The Trouble With Democrats (Page 5)

Find out more about A New Way Forward and its grassroots efforts to reform our financial system here. William Greider's new book is Come Home, America.

Outlawing Usury

The Rev. David Brawley of East Brooklyn Baptist described a preliminary statement of basic principles. "Reasonable interest rates," he said. "In this financial culture, the nation will return to a time-honored, indeed ancient, practice: the law against usury. Financial institutions and mechanisms that participate in this culture will agree to a maximum of 9 percent interest or so. This was the usual state-mandated rate before the repeal."

Brawley described other principles with radical implications. "The lender holds the loan," he explained. "The financial institution that makes a loan holds the loan for its duration. The borrower and lender enter into a long-term relationship that ends when the loan is fully repaid. This is the fundamental starting point for any return to accountability." That statement of principle challenges the market securitization of mortgages that falsely claimed to reduce risk by dispersing it among many investors. The process instead left no one responsible for sound lending and thus multiplied the costs of failure.

Brawley's final principle was perhaps most threatening to the existing order. "The federal government insists on these core characteristics as the criteria for all further bailout funding. Banks that wish to borrow from the government must accept these simple standards [and] provide consumers with an alternative to the current monopoly of financial transactions dominated and still dictated by the same fifty financial institutions that caused the crisis."

In other words, the social standard of usurious practices should define which banks and financial firms are eligible to participate in all forms of government aid and protection. Why should taxpayers finance the usurers who are injuring the society? The government's undiscriminating approach to aiding banks implicates everyone in supporting the usury. So do the banks and brokerages that collect people's savings and channel the money into usurious practices that produce greater returns by ruining more borrowers. The moral standard poses difficult questions for everyone, not just bankers and politicians.

Arnold Graf, national organizer for the IAF, argues that the moral question can lead people to confront a deeper debate about the future. "What is the kind of society we want to have?" Graf asked. "That's really what we want to talk about--transforming the society. We're not going to get transformation form the president and Congress. It can only come from the people themselves."

These IAF organizations expect to try different tactics to spread the message and engage the people with power who make decisions. That means directly confronting elected representatives but also the banking institutions with famous names. The alliance hopes the moral principles will mobilize people of faith but also students and workers and investors. Following the example of the civil rights movement, people of conscience have to find ways to turn up the heat on the established order and discomfort the silent citizens who are passive and indifferent. This effort, Graf assumes, will probably take years, not months. Leaders of the community organizations are aware of the risks. They are attempting a leap into the unknown and they might fail. No one listens, nothing changes. They accept the risk because they too have asked Hillel's question. If not now, when?

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