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Vatican pointers for banks royal commission



As the royal commission prepared to resume its hearings into financial services the Vatican released Oeconomicae et pecuniariae quaestiones (OPQ), a clunkily translated document (reviewed here in detail), on the ethics of markets.

Pope Francis at the general audience in St Peter's Square on 23 May 2018. (Daniel Ibáñez/CNA)Although written quite independently, passages of the document could have been mistaken for factual reporting of the royal commission. It speaks, for example, of financial advisers:

'Among the morally questionable activities of financial advisers in the management of savings, the following are to be taken into account: an excessive movement of the investment portfolio commonly aimed at increasing the revenues deriving from the commission for the bank or other financial intermediary; a failure from a due impartiality in offering instruments of saving, which, compared with some banks, the product of others would suit better the needs of the clients; the scarcity of an adequate diligence or even a malicious negligence on the part of financial advisers regarding the protection of related interests to the portfolio of their clients; and the concession of financing on the part of the banking intermediator in a subordinate manner to the contextual subscription of other financial products issued by the same, but not convenient to the client.'

The significance of this and other judgments of OPQ is precisely that they are not descriptions of individual crimes but flow logically from a defective understanding of the economy shared by its actors. They are not aberrations but natural consequences of a shared ideology.

The naivety of conventional economic wisdom, in the view of OPQ, is that it regards economics as a science independent of ethics. It abstracts economic transactions from their full human context, seeing them simply as directed to profit-making by competitive individuals. It holds that a market as free as possible from regulation will benefit society as a whole.

OPQ sees a sophisticated market as beneficial to society provided that it is seen as composed by human decisions and so serves human goals that go far beyond individual wealth making. Money is a means not an end. The market will serve society as a whole only if it is governed by ethical reflection:

'In principle, all the endowments and means that the markets employ in order to strengthen their distributive capacity are morally permissible, provided they do not turn against the dignity of the person and are not indifferent to the common good.


"In each of these areas, OPQ focuses on the human qualities that should be reflected in the transactions involved."


'At the same time, it is clear that markets, as powerful propellers of the economy, are not capable of governing themselves. In fact, the markets know neither how to make the assumptions that allow their smooth running (social coexistence, honesty, trust, safety and security, laws, and so on) nor how to correct those effects and forces that are harmful to human society (inequality, asymmetries, environmental damage, social insecurity, and fraud).'

The ethical framework developed in the document asserts the non-negotiable value of each human being, their freedom, the interdependence of human beings in society, and their consequent responsibility for recognising this in all individual choices. In all transactions, as in all human actions, we need to take into account the other relationships which are involved, including those to society as a whole.

From this perspective the document identifies what it sees as current defects. It discusses the pursuit of profit at any price, the cosy relationships between regulators and institutions, the denial of responsibility to the wider community, the greed built into remuneration, the venal and deceitful behaviour of financial advisers and the confinement of ethical responsibility to the minimal observance of laws that cannot be evaded without prosecution.

The practical issues discussed in the document include: the need for coordination of regulation at an international level and for ethics committees in financial institutions; lines of credit; speculation that destroys social value for private profit; manipulation of exchange rates; derivatives; credit default swaps; the need to demand compliance to moral as well as legal demands; and the regulation of offshore transactions to avoid tax.

In each of these areas, OPQ focuses on the human qualities that should be reflected in the transactions involved. In its treatment of derivatives and CDS, for example, it sees a lack of the transparency that should characterise any transaction, particularly on the part of the more powerful partner. This lack of transparency meant that when the transactions unravelled, profits stayed with speculators while society bore the costs.

The lessons the royal commission might draw from this analysis are sobering. Regulation, prosecution of executives, shaming of board members and effective systems of accountability may deal with the indecent and rapacious behaviour revealed in the hearings. But they will not touch the self-serving ideology subscribed to by economists, politicians, financial executives and journalists. That demands more than compliance. It requires conversion.



Andrew HamiltonAndrew Hamilton is consulting editor of Eureka Street.

Main image: Pope Francis at the general audience in St Peter's Square on 23 May 2018. (Daniel Ibáñez/CNA)

Topic tags: Andrew Hamilton, banks, finance, royal commission, Oeconomicae et pecuniariae



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Existing comments

The pot calling the kettle black, Fr Andrew? The Vatican is no guiding light when it comes to ethical financial dealings!!

john frawley | 30 May 2018  

Your final sentence is a brilliant summation and indicator of where real reform lies, Andrew.

John | 30 May 2018  

Here here, John Frawley. Perhaps the authors of this report should be asked to report on the Church's own use and abuse of the legal system too. They could start with the denial of responsibility explicit in the Ellis Defence and the deliberate fencing-off of assets that facilitated that act of religious bastardry.

Ginger Meggs | 30 May 2018  

The significance of this document to those cheerleading it from the Catholic Left is that it is produced by the Vatican. But if the Catholic Left don’t believe in Magisterium (which is the credibility that a work inherits from who the author is), why should they expect this document to hold any more intrinsic status for the rest of us than, say, the Humanae Vitae which they deride, or an economic paper put out by the Greens?

Roy Chen Yee | 30 May 2018  

Yes, John Frawley and Ginger Meggs, the Church is, as it always has been, rather better in theory than in its own practice. But that's just human, isn't it? We, the Church, do need to be constantly critiquing our own behaviour in the light of the Gospel. And this document seems to me to be another example of holding up human social behaviour to that Light. That's the Church's job. If we wait for the Church, or any other group or individual, to be perfect before we listen, we'll never listen. The Church's imperfections and misdeeds will become an excuse to ignore its challenge. Don't play the man, guys, it isn't cricket...

Joan Seymour | 31 May 2018  

Thank you for the well argued article Andrew. What is so sad is that the outdated and, dare I say it, corrupt practice of clericalism and appointment of hierarchy by the Catholic Church undermines some very valid and insightful church publications. This indeed is sad as sometimes what is published is well worth a study and has much to offer our current society. Unfortunately if the Catholic Church continues on its clerical and authoritarian way these publications will continue to be set aside by governments who quite rightly challenge their validity from an organisation that is 'the pot calling the kettle black'.

Tom Kingston | 31 May 2018  

Thanks Fr Andrew .. another wonderful article! "Not compliance but conversion" ... a change of heart, then a change of culture; this is so much harder to do than 'social change'. It is possible though if enough people lament and resist (counter-cultural stance and activities), lean into the societal cracks and persist (subversive activities); and stay the course in trust and solidarity (integrity and endurance). We also need to be like geese ... when flying, one takes the lead for a while then takes a rest at the back of the group (while honking to others!!!) until it has the energy to resume its role again. Too many people are in serious & life-threatening struggles in Australia at the moment thanks to destructive ideologies that others did not see coming in time to stop them. A friend living in Canada sent me this to watch ... it is about our current threat to democracy (which involves the ideology of "the market as God") -https://www.aljazeera.com/programmes/specialseries/. With State and Federal elections coming up here in Australia we need to keep our eye on the ball or these ideologies will continue to prevail ... to everyone's further detriment.

Mary Tehan | 31 May 2018  

But 'just human' is just what the institutional church claims not to be Joan. If it were 'just human' how could it claim papal infallibility and the authority of Magisterium? Those sorts of claims set the bar much higher than that which might pass for those of us who are merely 'just human'. How does the 'Ellis defence' differ from a corrupt businessman placing all his assets in a family trust and all his liabilities in a limited liability company so that when the company goes broke he can walk away unscathed?

Ginger Meggs | 31 May 2018  

Fr.Andrew is spot on, in my opinion... Perhaps his message could be unpopular, because he may mean we ALL need a conversion... Do we all want more money ????

Bernie | 31 May 2018  

Ginger, the gift of infallibility was given to Peter and his successors, but not impeccability. The distinction, and often existential gap, between the good and true we know and what we actually do, is part of Christian anthropology, requiring grace and metanoia as long as the Church and its members exist in history.

John | 01 June 2018  


Denis Quinn | 01 June 2018  

Thanks for this article Andy and making this important document available to a wider audience of readers such as myself. Hopefully it is peer reviewed widely and ultimately achieves the level of influence it appears to merit.

Denis Quinn | 01 June 2018  

“That demands more than compliance. It requires conversion”…#An extract from a speech By Rev. Martin Luther King 4 April 1967… “I am convinced that if we are to get on the right side of the world revolution, we as a nation must undergo a radical revolution of values. We must rapidly begin the shift from a "thing-oriented" society to a "person-oriented" society. When machines and computers, profit motives and property rights are considered more important than people, the giant triplets of racism, materialism, and militarism are incapable of being conquered”…It is said that you cannot be what you do not see/envisage. Hope needs to be kindled, the laity needs to see those who serve, giving a ‘full’ (Honest) account to those they serve. We need to see our Shepherds holding the bright lamp of Truth high, giving ‘HOPE to all of Mankind’ in seeing the Truth within the gospel actually working. Our Lord Himself has given the Church the means to do this thorough a public act of humility (The True Divine Mercy Image one of broken man) If it were to be venerated, a transfiguration would occur within the Church at this ‘moment in time’, that would resurrect the true face of Jesus Christ, a humanised face that reflects Truth and humility before all those she is called to serve, in love and compassion. Manifesting a loving God, who holds us accountable to the consequences of our choices, encourages us to ‘grow up’ and inspires our cooperation and as we do so, provides the grace to confirm our efforts. From this base one of humility many past wrongs could be corrected while new more inclusive structures would be formed, in effect bringing an end to Clericalism. And in so doing, set the ‘visible’ foundation, for person-oriented societies.

Kevin Walters | 01 June 2018  

Wow. Roy! Wouldn;t it be great if we could all forget Left/Right ideologies and just follow the gospel Truth!

AURELIUS | 03 June 2018  

Yes! AURELIUS ‘it be great if we could all forget Left/Right ideologies and just follow the gospel Truth’ But how do we do this in Unity of Purpose. Extracts for my posts via the link below: 'If we could plumb the depths of meaning in our own personal life histories we might be able to forge more effective link with others'. Our ideas relating to attendance/ ‘participation’ at Mass vary, as they most probably relate to our personal life experiences. But for all of us, it is an encounter with the Lord and each other, no matter how broken that encounter may be. The purpose of the occasion should be to give glory to Our Father in Heaven, while encountering the Word made flesh in the shared sacrificial image/food /Way of Jesus Christ, this encounter is individual, as the Church does not pass judgment on the internal forum of men’ but it’s fruit should be 'communal' as in binding us together in humility/Truth/Love. James 5:16 confess your sins to each other and pray for each other so that you may be healed. ‘The earnest prayer of a righteous person has great power and produces wonderful results’... For me the Priest/‘Pastor’ does not need to give a homily worthy of the occasion, rather he should be worthy of the occasion, in acknowledge his failings openly, as Truth is the mortar that holds the house/flock together. As it could be said, that for true emotional inter-dependence to come about with others, we need to show/tell our vulnerability, for when we do so, it confers authenticity, a place from where we can truly share the communal meal and our life with others… Please consider continuing via the live link. https://acireland.ie/emerging-christianity/#comment-10808 kevin your brother In Christ

Kevin Walters | 04 June 2018  

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