Archbishop Celestino Migliore, the apostolic nuncio leading the Holy See’s permanent observer mission to the United Nations, on Thursday addressed the global financial crisis, making a call for ethical responsibility and the use of lending only for truly productive investments.
A severe worldwide shortage of credit has resulted after speculation in U.S. real estate loan securities lost creditworthiness and possibly billions of dollars in value when housing prices deflated.
The archbishop said that his delegation endorses the views of economists and analysts who attribute the crisis to a lack of an effective regulatory system, a disregard for regulatory and supervisory structures, and a disregard for the rules of accountability and transparency.
However, Archbishop Migliore insisted that the causes of the crisis also involve immoral conduct, such as profiteering and unscrupulous pursuit of gain. He called for not only effective regulation, but “a high standard of ethical conduct on the part of financial leaders themselves.”
“Our reaction should not be limited to deploring the crisis and offering formal expressions of sympathy to the poorer countries and social strata which have been affected. We need to come up with the ways and means to avoid similar crises in the future,” he insisted.
The archbishop claimed that governments and institutions were lax in following regulations at high levels. He also reported that international financial institutions had implemented oversight in poorer countries, but did not do so in developed countries.
“Now that the latter have collapsed, the former also have to bear the consequences,” he continued.
“Government is the exercise of the virtue of prudence in the enactment of legislative and executive measures capable of directing social activity towards the common good,” Archbishop Migliore said, arguing that the principle of subsidiarity requires that governments and international agencies ensure solidarity “on the national and global levels and between generations.”
The apostolic nuncio also directed some comments towards the financial sector.
While granting that lending is “a necessary social activity,” the archbishop said financial institutions and agents are responsible for ensuring that lending “fulfills its proper function in society” by connecting savings to production. Lending should be “a part of the product chain of goods and services, and not an independent activity.”
“If lending is seen merely in terms of trading off financial resources without regard for their reasonable use, it fails to be a service to society. When attempts are made to conceal the real risk that loans will not be repaid, savers are cheated and lenders become actual accomplices in theft,” Archbishop Migliore insisted.
The prelate then reminded his listeners of those at the edges of the financial system such as retired persons, small family businesses, cottage industries and countless employees for whom savings are an “essential means of support.”
Noting that the crisis also found encouragement in “the general public and its choice of values and lifestyles” he commented that a lifestyle or economic model “solely based on increased and uncontrolled consumption and not on savings and the creation of productive capital” is “economically unsustainable,” as well as environmentally unsustainable.
Further, such lifestyles or models are unsustainable for human dignity itself because “the irresponsible consumer renounces his own dignity as a rational creature and also offends the dignity of others.”
Calling for “credibility” and “authenticity” to be restored to lending, the archbishop said there is a need to “invest in people.”
He further suggested that aid to the poorest populations be a part of post-bailout expenditures, endorsing the “positive experience” of microcredit. Adding that grants for health, education, housing, and other basic services should be provided, he explained they are the “most profitable investments” because “they alone ensure the harmonious functioning of society as a whole.”