These are the notes from a
presentation by Brother Louis De
January 27 2009, Rome.
This is a very complex topic. To
put it into context there is a story about Boris Yeltsin at a chaotic time in
the Russian economy. At a press
conference he was asked how he would describe the Russian economy in one
word. He answered “Good.” The reporters were surprised since no one
else thought the economy was good. So
they asked how he would describe it in more than one word. He replied, “Not good.”
What is going on today in terms of
the economy is “not good.”
will consider 4 points:
- The foundation – a basic understanding of what this
crisis is about
- The understanding of the crisis for the Church –
another complex issue
- What needs to be transformed in the Church
- How to transform? An example…
Clearly, there is no answer to the
questions – certainly not rationally – and there will never be an adequate
1. The foundation – a
basic understanding of what this crisis is about
The origins are found in the United States,
but all the dynamics that caused the crisis are present in the entire
There was a proliferation of
derivatives. A derivative is a financial
obligation which is treated as an asset, which represents an asset or assets,
but is not the asset(s) itself. An
example is the bundling together of mortgages, which is then sold to another
Structured Investment Vehicles are
another instrument which appeared; they are based on derivatives and are also
more distant than derivatives from the real assets.
There was a proliferation of easy
money and credit was extended, even to those who could not afford the debt. There was too much money created (derived)
and given out, that could not be paid back.
If you owe the bank 100 thousand
euros and cannot pay it back, you have a problem;
But if you owe the bank 100
million euros and cannot pay it back, the bank has a problem – and in this case
we are talking about billions that cannot be repaid.
One of the results of this
situation is fear and pessimism. Confidence and trust are necessary but unethical and fraudulent schemes
on the part of [government] banks and financial institutions eroded
trust. Charitable organizations were
victims, but even banks were victims, that is, even the professionals were
It is possible to talk about a
“turn-around” and people will argue that the markets are cyclic – after a bad
period there is a good period and it is possible to see these trends. This is true, but, no one knows when this
“turn-around” may come – in weeks, in months, in years….
This is a problem which has
touched the entire industrialized world. It is not everywhere that derivatives or other questionable practices,
which have caused problems, were allowed or practiced, but all the
industrialized nations are affected by the current economic situation and have
There will be the loss of work and
jobs; of pensions and retirement funds. There
will be more tension, more hunger, and more poverty, while at the same time
government funding and charitable funding will be constrained. In other words there will be more and greater
needs and less ability to respond.
Religious will find it more difficult
to support their old and retired members, and to support their emerging
members; they will find it more difficult to provide services. It will be impossible to make up the
deficiencies on the part of the government and charitable institutions.
We need to take up the challenge
to find a new understanding between faith and finance for the new Millennium;
otherwise peace and justice will not be possible.
2. The understanding of
the crisis for the Church – another complex issue
This is a very complex issue for
the Church. There is a need to see this
financial crisis also as a religious crisis and for the Church to experience a
metanoia and to transform the relation of faith and finance.
In a book by Toni Morrison, “Beloved”,
there is a slave who is preaching Christianity to other slaves. She says that the only grace you will have is
the grace you can imagine, if you do not see it you will not have it.
We too need to have new
imagination to create within our theology, social action programs, etc. Benedict XVI in his statement for January 1,
2009 at the Mass of the Solemnity of Mary noted that poverty is not bad
when it is spiritual but an involuntary poverty which results in a real lack of
basic human needs is not good at all.
“...God became man and chose to be
poor, but there is a poverty that prevents persons and families from living
their dignity: a poverty that offends
justice and equality and that, as such, threatens peaceful living together…”
Benedict XVI also asked [if],
“…we are prepared to read the current economic crisis in its complexity as a
challenge for the future and not just as an emergency to which [to] give short
The Pope also said in an address
after that mass to look for long term answers, “…This crisis requires intervention
at its roots. Putting the poor in the first place means decidedly moving toward
the global solidarity that John Paul II pointed out as necessary coordinating
the potentialities of the market with those of civil society in constant
respect of the law and tending always to the common good.”
We, the leadership, need to make
it happen. To have justice and peace it
will be necessary to coordinate the potentialities of the market. The prophet is not one who necessarily sees
the future, but one who sees what is happening now, who interprets the present.
3. What needs to be
transformed in the Church?
Share in faith in our communities,
promoting this new paradigm, which is mystical. Faith/finance separately are world molding. We need to bring them together, and not with 50%
of each; but 100% faith and 100% finances. We need to show how to put them together.
Don’t be afraid to talk about
finances – before, finance was relegated to discussions among treasurers; it is
the role of everyone in the congregation, leadership and members, as well as
When we consider the events of
9/11 in 2001, the Madrid
train bombing, and other examples of terrorist activity and look at this
financial crisis, is this the setting for the end of terrorism?
We add the religious
fundamentalists who talk in the name of God about “killing” and bombing.
Everything says that these
problems will increase in this crisis.
People who cannot live in dignity
will not live in degradation – and they will fight to the death, theirs and
ours. How will others see this if we do
4. How to transform? An
Do we want more of what we have
had? We need to do creative, imaginative
things – and it is everyone’s business.
Find ways to do this that are so
creative that God will say, “Why didn’t I think of that?”
One example is what we did with
Christian Brothers Investment Services, Inc.
In 1981 we established CBIS to
pool our investments (and later added others’) and to find ways of being
constructively active in pressuring businesses to do business in ways that
expressed good values. This is not done as
comprehensibly by other investment advisors. It also researches companies to determine in which companies to invest,
and actively participates in shareholder meetings and other kinds of encounters
to promote Catholic values. All the profits go to the good works of the
Brothers and other congregations through a foundation. A socially responsible approach is utilized
and it does not hurt the performance of the investment funds results.
One of the questions touched on
this kind of group – religious involved in and concerned about Justice, peace
and the integrity of creation. Most
often discussions of this topic tend to become very technical in dealing with
the complexities and intricacies of finance, but this is a broader issue, and
this group is not involved in or concerned about only the technical issues.
When he was asked to imagine,
Brother Louis talked about dialoging. The more dialog on this issue the more likely it is that more will be
seen of ways companies are trying to do good things and this will give some
direction to the ways of investing. Talk
about finance will help change. Business
only hears the language of money. Business responds to pressure, especially money. It is not bad to use the power of money and
finance to do good; it takes money and power to get people out of poverty.
In doing this CBIS looks to
Catholic values and avoids companies that promote militarism, tobacco, abortions,
etc. And then makes judicious judgments
as active owners.
There are ways other than investments,
for example, look at our way we treat our employees, to see if we are discriminatory? Or look at the way we purchase, e.g., Fair
Trade products. You will think of others
Notes by: Timothy Phillips, SM. Rome,
27 January 2009