the black hats pay the price, and that I have to say doesn’t happen very often, particularly in a very complex economy. We’re in a time of panic right now where people have lost trust in what the banks are doing, what the investment firms are doing — lost trust beyond a level of reasonableness, to be honest, and it’s got to be stopped. And, you know, taking account of that fear and panic in many ways is more important than assigning blame one way or the other.

ABERNETHY: We all do want to assign blame, though.

Dr. BLANK: Yes, we sure do.

ABERNETHY: We look for villains. Are there no villains in this?

Dr. BLANK: Yes, I do think there are a few villains, but it’s probably too strong a word. There is, as you say, there are leadership particularly in some of these banks that were not open at all about what they were doing and how they were bundling . . .

ABERNETHY: Did they understand what they were doing? Is there a question of competence here?

Dr. BLANK: Well, that’s an open question. I think that is part of a question. There’s also a real question on the part of regulation. You know, there were no requirements here for greater openness and greater transparency, and of course that’s now what’s being called for. But that should have been called for long ago. And it is the role of government to create, if you will, responsible greed to keep boundaries around what people do.

ABERNETHY: Government perhaps, and how about the boards of directors and the people who are running some of these companies?

Dr. BLANK: No, I think there is certainly leadership questions here about competence and understanding and not paying attention to the risks that they were taking.

ABERNETHY: And trying to put some limit on the greed?

Dr. BLANK: Yeah. And of course if you ask these people three and four years ago how do you justify multimillion dollar salaries and huge bonuses, their answer would have been, “We are in a high-risk industry, so we deserve this.” Under those circumstances you then can’t feel very sorry when they lose at the other side of the risk. But, of course, there are a lot of people who weren’t in a high-risk industry who are also losing — the clerical people, the maintenance folks.

ABERNETHY: Rebecca Blank of the Brookings Institution, many thanks.

Dr. BLANK: Thank you.

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