Is the Bail-Out Good News?

I got behind in posting to the blog. Now I'm catching up... ;-)

First published in The Daily Sentinel, Friday, Sept. 26, 2008.


The big headline this week is the $700 billion bail-out plan for the financial services industry proposed by President Bush’s administration. I am flabbergasted by the sheer size of the proposal. Do you have any clue how big 700 billion is?

Thomas Sowell, a syndicated columnist tried to explain the enormity of the number by comparing it to a trillion seconds. He claimed this week that “a trillion seconds ago, no one on this planet could read and write. Neither the Roman Empire or the Chinese dynasties had yet come into existence.”

Unfortunately, Sowell did his math wrong. There are 31,536,000 seconds in one year (60 seconds x 60 minutes x 24 hours x 365 days). That means it takes just under 32 years to equal a trillion seconds. Even I was able to read and write 32 years ago.

Still, $700 billion is a huge price to pay for this bail-out. Why do we need so much money for Wall Street? In all the news reports I’ve read or heard, I haven’t received a straight answer to that question. In truth, nobody knows if that number is too high or too low.

I am reminded of the old saying: the bigger they are, the harder they fall. It seems in this situation we have to add a “to” to the saying: the bigger they are, the harder they are to fall. The bail-out is deemed necessary because these companies are too big to fail. Fanny Mae, Freddy Mac, AIG, Merrill Lynch, Goldman Sachs, and others must survive or our entire financial system will crash – sending the whole economy into a downward spiral that makes the Great Depression of the 1930s seem like boom times.

How did we get into this mess? Granted, I am not a Wall Street Wizard. I do not have an economics degree from Harvard, Yale or even Podunk Community College. But even I can understand how this mess was created: greed.

I am well acquainted with that sin. I had some pretty severe expressions of it in my own life. Before becoming a pastor, I rose through the ranks of marketing professionals to achieve worldly success. My household income in 2001 was nearly $200,000. But because of greed, I was flat broke. I spent more than I earned (even at that income!), borrowing heavily to enable the spending. And I didn’t pay back what I owed consistently or sufficiently enough to get out of debt and break the cycle.

I wasn’t a bad person, I just didn’t know how to handle my money. And I am not alone. All across the country, mortgage lenders, credit card companies, and car financiers make billions of dollars off of people like me. The “subprime” credit industry offers credit to people who have already shown they don’t know how to successfully manage credit. So I could borrow money only by paying too much for the privilege. When I went to buy a new minivan, I got the financing for it – but with a 20% annual percentage rate when “prime” borrowers could finance the same vehicle at around 6.5 percent.

That kind of income opportunity attracted the so-called blue chip financial firms. They saw this as “easy money.” So much cash flowed into the coffers of creditors that one’s ability to repay no longer was a factor. Greed overruled logic.

My financial world collapsed when my six-figure income ended. The brutality of logical consequences forced me into a bail-out of my own. After exhausting all retirement savings and shredding the credit cards, selling my house at a loss just to get rid of the mortgage, I still owed more than I could pay. Bankruptcy court became my only option. In exchange for wiping out my past debts, I have to live with a terrible mark on my credit record for 10 long years.

Now, Wall Street wants the benefits of “bankruptcy” without the consequences – and the Bush Administration seems to want to give it to them. But how about all the folks who have also been caught in this illogical lending game outside of Wall Street? Is this a case of “the smaller they are, the easier to make them fall”?

The Bible is a resource that should be considered in dealing with all of this. It has a lot to say about money, sin, and bail-outs – er, forgiveness. 1 Timothy 6:9-11 declares that “People who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge men into ruin and destruction. For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.”

I think that section of scripture sums up rather succinctly the situation we’re in today.
But what about forgiveness? Jesus told a story to Simon the Pharisee to explain God’s grace:
“Two men owed money to a certain moneylender. One owed him five hundred denarii, and the other fifty. Neither of them had the money to pay him back, so he canceled the debts of both. Now which of them will love him more?” Jesus asked. Simon replied, “I suppose the one who had the bigger debt canceled.” “You have judged correctly,” Jesus said.

If we take Jesus’ story at face value, then forgiveness should be offered – even to Wall Street executives. But even in forgiving, we do not have to reward their sin. Therefore, salary limits, taxpayer stockholding, and relief to the consumers at the bottom of this calamity are all good ideas.

Jesus said that he came to preach good news to the poor. I wonder if $700 billion is a big enough number to refinance all those troubled mortgages into terms that people could more easily pay off? Now THAT would be good news to the poor, today.