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Movement of Christian Workers
St, Joseph’s, Watford Way,
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Telephone: 0208 2036290,

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The American Mortgage Crisis

A personal view of Clayton Sinyai a member of the Catholic Labor Network (USA)

In the 1960s Prime Minister Harold Wilson spent about US$10 Billion (in today's currency) from the British Exchequer to assume public ownership of Britain's steel industry. In 1982, President Francois Mitterand incited massive capital flight when his new Socialist government purchased most of France's basic industry for less than US$15 Billion. But comes now US President George W. Bush and with a plan to dwarf these great nationalizations, extending nearly US$1 trillion in funds and loan guarantees to acquire a bankrupt insurer, shares in several wobbly banks, and perhaps a million home mortgages of questionable value. I, for one, wish my Treasury secretary could have held out for at least a few tangible assets.

The financial crisis on Wall Street that has now spread across the globe is rooted in the collapse of a speculative housing bubble that brought with it mass defaults of the high-interest loans that had sustained it. Now, the American suburb with its attendant car culture is surely poor urban planning and probably environmentally unsustainable. It has long been a figure of amusement - or disdain - to bien-pensants at home and abroad. But it is important to recognize the social and cultural value of the ubiquitous single-family home in American life. Catholic social teaching, after all, has differed from various forms of socialism in the value it assigns to private property - precisely as the basis for family life.

Nineteenth century Americans celebrated the abundant land that enabled virtually every man to escape the curse of serfdom or servitude and acquire property, setting up with his family as a yeoman farmer or small tradesman. As work was collectivized in the factory or office during the twentieth century, the home remained. As socially disruptive markets tore at the fabric of community life, the single-family home represented private property as it was meant to be: a source of stability, which bound the members of the family together in relation to a shared space and article of property.

Indeed, the very firms that created the speculative bubble in housing values with massive expansions of mortgage lending unhinged from the value of the underlying properties have taken to explaining their usurious ‘subprime' lending as an attempt to extend homeownership to social classes otherwise ineligible. (That high interest loans were more often offered to tempt comfortable middle class families out of modest ranches and into 4,000+ square foot ‘McMansions' is seldom mentioned.)

The US Conference of Catholic Bishops can claim credit for a consistent support of affordable housing while taking an early stand against the predatory lending practices - practices that we now see were not just unethical but economically imprudent. The Bishops, like the AFL-CIO trade union federation, support a national housing trust as a more suitable vehicle than unregulated financial markets to enable working people to secure housing.

One thing is for certain: the ‘American model' of deregulated capital and labor markets has proven to have feet of clay, failing to deliver the limitless growth and endlessly increasing consumption promised by its advocates. Like Belshazzar holding his wanton feast on the Temple silver, we have been putting the gifts of God's creation to profane and selfish ends. If the spreading economic suffering engendered by this crisis is to have any redemptive value, it will be in the call to renew our understanding of property as an instrument for fostering solidarity in our relations with men and women everywhere.