(UNDATED) A few years ago, the question was What Would Jesus Do? Later it became What Would Jesus Drive? Now, with the economy in freefall because of a collapse in home values, the question seems to be: Whom Would Jesus Bailout?
Under a plan unveiled Wednesday (March 4), the White House hopes to avert as many as 4 million foreclosures through mortgage modifications and assist as many as 5 million through low-cost refinancing. The total cost? About $75 billion.
While nearly everyone agrees that stabilizing mortgages is key to economic recovery, there’s less agreement on whether responsible taxpayers (or renters) who took out affordable mortgages should bail out those who didn’t.
Is it ethical for others to foot the bill for your bad financial decisions? And is it ethical to say no to those pleas for help?
“Presumably, lots of people made very bad judgments (in home buying), and some of them were plain-and-simple wrong to do so. They were unthinking,” says the Rev. Edward Vacek, a Jesuit priest and professor of moral theology at the Boston College School of Theology and Ministry.
“But when you get done with that, you say, `What can we do now to make our society and our world better?'”
As Washington takes up the mortgage bail-out, clergy and congregations in 10 cities are holding rallies (March 6-10) to urge quick governmental action to blunt a rash of foreclosures. Religious ethicists, meanwhile, are weighing what’s the right thing to do.
Vacek supports a homeowner bailout for two core reasons. First, it falls under society’s duty to provide basic necessities for those who are unable to provide for themselves — even when a beneficiary’s woes are of his or her own making. Second, he says a bailout would serve the common good by helping stabilize economies across the globe, whereas permitting an epidemic of foreclosures would invite a ripple effect of increased suffering.
But a bailout likely won’t diminish the destructive greed that fueled the current crisis, according to Mu Soeng, director of programs at the Barre Center for Buddhist Studies in Barre, Mass. Greed motivated both aggressive lenders and overstretched consumers, he said. He worries a homeowner bailout would only encourage more greed and eventual heartache.
“The economic system is based on the idea that you take responsibility for your actions, and if you go bankrupt, then that’s what life is,” Soeng says. “Unless there is a collective effort to reorient society in a different way — to say, `We are not going to be a culture and society of greed anymore’ — then we are just refurbishing the tired old system, and it will collapse again and again.”
Others haven’t come to a firm position. Kenman Wong, a business ethicist at Seattle Pacific University, approaches the dilemma by remembering that God is just — and merciful. Wong’s struggle comes in sorting out whether mercy means subsidies to keep delinquent mortgagors — some responsible, some less so — in their homes.
“I’m torn,” says Wong, who self-identifies simply as Christian. “The principle of mercy holds, but how far that extends into specific policy is another question. … By bailing out, do we encourage more irresponsibility during the next bubble? At the end of the day, it may be unjust for others who end up footing the bill.”
Some American Muslims oppose a homeowner bailout, though not necessarily because Islam forbids interest-based contracts, according to Timur Kuran, a Duke University economist and professor of Islamic studies. More commonly, he says, Muslims who object are doing so on the basis of relative need. American homeowners, even those on the brink of foreclosure, likely aren’t suffering as much as, say, citizens of Gaza or parts of Africa.
What’s more, Kuran said Muslims hold multiple views on the bailout issue, perhaps in part because history offers few clues on the right way to handle it.
“I cannot think of a single precedent in Islamic history for helping people in a situation like this, where the difficulties stem from a downturn in certain prices — in this case, home prices,” Kuran says.
In this crisis, “we’re talking about people who are apt to move into a smaller home, or they might have to rent … They’re not in the same category as people who are literally hungry and without shelter.”
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In some cases, the massiveness of the crisis is pushing ethicists to look beyond the usual standards for dealing with misdeeds. Baylor University business ethicist Joseph McKinney says Christianity teaches people to “be responsible, be accountable, be wise stewards of resources, (and) with contracts, to live up to their duties.”
In normal circumstances, he says, a Christian could expect a strapped homeowner to cope with the consequences: no government bailout. Yet because the crisis affects so many, not just lenders and borrowers, McKinney says a hands-off approach would represent a choice to let harm spread. That’s why he supports a bailout this time, in the name of compassion.
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Others, meanwhile, find the idea of a homeowner bailout easy to swallow. Gerald Shenk, professor of church and society at Eastern Mennonite Seminary in Harrisonburg, Va., chairs the board of People Helping People, a local charity that helps struggling neighbors pay for utilities and other essentials. In November, the agency ran out of housing assistance funds.
In this hurting economy, Shenk is glad the government may be able to address a problem that has grown so large it now lies beyond the reach of groups like his.
“I don’t see great harm coming from trying to help everybody right now, even though we know a certain portion will not prove worthy of that assistance,” Shenk said. “If they get to keep houses for a few months longer or a year longer — well, so be it. Housing is not a waste. Housing is basic.”
