February 18, 2009
There’s something very comforting about the idea of confession. It’s a great idea. When I was a kid I used to love the ritual of confession on a Saturday. A half dozen of us would traipse down to the empty, echoey church after ‘Football Focus’ on BBC. I remember the anxiety of waiting for my turn and counting the seconds as the penitent in front of me mumbled unspeakable acts to the priest who went through the motions. His hushed blessings were always drowned out by the giggling — that unique and uncontrollable giggling that the combination of church and six young boys can spark.
Then there was the ritual of comparing notes. “What did you get?” ” Jesus, six Hail Marys, a Hail Holy Queen and a pair of Our Fathers”. Fr Moore was always the hanging judge of the place, doling out heavy sentences for tiny misdemeanors such as Macaroon bar-thieving which everyone knew was “allowed” — and even expected at the age of 12. Anyway, the whole process of getting away with it and starting again before Mass on Sunday appealed to me as a child.
Over the years, many non-Catholic friends have slagged the very idea of confession, when they heard that all you have to do is go in and say sorry and you are absolved, but there is something wonderfully simple about this sacrament. If God can’t forgive sins what can he do? In fact, the very ability to forgive is what makes God, God. The Vatican also understands that confession offers hope. There is great energy in the second chance. Confession is crucial for continuity; absolution and forgiveness are essential for renewal and recovery.
This morning, all over Ireland, bankers are meeting their clients. At the table will be two bankers, the lad who lent the money and the lad who is trying to get it back. On the other side of the table is the sinner who has borrowed heavily and now can’t pay his debts. There might also be a liquidator there with the sinner, explaining to the bankers just how desperate the situation is. The first thing the bankers have to get their head around is that the “security” they were pledged against the loans last year isn’t worth the paper it is written on. The second thing they have to understand is that they are not getting their money back, not today, not tomorrow, not ever. The bankers have to start thinking like priests. They need to get into the forgiveness game.
Why, you might ask? Surely someone who was stupid enough to expand his or her business using borrowed money at the top of the boom doesn’t deserve forgiveness? Surely, they deserve punishment? Well in an ideal world retribution has its place, but now Ireland has to start talking about forgiveness. We need to soften our stance toward our debtors, not because of any moral requirement, but because it is the only way out of the situation.
In the meetings that are taking place all over the country as you read this, one man is terrified. There is one person at the table who is petrified of losing everything. He is not the debtor. He is the lender and at this stage, he has no place at the meeting.
Think about what is happening today. Many companies have seen their turnover halved in six months. There is no way they can pay back borrowings based on last year’s turnover metrics. But the lad who lent to them is snarling at them over the table demanding that they pay every penny. He is doing this because if they do not pay he will lose his job. Therefore, he digs his heels in. So he is thinking like a debt collector, not a priest.
If the company is told that it will have to work the next decade simply to pay back the bank, that company may simply choose to fold. What is the point in building anything now, if all the profits will simply go to the bank? Therefore, the bank loses everything, the business fails, the liquidator is called in, employees are laid off and something is destroyed. More importantly, the credit crunch gets tighter, not looser, and the prospect of more defaults increases as the negative impact of this company’s closure shunts on throughout the system.
What would a priest do in this situation? The priest’s job is to keep the flock together as much as possible and, particularly for a proselytising organisation like the Catholic Church, keeping the numbers up is the bottom line. So the priest would act like a businessman here and he would cut a deal. The banker has to think like a businessman or priest and give hope to the company or the individual. The banker has to appreciate the powerful psychology of the second chance. By cutting a deal, the banker gets something, the company survives and the debtor is energised to try again. Yes, there is a risk that the debtor just walks way laughing, but by keeping a hold over the debtor, which is firm but doesn’t strangle him, everyone gets a second chance.
The first thing the banks must do to achieve this mindset shift is get the lender out of the room. In the negotiations between the bank and the debtor, the lad who lent can’t be present. He has too much at stake and as a result of being both personally and professionally involved, he will not make the right decision. He wants all his money back so that he doesn’t look like an eejit. In so doing, the lender makes a bad situation worse.
When he is out of the room, the writedown lad can deal with the possible, not the fanciful. By forgiving, we can start again. And, counter-intuitively, the only way to get liquidity going again is to forgive debt.
There is nothing unusual about this. This is the process by which we grope our way to the bottom. We need to find the floor and the banks have to lead this operation. If they continue to behave as if nothing has changed and as if we can all pay back the billions we borrowed, we will not get out of this mess. Catholic Ireland needs to start thinking like a Catholic again. Central to this will be financial confession where the debtor shuffles into the confessional and, depending on his delinquency, is offered a penance. This way, we keep hope alive. The economic equivalent of two Hail Marys and an Our Father is doled out and we start again. The banks take the hit because it is they who lent the money in the first place. We draw a line under the problem and move on.
You won’t read this Catholic forgiveness stuff in economic textbooks but then again, there was always something very Protestant in free-market economics. Max Webber mightn’t like it, but debt forgiveness will be part and parcel of the recovery.