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Articles > Financial Crisis


The Wicked Borrow and Do NOT Repay
By Glen Becker
Article 2 of 3

The first article, "What Caused the Financial Crisis….The Borrower is Servant to the Lender", explored the poor decisions and finger-pointing about the causes of the current financial difficulties.  This article explores what the Bible says about the foolish decisions that led us into this financial mess.

The Bible admonished Christians to honor their commitments.  Proverbs 22:1 says "A good name is more desirable than great riches," and Psalm 37:21 says "the wicked borrow and do not repay."  Yet many home buyers cared nothing about repaying their debts.  They put no money down on their houses, hoping to sell at a profit, but otherwise it would be the bank’s loss.  Now that the value of their houses has declined, many homeowners with solid incomes and good credit are simply walking away from their loans, even though they could repay.  This is not a financial problem, but rather it is a spiritual problem.

Likewise, many people took out stated income loans, sometimes called "liar loans," in which the borrower states his income with the understanding that it would never be verified.  I asked a loan processor who had repented of her involvement in sub-prime lending, whether some of the people who got these loans lied about their income.  She said, "No, ALL of them did."  Her co-workers called them "NINJA" loans, for "NO Income, No Job or Assets."  Any form of deception violates God’s standards.

Fannie Mae was created by the U.S. Government to make money available to finance homes by buying mortgages and funding the purchases with bonds.  It was a stock company, controlled by its shareholders like any other corporation, but with a dual purpose:  to encourage increased home ownership, and to make a profit for its shareholders.  Fannie Mae, therefore, had two different masters with two very different objectives.

Matthew 6:24 says "No one can serve two masters."  Yet Fannie Mae allowed itself to be pressured by some in Congress to buy lower quality, riskier mortgages, and tried to protect its owners by carefully mixing risky mortgages with good ones.  By trying to serve two masters it utterly failed both:  its owners lost their entire investments, and the Federal Government was forced to take over Fannie Mae and become responsible for its bad debts. 

The Bible warns us that doing the right thing sometimes requires courage.  Those who blame congressional pressure for the bad loans ignore the fact that Congress never forced anyone to make or buy bad loans.  Doing so would have required new legislation, which would have caused a public debate over the issue.  Such a debate would have revealed the problem, and may have stopped it.  As it was, Fannie Mae and others quietly bowed to the pressure and hid the risks.  The Bible calls such cowardice "wickedness":  Revelation 21:8 lists "the cowardly" along with "the unbelievers, the vile, the murderers," etc., as those whose "place will be in the fiery lake of burning sulfur."

Now we have seen almost unprecedented financial collapse, desperate attempts to get credit flowing again.  The Federal Government has pumped hundreds of billions of dollars into the banking system to try to encourage banks to lend, hoping this money will pump the economy back up.  Yet many people and institutions that have money to lend are so scared that they are only willing to make absolutely safe investments.  They recently bid short-term U.S. Treasury Notes so high that their yield was literally zero.

Perhaps the reason for this crisis of confidence is the Biblical law of sowing and reaping.  Millions of Americans proved by their actions that their word is meaningless, that their motives are purely selfish, and that they cannot be trusted.  The banks got the message.  They are willing to lend, but only to those whose behavior shows that they care about their word, that they borrow only when it is wise to do so, and that their desire to keep their promises is motivated by more than just the hope of being able to borrow again.  Those who cannot borrow are now being forced to do what they should have been doing all along:  to balance income and spending, to plan, and to be careful to meet their obligations on time.  Those who lost their jobs must now rely on God instead of themselves for their security.

The next article, "How to Fix the Financial Crisis...Using God’s Wisdom," will explore God’s perspective on how to correct the problems.

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