An Ethical issue with Banks.
Do we, or should we, have an ethical issue with the banking services we use as individuals and as a church? It would be difficult for us to continue operating normally without using banking services. Banks have faced great difficulties, brought on at least in part by policies they implemented in the “tiger” years. They need to operate in such a way that they are viable. Banks vary in the policies they now implement in order to survive. Are there moral issues in the particular service we choose, or choose to continue? This is also relevant in view of the current “Ethics Initiative” launched by President Michael D Higgins. It is not just a church concern: it is a concern of our whole society.
Over a number of years, I have been critical of banking policies, particularly in relation to two issues. The first issue is the kind of treatment meted out to those who, because of the recession, now have mortgages they are unable to pay. The second issue is the level of remuneration of those in the top executive positions. A| third issue, not dealt with here, is that of people whose savings for retirement were wiped out by the crash.
The first issue: the mortgages. I presume that, in “normal” times”, there would always be some people who take out mortgages unwisely, and lose their homes as a result. However, in the present scene, decisions made by banks themselves were at least in part responsible for the crash in the economy, and consequently banks must bear some responsibility for many people becoming unemployed despite their best efforts, resulting in their inability to keep up mortgage payments. Is it just that a financial institution which is in part responsible for this should then effectively penalise the mortgage holder for being unable to pay? They may plead that the market forces them to do so, but market forces cannot be a justification for injustice. Financial institutions seem to have a variety of ways of dealing with this. How can we decide which institution to do business with so as best to serve the cause of justice?
This was brought to a head for me by a report in the Irish Times on 10 April 2014: The CEO of Bank of Ireland said it was Bank of Ireland’s “policy and practice” not to write off debt on mortgages outside of a legal process such as bankruptcy proceedings. “We have to take into consideration the responsibility that we have to our stakeholders to maximise the recovery of the loan.” This was widely reported in the media.
The second issue: remuneration of those in executive positions. Levels of remuneration have come down significantly. And yet, for example, it seems that the “austerity” level for the CEO of the Bank of Ireland is around €843,000. In the Irish Times on 10 April 2014, it was reported that he said his annual pay package is voted on by shareholders at the company’s AGM. “I abide by the decisions of the shareholders,” he added. I presume he is effective at his job. It may well be that his remuneration is in line with market forces. It seems to me that such arguments do not in any way take from the apparent excessive level of remuneration when contrasted with the austerity faced by so many bank customers.
I cannot pretend to have competence in that level of the economy. I have been a customer of the Bank of Ireland for 46 years. Switching to another bank would be an inconvenience, but nothing like the “inconvenience” many others are facing. (There is advice on how to go about this on http://www.consumerhelp.ie/switching-accounts. )
So to some questions:
- How do we deal with the ethical dimension of this which must not be ignored? Action by a single individual could be symbolic, but would be entirely un-noticed by a bank.
- What would Christian morality indicate?
- For Catholics, with the reminders from Pope Francis about the importance of those at the margins of society, could there be, should there be, individual and/or concerted action?
- Is there Catholic Social Teaching on this?
- If a bank CEO “abides by the decisions of shareholders”, would action taken by a large number of customers (not shareholders) influence bank policy?
- What factors am I missing in this?
- Is this a matter which should be addressed directly by our local churches?