A decade before the financial meltdown of 2008, Brooksley Born (Chair of the Commodity Futures Trading Commission) and Alan Greenspan (Chairman of the Federal Reserve Board) were at loggerheads about whether the multi-trillion dollar market of "derivatives" should be subject to governmental oversight.
Sometimes the State oversteps its bounds. And when it does, things get ugly. But the Bible makes it clear that civil government is appointed by God for a purpose. According to Romans 13, the purpose of civil government is to reward those who do good and to punish those who do evil. Paul tells us civil servants are "God's ministers."
When Alan Greenspan testified before Congress in October of 2008, just after the economic meltdown, he said he "found a flaw" in the way he had previously thought the economic world worked.
In his testimony, Greenspan did not elaborate on the "flaw." But I would like to do so.
The fatal flaw can be boiled down to one word: sin.
A big problem with derivatives is that few people understand how they work. Some derivatives are so complex that the financial institutions using them don't even understand how they work.
When something is that complex, and those who create the instruments don't want to "show their math," you have a disaster in the making.
One reason Brooksley Born smelled a rat is because she was a specialist in derivatives law. She had practiced in that field for 20 years before her clash with Greenspan. She knew what humans are capable of, when given a long enough leash. Worse yet, when there is no leash at all.
When a business that affects the hard-earned dollars of millions of trusting Americans operates in secret, with no accountability whatsoever, it is just too easy for sin to have its sway. The love of money is too powerful for many to resist.
This flaw is greatly magnified in a society that seeks to exclude God from the workplace, limiting Him to private, personal affairs, or to an hour of "spirituality" on Sunday morning.
When people lack the kind of internal control that restrains them from caving in to the love of money, there is a greater need for external control. That's the way life in a fallen world works.
But will external accountability fix the fatal flaw?
More to come...