Center for Ethics and Leadership

Monday, September 29, 2008

Faith-Based Investors Issue Statement on Financial Crisis

The Interfaith Center on Corporate Responsibility (ICCR [http://www.iccr.org/]), a coalition of nearly 300 faith-based institutional investors representing over $100 billion in invested capital issued a statement on September 26 that raised concerns about the financial crisis and its effects. ICCR spoke of greater transparency, predatory lending, and other issues. The organization expressed concern that the poorest and marginalized not bear undue burdens as a result of the crisis and that there be no bailout for shareholders and no golden parachutes. ICCR also said that the root causes of the meltdown (e.g., unregulated derivatives) should be addressed.

4 Comments:

  • Unregulated derivatives, repackaging and reselling mortgage based securities and private hedge funds are all areas that merit some concern. Interesting how some are now talking about the idea that additional bills may have to be passed before the election. The poorest and marginalized should not bear undue burdens but bailout expenses fall disproportionately on the middle class (look at our current revenue structure). If I recall correctly the Freddie/Fannie Mae bail out offered discounted mortgages up to $400,000, I don’t think the lower classes are being serviced by the $200,000 - $400,000 refinance packages. Some promise has been offered - perhaps the securities the government buys will turn a profit - if there was any confidence in that position, the securities would not be offered out for sale to start with.

    Once one starts down a slippery slope it is difficult to determine when exactly one should stop. I would have to say that we started our slide....

    By Blogger kobe2, At September 29, 2008 2:48 PM  

  • Improper management is the reason of this problem, I think. And truly the most affected by this are those poor people, since financial crisis is the result. The current economic climate in the United States is a crisis. However, Americans aren’t the only ones feeling the crunch. An article from The International Herald Tribune tells us about a small business owner, Dominique Boudier, owner of a printing company just outside of Paris, and how her business has been affected by the fast drying up of available credit. Her creditors are reducing their offers by as much as 50% or more, and it is by mandate of her supplier’s credit insurance companies. Her business has a 60 day lag in payments from customers, and she needs credit in order to keep the shop open when their payments are that late. Her banks’ hands are tied, and she is left fearing the worst as her bank, like many in Europe, puts all their liquid cash into the European Central Bank’s reserve depository, in lieu of reinvesting it into the economy and generating income. As banks fail and liquidity goes with it, credit is drying up rapidly. The European Central Bank functions much like the American Federal Reserve Bank to create fiat money as required. Fiat currency is effectively credit currency, but as a government’s guarantee of its value decreases, so does its value. The natural result is high inflation rates, which is happening currently. The consensus amongst many is that stronger banking systems is the correct medicine. Until the correct changes are in place, payday advance loans will be easier to come by for consumers who need short term help immediately and can’t afford to wait for the banking system.

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    By Anonymous Payday Loan Advocate, At October 27, 2008 1:44 AM  

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    By Blogger Forex Knowledge, At May 18, 2009 11:55 PM  

  • It's really good to see big institutions like this standing up and saying 'No'. We need more of this. For example, the golden parachutes for executives as mentioned above have continued to get more and more ridiculous over the years. Nice post.

    By Anonymous AlphaGraphics Denver, At October 3, 2009 10:15 AM  

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