At Turbulent Year’s End, Editorial Writers Address Ethics and Economy
Dec 22nd, 2008 • Posted in: NewsAmong the observations: predictions the U.S. may be returning to culture of thrift; call for an “ethical bailout” instead of financial one; four lumps of coal awarded to ethics of investment bankers
VARIOUS DATELINES
The ethics of debt and the role of reckless or deceptive lending and borrowing in the implosion of the world economy were the focus of several editorials last week. Among the stories:
- The Christian Science Monitor reports that new rules slated to be enacted last week are designed to ensure that credit card contracts are honest, transparent, and grounded in what Federal Reserve chief Ben Bernanke calls “a new baseline for fairness.” Banned in the new legislation are the practices of raising rates without a good reason and increasing rates if cardholders default on unrelated bills, such as utility payments. In a related observation, the Monitor notes in its December 18 editorial: “This long recession, triggered by a crisis in mortgages that never should have been lent, may end up turning America’s debt culture back into a thrift culture. For the first time since 1952, household debt is on the decline. Personal saving is up after being at zero for a long time. And this Christmas, conspicuous consumption of expensive goods seems so un-Christmasy.”
- New York Times columnist Thomas Friedman, reflecting on what he calls the “national breakdown in financial propriety, regulations and common sense,” opines that “we don’t just need a financial bailout; we need an ethical bailout. We need to re-establish the core balance between our markets, ethics and regulations. I don’t want to kill the animal spirits that necessarily drive capitalism — but I don’t want to be eaten by them either.”
- As a “holiday season service,” USA Today’s editorial board has awarded ceremonial lumps of coal to those deemed most culpable for the financial meltdown. Receiving four lumps were investment bankers: “In the war on drugs, the top target is always the traffickers. The same principle is true with the massive implosion of credit markets and corporate ethics. In this case, the traffickers were the Wall Street firms that created bundles of subprime mortgages and other toxic financial instruments, then peddled them as low-risk, high-return investments. These securities, and enormous side bets on them, fueled the housing bubble and infected the global financial system…. Nearly all the big investment banks were culpable, though the poster child of mismanagement has to be Richard Fuld, former CEO of the former company known as Lehman Bros. Fuld, who received as much as $480 million in compensation from 2000 to this year, took risks that drove the storied investment house straight into the ground.”
Sources: Christian Science Monitor, Dec. 17 — New York Times, Dec. 16 — USA Today, Dec. 16.
For more information, see: Related Newsline Commentary, Dec. 15 — Related Newsline story, Dec. 15 — Related Newsline story, Dec. 8 — Related Newsline story, Nov. 24.
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