JPMorgan and the problem of hubris

TIMOTHY A. CLARY AFP/GETTY IMAGES People walk past the JP Morgan Chase Building on Park Avenue May 15, 2012 in … Continued

TIMOTHY A. CLARY

AFP/GETTY IMAGES

People walk past the JP Morgan Chase Building on Park Avenue May 15, 2012 in New York. The US Justice Department has opened an investigation into JPMorgan Chase’s more than $2 billion trading loss that the Wall Street bank announced last week, media reports said Tuesday.

JPMorgan’s losses from risky bets the bank made continue to grow . According to reports, investors who lost money because of these “bets” are now suing the bank because of it.

This is exactly the kind of “too big to fail” financial problem that brought down the financial house of the country starting in 2007, and caused the “Great Recession.” It is the kind of problem the new banking regulations put in place under the Obama administration were designed to prevent.

But it is also a theological problem. It is a problem of the frailty of human nature and the human temptation to overreach.

Let’s look at the financial problem first, because it illuminates the theological problem. The Federal Reserve is looking into whether JPMorgan’s original bet, and the growing losses, were “inappropriate for a federally insured depository institution.” To put it in simpler terms, that’s your money, my money, taxpayer money in “federally insured” guarantees for these deposits. But JPMorgan was effectively running a giant hedge fund in the middle of what is supposed to be a bank, and they made risky bets with you and me and the rest of the American taxpayers potentially on the hook for their losses.

This is the flaw at the heart of unregulated capitalism, and why, without regulation, “the smartest guys in the room” will crash the system over and over again.

Those with a lot of money and power often overestimate their own competence and ability. They decide to run up the risk. This wasn’t just an “error” of some traders making mistakes. It may have been strategic. Jamie Dimon, Chairman and CEO of JPMorgan, had, according to Bloomberg, “transformed the unit in recent years to make bigger and riskier speculative trade with the bank’s money, five former employees said.”

This kind of excessive risk-taking is “hubris.” The Greeks knew all about this. “Hubris,” from the Greek, is often mistranslated as “pride,” but it’s more than pride. It is falling for the seductions of power, and thinking that the rules don’t apply to you. As Christian theologian Paul Tillich saw it, this was part of the frailty of the human condition; our “estrangement” as self-interested, fallen human beings, leads us to think we know it all, can do it all, and that we as humans are, “the smartest guys in the room.”

That’s temptation. And human beings fall into temptation a lot, especially when there’s a lot of money involved. The inordinate love of money, as the writer of the New Testament letter 1 Timothy said, is the “root of all evil.” It’s when you are “eager for money” that you come to grief. (1 Tim. 6:10)

We really need to bring our theological insights on temptation to our understanding of capitalism and regulation. Regulated capitalism makes smart theological sense, and it also makes smart business sense. People are tempted to overestimate their ability to manage risk when there’s a lot of money to be made. That’s what 1 Timothy is talking about. So, given human nature, does it make sense to you to keep allowing practices on Wall Street that threaten to crash the system over and over again? Does it make sense to you to have your tax money, and mine, covering the bets of risk-taking traders? When they win, they keep the money. When they lose, it’s your money on the line.

The reason we’re having trouble applying both theological and business sense to the issue of boom and bust, unregulated capitalism, is that unregulated capitalism has become almost any article of faith for many Americans. Many Americans say they believe in the “free market” and in the “invisible hand” of the market, which can sometimes almost be taken to mean “God’s invisible hand.” This idea arose during the struggle with ‘godless Communism.’

But in fact, God doesn’t run markets, people do. Yes, we need a Christian interpretation of capitalism and this is it: We need to take our theological insights on how people really behave when there’s a lot of money at stake (temptation!) and regulate accordingly.

“Hubris” is no way to run our economic life. How many lessons on this do we need?

About

Susan Brooks Thistlethwaite Rev. Dr. Susan Brooks Thistlethwaite is Professor of Theology and immediate past President of Chicago Theological Seminary. She is also a Senior Fellow at the Center for American Progress. Her most recent books are "#OccupytheBible: What Jesus Really Said (and Did) About Money and Power" and, as contributor and editor, "Interfaith Just Peacemaking: Jewish, Christian, and Muslim Perspectives on the New Paradigm of Peace and War."
  • tony55398

    Communism was making the state your god, and Capitalism is all about making money your god.

Read More Articles

egg.jpg
Jesus, Bunnies, and Colored Eggs: An Explanation of Holy Week and Easter

So, Easter is a one-day celebration of Jesus rising from the dead and turning into a bunny, right? Not exactly.

shutterstock_186566975
Hey Bart Ehrman, I’m Obsessed with Jesus, Too — But You’ve Got Him All Wrong

Why the debate over Jesus’ divinity matters.

SONY DSC
Dear Evangelicals, Please Reconsider Your Fight Against Gay Rights

A journalist and longtime observer of American religious culture offers some advice to his evangelical friends.

shutterstock_186090179
How Passover Makes the Impossible Possible

When we place ourselves within the story, we can imagine new realities.

This Passover, We’re Standing at an Unparted Red Sea

We need to ask ourselves: What will be the future of the State of Israel — and what will it require of us?

shutterstock_185995553
How to Debate Christians: Five Ways to Behave and Ten Questions to Answer

Advice for atheists taking on Christian critics.

HIFR
Heaven Hits the Big Screen

How “Heaven is for Real” went from being an unsellable idea to a bestselling book and the inspiration for a Hollywood movie.

shutterstock_186364295
This God’s For You: Jesus and the Good News of Beer

How Jesus partied with a purpose.

pews
Just As I Am

My childhood conversion to Christianity was only the first of many.

shutterstock_127731035 (1)
Are Single People the Lepers of Today’s Church?

In an age of rising singlehood, many churches are still focused on being family ministry centers.

2337221655_c1671d2e5e_b
Mysterious Tremors

People like me who have mystical experiences may be encountering some unknown Other. What can we learn about what that Other is?

bible
Five Bible Verses You Need to Stop Misusing

That verse you keep quoting? It may not mean what you think it means.

csl_wall_paper
What C.S. Lewis’ Marriage Can Tell Us About the Gay Marriage Controversy

Why “welcome and wanted” is a biblical response to gay and lesbian couples in evangelical churches.