wsj | Move over, Sen. Elizabeth Warren—there’s a new high-profile critic of the world’s largest banks, and he has over a billion followers.
Pope Francis dedicated a few lines of his 183-page encyclical on the environment
on Thursday to the topic of the failures of banks and markets. In the
Holy Father’s view, “[t]he lessons of the global financial crisis have
not been assimilated” and the governments’ response to the crisis have
only set up the financial system for a future panic:
Saving banks at any cost, making the public pay the price, foregoing a firm commitment to reviewing and reforming the entire system, only reaffirms the absolute power of a financial system, a power which has no future and will only give rise to new crises after a slow, costly and only apparent recovery. The financial crisis of 2007-08 provided an opportunity to develop a new economy, more attentive to ethical principles, and new ways of regulating speculative financial practices and virtual wealth. But the response to the crisis did not include rethinking the outdated criteria which continue to rule the world.
While praising business as a “noble vocation, directed to producing
wealth and improving our world,” His Holiness called out the financial
sector for having outsized influence over the political process and
endorsed limiting its reach:
[E]conomic powers continue to justify the current global system where priority tends to be given to speculation and the pursuit of financial gain, which fail to take the context into account, let alone the effects on human dignity and the natural environment… To ensure economic freedom from which all can effectively benefit, restraints occasionally have to be imposed on those possessing greater resources and financial power.
The pope’s views may be backed by some recent research: On Wednesday
the Organization for Economic Cooperation and Development said that curbing certain kinds of bank lending could ameliorate income inequality around the world and increase economic growth.
