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Northern Rock queried: CEN 11.23.07 p 4. November 24, 2007

Posted by geoconger in Church of England Newspaper, Development/Economics/Govt Finances, House of Lords.
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christopher-herbert-of-st-albans.jpgImmoral banking practices lay behind the credit crunch confronting Britain, the Bishop of St Albans told the House of Lords on Nov 14.

Speaking in response to the Northern Rock banking crisis, Bishop Christopher Herbert called for a fresh approach to restoring damaged trust in the banking industry. Lending money to customers who “are not really aware of the risks they are taking,” was financially and morally unsound, he said.

“Woe to you who join house to house, field to field, until there is room for no one but you,” Bishop Herbert reminded the Lords, citing Isaiah 5:8.

The Bible spoke cogently and repeatedly about the “relationship between social morality and economic affairs,” he said.  Then as now “greed began to prevail over justice, oppression was rife and mercy was no longer part of the social or political vocabulary.”

Press and political comments about the Northern Rock crisis had missed the “much bigger issues concerned with the probity of institutions. It misses those situations that are about the moral relationship that exists between trust and risk and reward; about the moral accountability of those who have financial control over the most vulnerable; and about the morality of a society in which the gap between rich and poor remains achingly large,” he said.

“In a democratic society, banking necessarily depends on trust,” Bishop Herbert said.  If “moral trust” is absent the “banking system will collapse.”

“The current failures in the system are as much to do with morality as with economic mechanics,” he said, urging the Treasury to rethink its response to the credit crisis.  The government should “call together senior bankers with ethicists, philosophers, theologians and academics to reflect on the moral values which underline banking practice in our country to see whether there is any room for improvement.”

While such an approach may appear “a touch academic and self indulgent” it would go a long way towards restoring confidence in the “financial rectitude” and moral probity of the banking system, Bishop Herbert said.

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