Did Christianity Cause the Crash?

[Iason Ouabache]

Or more specifically, was it the Prosperity Gospel that set us down the Road to Ruin?

http://www.theatlantic.com/doc/200912/rosin-prosperity-gospel

America's mainstream religious denominations used to teach the faithful that they would be rewarded in the afterlife. But over the past generation, a different strain of Christian faith has proliferated—one that promises to make believers rich in the here and now. Known as the prosperity gospel, and claiming tens of millions of adherents, it fosters risk-taking and intense material optimism. It pumped air into the housing bubble. And one year into the worst downturn since the Depression, it's still going strong.

Many explanations have been offered for the housing bubble and subsequent crash: interest rates were too low; regulation failed; rising real-estate prices induced a sort of temporary insanity in America's middle class. But there is one explanation that speaks to a lasting and fundamental shift in American culture—a shift in the American conception of divine Providence and its relationship to wealth.

In his book Something for Nothing, Jackson Lears describes two starkly different manifestations of the American dream, each intertwined with religious faith. The traditional Protestant hero is a self-made man. He is disciplined and hardworking, and believes that his "success comes through careful cultivation of (implicitly Protestant) virtues in cooperation with a Providential plan." The hero of the second American narrative is a kind of gambling man—a "speculative confidence man," Lears calls him, who prefers "risky ventures in real estate," and a more "fluid, mobile democracy." The self-made man imagines a coherent universe where earthly rewards match merits. The confidence man lives in a culture of chance, with "grace as a kind of spiritual luck, a free gift from God." The Gilded Age launched the myth of the self-made man, as the Rockefellers and other powerful men in the pews connected their wealth to their own virtue. In these boom-and-crash years, the more reckless alter ego dominates. In his book, Lears quotes a reverend named Jeffrey Black, who sounds remarkably like Garay: "The whole hope of a human being is that somehow, in spite of the things I've done wrong, there will be an episode when grace and fate shower down on me and an unearned blessing will come to me—that I'll be the one."

More recently, critics have begun to argue that the prosperity gospel, echoed in churches across the country, might have played a part in the economic collapse. In 2008, in the online magazine Religion Dispatches, Jonathan Walton, a professor of religious studies at the University of California at Riverside, warned:

   

Narratives of how "God blessed me with my first house despite my credit" were common ... Sermons declaring "It's your season of overflow" supplanted messages of economic sobriety and disinterested sacrifice. Yet as folks were testifying about "what God can do," little attention was paid to a predatory subprime-mortgage industry, relaxed credit standards, or the dangers of using one's home equity as an ATM.

In 2004, Walton was researching a book about black televangelists. "I would hear consistent testimonies about how 'once I was renting and now God let me own my own home,' or 'I was afraid of the loan officer, but God directed him to ignore my bad credit and blessed me with my first home,'" he says. "This trope was so common in these churches that I just became immune to it. Only later did I connect it to this disaster."

Demographically, the growth of the prosperity gospel tracks fairly closely to the pattern of foreclosure hot spots. Both spread in two particular kinds of communities—the exurban middle class and the urban poor. Many newer prosperity churches popped up around fringe suburban developments built in the 1990s and 2000s, says Walton. These are precisely the kinds of neighborhoods that have been decimated by foreclosures, according to Eric Halperin, of the Center for Responsible Lending.

Zooming out a bit, Kate Bowler found that most new prosperity-gospel churches were built along the Sun Belt, particularly in California, Florida, and Arizona—all areas that were hard-hit by the mortgage crisis. Bowler, who, like Walton, was researching a book, spent a lot of time attending the "financial empowerment" seminars that are common at prosperity churches. Advisers would pay lip service to "sound financial practices," she recalls, but overall they would send the opposite message: posters advertising the seminars featured big houses in the background, and the parking spots closest to the church were reserved for luxury cars.

Nationally, the prosperity gospel has spread exponentially among African American and Latino congregations. This is also the other distinct pattern of foreclosures. "Hyper-segregated" urban communities were the worst off, says Halperin. Reliable data on foreclosures by race are not publicly available, but mortgages are tracked by both race and loan type, and subprime loans have tended to correspond to foreclosures. During the boom, roughly 40 percent of all loans going to Latinos nationwide were subprime loans; Latinos and African Americans were 28 percent and 37 percent more likely, respectively, to receive a higher-rate subprime loan than whites.

Beth Jacobson is a star witness for the City of Baltimore's recent suit against Wells Fargo. Jacobson was a top loan officer in the bank's subprime division for nine years, closing as much as $55 million worth of loans a year. Like many subprime-loan officers, Jacobson had no bank experience before working for Wells Fargo. The subprime officers were drawn from "an utterly different background" than the professional bankers, she told me. She had been running a small paralegal business; her co-workers had been car salespeople, or had worked in telemarketing. They were prized for their ability to hustle on the ground and "look you in the eye when they shook your hand," she surmised. As a reward for good performance, the bank would sometimes send a Hummer limo to pick up Jacobson for a celebration, she said. She'd arrive at a bar and find all her co-workers drunk and her boss "doing body shots off a waitress."

The idea of reaching out to churches took off quickly, Jacobson recalls. The branch managers figured pastors had a lot of influence with their parishioners and could give the loan officers credibility and new customers. Jacobson remembers a conference call where sales managers discussed the new strategy. The plan was to send officers to guest-speak at church-sponsored "wealth-building seminars" like the ones Bowler attended, and dazzle the participants with the possibility of a new house. They would tell pastors that for every person who took out a mortgage, $350 would be donated to the church, or to a charity of the parishioner's choice. "They wouldn't say, 'Hey, Mr. Minister. We want to give your people a bunch of subprime loans," Jacobson told me. "They would say, 'Your congregants will be homeowners! They will be able to live the American dream!'"

[Halfbaked1]

I used to go to church, sang in the choir and played my harmonica in the praise team.  I have sat there and listened to the claim from the pulpit that by giving our tithe and offering that we would be rewarded seven fold, or "pressed down, shaken together and overflowing."  I kid you not, that was the phrase used.  So the Christians I know have been led to believe, by their sectarian masters, that their worldly  reward is dependent upon their gifts to the church (ie. God).  Thus armed they tend to go out and buy new cars, saw alot of those in the church parking lot, and other things on credit.  None of them seemed to realize that the pastor guy was in realty and a few other business ventures, thus allowing him to not take a salary from the church and for him to even subsidize projects that the church needed that didn't get any offering for.  All they saw was a pious man who worked for the church and drove a hummer.

[Cain]

Sound's kinda suspect, to be honest.  America has always had a sort of Calvinist attitude towards wealth, this is nothing new.

[The Good Reverend Roger]

Sound's kinda suspect, to be honest.  America has always had a sort of Calvinist attitude towards wealth, this is nothing new.

Puritans FTW.

[Cain]

Yeah.

Also doesn't explain how Dubai and the UK are crashing, either.

[The Good Reverend Roger]

Yeah.

Also doesn't explain how Dubai and the UK are crashing, either.

The whole world was floating on easy credit.

It had to end eventually.

[Iason Ouabache]

Sound's kinda suspect, to be honest.  America has always had a sort of Calvinist attitude towards wealth, this is nothing new.

Agreed. I thought that it was an interesting article but didn't agree with the main premises. The Prosperity Gospel didn't help matters though. It is very shitty that the banks actively sought out particular preachers to be their hustlers. They convinced a lot of poor people to take very high stake risks with sub-prime loans that they could never afford. And if people ended up failing it wasn't God's fault, it was their fault for not believing hard enough. It's The Secret with some Christian imagery throw on top of it.

[Cain]

Yeah, it certainly contributed, but I think that was a local adaptation to a global theme (here easy credit was translated into a virtual subculture of "doing up" houses and selling them on - probably due to the very middle class British obsession with real estate and house prices).

[Requia ☣]

Sound's kinda suspect, to be honest.  America has always had a sort of Calvinist attitude towards wealth, this is nothing new.

Agreed. I thought that it was an interesting article but didn't agree with the main premises. The Prosperity Gospel didn't help matters though. It is very shitty that the banks actively sought out particular preachers to be their hustlers. They convinced a lot of poor people to take very high stake risks with sub-prime loans that they could never afford. And if people ended up failing it wasn't God's fault, it was their fault for not believing hard enough. It's The Secret with some Christian imagery throw on top of it.

The loans were (mostly) perfectly affordable.  They just came with adjustable interest clauses so that they could be made unaffordable later on.

[Iason Ouabache]

The loans were (mostly) perfectly affordable.  They just came with adjustable interest clauses so that they could be made unaffordable later on.

Did you miss this part of the article?

I asked Garay many times about a connection between the mortgage crisis and the gospel, but he does not really see one. From everything he says about his time as a loan officer, it seems he was involved in the kinds of subprime loans that led to so many foreclosures. He was hired in Countrywide's emerging-markets division, which meant he was expected to target the growing Latino community in the area. Like Beth Jacobson, he had no previous experience, but was valued for his connections and hustle. He makes astute criticisms of the risky loans but, like many former loan officers, he does so with a curious sense of distance, as if he had been just a cog in the machine. Loans got "too easy," he says. "Mortgages would be $1,500 a month, and that was all [the loan applicants] made in a month," he recalls, "but they figured they would rent the basement." He says sometimes he told people the loans were going to kill them, but they would plead, "Please help me, please. I want a house." Because he was becoming an increasingly prominent pastor at the time, many people who came to see him assumed he was the president of the bank and could protect them, he recalls.

[Requia ☣]

Exceptions, not the rule.

Also, those people didn't get loans.  if he knew what they made it wasn't a subprime loan (which requires no proof of income), and all but the most corrupt loan officers (read, those that would ignore fake proof of income) would have to turn the loan down under regulations, and shunt them off to the sub prime department where they'd get the kind of loan I described.