2009 tAWNEY contributors

Rewiring the global economy – can the church provide the spark?

Bishop Stephen Lowe

Bishop

"One of the great lessons of the present financial crisis has been the dangers of breaking relationships between lender and borrower. It is this relationship that is at the heart of Islamic Banking. On the other hand we have seen the growth of multi-national, global banking where money movements and the 'exchange' of debt packages have been far removed from those whose liabilities they are.

I am arguing that the comparative performance of the mutuals and the Cooperative Bank have some lessons for us. We have lost the relationship between a bank manager who knows the community he/she is serving and his/her clients personally. We have lost banks committed to the regeneration of their local neighbourhoods where the manager has some real charitable and investment resources.

Big banking has been shown to be dangerous, threatening global financial stability. Better regulated, better connected local banking with relationship as a key pillar of the system needs to be our financial future."

John McFall MP

"The global financial crisis that has erupted over the last couple of years has plunged the world economy into recession.  We are still only beginning to learn the lessons of what happened and why.  However it is clear that our financial system could not cope with the risks that were being taken.  It became detached from the rest of society but also had an impact on the rest of us, as shown by the housing boom for example.

Those working in the financial sector did not understand the systemic risks inherent in the financial products they were creating and trading.  When the Treasury Committee, which I chair, examined the directors of our leading banks, it found that very few understood the risks their organisations were taking.  It also seems clear that remuneration schemes created incentives to encourage greed and risk-taking that failed to take account of the wider impact on the economy.  As Gordon Brown and the Australian Prime Minister Kevin Rudd argued before the G20 summit, we need to rebuild the global economy around an agreed set of values.  Commonly-held values underpin trust and it was the breakdown of trust, at the heart of market relationships, which nearly caused the collapse of our financial system.  That is why I have been calling for more transparency from both the government and the banks about the way we are rescuing City institutions.

There is certainly a role for the Church to help us develop a better economic system.  This has to start with developing a fresh appreciation of the common good, which I note is the title of CSM’s magazine.  We all need to cherish the fact that we are together members of one society and this must apply to the financial sector too.  As we are dealing with global finance, so the church worldwide has an important role.  But I would encourage the church to think through its message.  Just as we on the Treasury Committee have gone behind the headlines to understand what is really happening, so must the Church."

Be at the Tawney Dialogue this Thursday 7th May.  Come along at 5pm, for CSM’s Annual General Meeting (lasting until 6pm), followed by refreshments and the Tawney Dialogue at 6:15pm, finishing at 8:15pm. It will be held in the Atlee Suite, Portcullis House, Westminster.