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Societal Norms Understating Unethical Corporate Cultures: The Case of Wells Fargo

The case of Wells Fargo suggests that even when a massive scandal is revealed to the general public, the moral depravity of a company’s culture is skirted rather than fully perceived. Wells Fargo was fined a total of $185 million by regulatory agencies including the Consumer Financial Protection Bureau, which had accused the bank of creating as many as 1.5 million deposit accounts and 565,000 credit-card accounts that for which consumers never asked. The bank fired 5,300 employees over the course of about five years after it was revealed those employees had opened the accounts and credit cards.[1] Wells Fargo’s CEO at the time, John Stumpf, “opted” for a cushy early retirement after an abysmal performance before a U.S. Senate committee; he walked away from the bank with around $130 million[2], and none of the other members of senior management were fired, or “retired,” obliterating any hope societally that any of the senior managers would be held accountable. This result is particularly troubling, given the true extent to which that management had turned the bank into an ethically compromised organization.

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Fraud in Selling Sub-Prime Mortgage-Based Bonds: Beyond Accountability

“In December 2011, the S.E.C. publicized its civil securities fraud charges against top executives from Fannie Mae and Freddie Mac for understating their exposure to subprime mortgages, which resulted in the government taking them over.”[1]Robert Khuzami, then the head of the S.E.C.’s enforcement division, said at the time that “all individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country’s investors.”[2]Pursuing even senior ranks has the air of fairness economically as well as in terms of the dictum, no one is above the law. So much for words; how about the accompanying deeds?


The full essay is at “Fraud in Selling Sub-Prime Bonds.”

1. Peter Henning, “Prosecution of Financial Crisis Fraud Ends With a Whimper,” The New York Times, August 29, 2016.

2. Ibid.

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Politics over Finance at the Vatican: The Status Quo Vanquishes a Reformer

Late in 2015, Cardinal Pell hired PricewaterhouseCoupers to conduct a comprehensive audit of the Vatican’s finances. Beforehand, he had hired McKinsey to do a review of assets; that company found a total of €1.4 billion (about $1.6 billion) “tucked away” off the books.[1] Other church officials, led by Cardinal Pietro Parolin, the Secretary of State, let Pell know that the audit wouldn’t happen. This was a setback for the financial overhaul that Pope Francis had charged Pell with wide authority to do a thorough job. That pope had been given the mandate to clean up the Curia, as the last pope had resigned amid allegations of “cronyism, inefficiency and corruption.”[2] So why did Pope Francis take Parolin’s side in scrapping any audit even though that pope had given Pell the o.k. to have it done?

The full essay is at “Politics over Finance at the Vatican.”


[1] Francis Rocca, “Vatican Finance Chief Runs into Resistance,” The Wall Street Journal, September 8, 2016.
[2] Ibid.

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SEC Investigating Hedge-Fund Priest: Christianity’s Pro-Wealth Paradigm Lapsing into Greed?

It is against U.S. securities law to knowingly make false statements or publish false information about a company you are shorting (selling stock now and buying the shares later, hence betting the stock price will go down). In other words, you can’t try to drive the company’s stock price down you are shorting so you can profit from the trade. Besides being illegal, the practice is unethical. Just go to Kant for that! The guy was fanatical against lying.

You wouldn’t expect to read, therefore, that the SEC is investigating a Greek Orthodox priest who sidelines as a hedge-fund manager for trashing commercial reputations in order to make money off shorting stock.  BloombergBusiness reported on March 18, 2016 that the SEC was “examining whether the Reverend Emmanuel Lemelson of Massachusetts made false statements about companies he was shorting.”[1]He reportedly referred to his trading skills as a “gift from God.”[2]Such a claim is on a slippery slope, theologically speaking.



The full essay is at “SEC Investigating Pro-Wealth Christianity.”


1. Matt Robinson, “Hedge Fund Priest’s Trades Probed by Wall Street Cop,” BloombergBusiness, March 18, 2016.
2. Ibid.

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American Consumers Using Gas-Savings to Reduce Debt: Frugality or Responsibility?

The steep drop in the price of oil in July 2015 was a concern for traders. Drillers and other energy companies comprise a significant portion of the S&P 500 index. “The upside to falling oil is that all the money that drivers are saving at the gas pump should mean more spending by them at stores — and a faster-growing U.S. economy. But Americans are choosing to pay off debt instead of going shopping.”[1]Is this a bad thing? In reckoning it as such, Wall Street analysts are missing the big picture, even financially.


The full essay is at “Wall Street Defining American Society.”


Gas at a station in January 2015 (ABC News)


[1] Bernard Condon and Ken Sweet, “Why Stocks Are Tumbling 6 Years into the Bull Market,” The Associated Press, August 23, 2015.

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Banks Guilty of Colluding to Set Euro-Dollar Exchange-Rate Fix: Toward a Competitive Market

In May 2015, Citicorp, JPMorgan Chase, Barclays, and the Royal Bank of Scotland both acknowledged colluding to set the “fix” rate in foreign exchange markets, and agreed both to change their internal cultures and pay criminal fines of over $2.5 billion.[1]The U.S. Attorney General, Loretta Lynch, stated that her department would “vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American customers.”[2]I submit that this does not go far enough, given the size and power of the banks and the condition of the sector.


The full essay is at “Banks Guilty.”


[1]Loretta Lynch, “Attorney General Lynch Delivers Remarks at a Press Conference on Foreign Exchange Spot Market Manipulation,” The U.S. Department of Justice, May 20-, 2015.

[2]Ibid.

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Banks Guilty of Colluding to Set Euro-Dollar Exchange-Rate Fix: Toward a Competitive Market

In May 2015, Citicorp, JPMorgan Chase, Barclays, and the Royal Bank of Scotland both acknowledged colluding to set the “fix” rate in foreign exchange markets, and agreed both to change their internal cultures and pay criminal fines of over $2.5 billion.[1]The U.S. Attorney General, Loretta Lynch, stated that her department would “vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American customers.”[2]I submit that this does not go far enough, given the size and power of the banks and the condition of the sector.


The full essay is at “Banks Guilty.”


[1]Loretta Lynch, “Attorney General Lynch Delivers Remarks at a Press Conference on Foreign Exchange Spot Market Manipulation,” The U.S. Department of Justice, May 20-, 2015.

[2]Ibid.

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Stockholder Activism at DuPont: A Conflict of Interest for Management

In American corporate governance law, the business judgment rule gives management expertise the benefit of the doubt over stockholder proposals. Compared with executive skill, they look rather populist and thus potentially irrational in nature. Nevertheless, with the rule chaffing up against the property-rights foundation of corporate capitalism, the managerial prerogative can be said to be dubious. Indeed, a strict private-property basis justifies displacing the default profit-maximization mission for a given corporation. Alternatively, stockholders may want to use their concentrated, collective wealth for other purposes, such as to alleviate hunger. Once enough profit has been made for the business to be sustained for another year or two, any additional surplus would be spent on food pantries, for example, rather than going out as dividends or being retained by the corporation. Because managerial skill is premised on the profit-maximization goal and its associated strategies, corporate executives intrinsically resist alternatives proposed by stockholders. The managers face a conflict of interest in providing their recommendation for stockholders. Even when the proposal assumes profit-maximization but differs from a current strategy (i.e., adopted by management), a conflict of interest exists should the management seek to provide a recommendation for the stockholders. In this essay, I use the activism of Trian Fund Management at DuPont to illustrate this point.


The full essay is at “Stockholder Activism at DuPont.”

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Hardness of Heart vs.Unethical Conduct: Which Is Less Christian?

Monsignor, a film made in 1982—in the midst of a very pro-business administration in Washington, D.C.—depicts a Vatican steeped in matters of finance centering around a priest whose degree in finance makes him a prime candidate to be groomed for the Curia. That cleric, Father John Flaherty, helps the Vatican operating budget during World War II by involving the Holy See in the black market through a mafia. In the meantime, he sleeps with a woman who is preparing to be a nun and subsequently keeps from her the matter of his religious vocation. The twist is not that Flaherty is a deeply flawed priest, or that the Vatican he serves is vulnerable to corruption inside, but that those clerics who mercilessly go after him are devoid of the sort of compassion that their savior preaches.

The full essay is at “Monsignor” 

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The Wolf of Wall Street Meets the Wolf of Hollywood: Greed Wearing Two Hats

 
It certainly does not take a Ph.D. to recognize that greed is a major player on Wall Street. Perhaps this is why films on the financial world embellish the behavior; filmgoers might otherwise fall asleep. It is much more difficult to see greed fueling the embellishment highs in the process of filmmaking. Perhaps both Wall Street and Hollywood are glitz on the outside, but supercharging the inside hardly does justice to either venture. In this essay, I discuss Jordan Belfort, an actual financier on Wall Street and the main character in the (fictionalized?) Wolf of Wall Street (2013) so as to flesh out the different ways in which sordid greed manifests in modern society.
In 1991, Robert Shearin could only repress his frustration as brokers at Stratton Oakmont unloaded their own shares in penny stocks while ignoring the sell orders of Shearin and other investments. “By the end it was constant screaming matches with these people,” Shearin recalls. “They would just ignore my sell orders.”[1]

The “suck and dump” scheme ran from 1988 to 1996. Twenty years later, the investment firm’s founder and CEO, Jordan Belfort, was still wheeling and dealing. After 22 months in prison followed by a period probation until 2009 during which half of his income had to go toward the $110 million in restitution, he was brazenly holding the remaining restitution ($98.4 million) owed to his shafted clients as hostage in negotiations with Loretta Lynch, the U.S. attorney for the Eastern District of New York. Since the end of the probation, Belfort had paid restitution of only $243,000 on income of millions from his two memoirs, the sale of the film rights, and motivational speaking fees.[2] Although legal, the post-probation skimping effectively nullifies his claim of being a changed man. “I was not such a good guy back in the day. But I’m a good guy now. I am. I live my life with such integrity,” he told the New York Daily News in October of 2013.[3] Yet at his speaking engagements, he would repeatedly quip, “Hey, at least no one got killed.”[4] Hearing about this crafty way of evading questions, Diane Nyggard, the attorney who represented Shearin and 24 other investors whom Belfort fleeced, replied, “I guess you could say no one was murdered. But a lot of lives were ruined, and many of the more elderly investors never recovered.”[5] Poverty, especially that which comes in the wake of treachery, is a sort of death in that it encages the body and snuffs out the the spirit, leaving walking corpses who cannot afford even to wander.

At the end of 2013, Belfort was still trying to weasel out of paying the remaining 90 percent of the restitution still owed to over a thousand former clients, including Shearin (who had received only 20 cents on the dollar as restitution). To be sure, Belfort had some leverage in the negotiations, for the 50 percent of income stricture had elapsed at the end of the probationary period so he could legally continue to pay scraps until his death, after which the restitution would abruptly stop. Among other acts, he had spent five years after being arrested in 1998 on securities fraud and money laundering charges wearing a wire, “ratting out friends and colleagues from Stratton Oakmont and testifying against them at trial.”[6]Besides stabbing friends in the back, the founder was essentially making the people whom he had trained and ordered to rip clients off take the hit in his place.

True to form, in the negotiations in 2013 on the remaining $98.6 million, the unchanged man offered to pay all the money from the film and books into the restitution fund if Lynch will substantially reduce the rest of his obligation. With almost all of the $11.4 million having come from sales of Belfort’s properties, the unrepentant swindler was clearly trying to keep the restitution judgment from touching the fortune he had saved from his swindling enterprise.

What lesson can we take from this case concerning the nature of greed? Most principally, it has not only unlimitedness as a salient quality, but also an imperviousness to the restraint that comes out of conscience. Put another way, greed does not recognize should. Instead, the desire for an even better deal, ad infinitum, views the external world as potential props that are themselves perceived only in so far as they can potentially be manipulated for gain. Because the last deal is never good enough, as it does not satisfy the desire, the wealth one possesses, including in property, goes practically unnoticed unless it can be manipulated for still more. That is to say, what was once vividly in focus as the aim of the best deal so far is naturally dismissed by greed as it moves on to getting still more for even less.

Going too far, in never being satisfied with enough, can apply to filmmaking too. In The Wolf of Wall Street, which is based on Belfont’s memoires, the credo of filmmaking that even a story based on a “true story” must push the truth to dramatic exaggeration to hold an audience’s attention reduces Belfont and his second in command to a contorted mass of drugged-down humanity on the floor of Belfont’s kitchen and side room. Having already provided over-the-top eye candy in the scenes of the office celebrations, Martin Scorsese apparently felt obliged to “kick it up a notch” on the emotional intensity meter by having Leonardo DiCaprio flop around on the floor, tangled in a phone cord while shouting and foaming at the mouth.
DiCaprio plays Jordan Belfort. The character reduces from this realistic image to a floundering fit of over-drugged and over-dramatic human mess. (Image Source: AP)
It is as though film must push its own adrenalin highs, each one more intense than its predecessor, in order to maintain the attention of a hyperactive audience, itself on popcorn laced with speed. With what costs to the story and, ironically, the integrity of the characters does serial exaggeration in a screenplay come? According to Shearin, the audience skates past the grounded gravitas of the characters as real human beings, whether fictitious or based on real people. “Jordan Belfort is not a fictional character, but when DiCaprio plays him he becomes one for the audience,” he said. “We like our scoundrels as entertainment, but it’s easy to become disengaged from the real harm this guy did.”[7]Watching the fun-loving, theatrical Belfort motivate his brokers onscreen does not begin to reveal the man behind the character, who stabbed his friends in the back in order to save himself from the consequences of what he himself had engineered and gotten others to do for him.


[1] Paul Teetor, “How the “Wolf of Wall Street” Is Still Screwing His Real-Life Victims,” LA Weekly (Blogs), December 16, 2013.

[2]Ibid.

[3]Ibid.

[4]Ibid.

[5]Ibid.

[6]Ibid.

[7]Ibid.

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The Underbelly of Corporate Charity as Corporate Social Responsibility

Why do corporate managements spend corporate money on charities? The obvious reason is to reduce the amount of corporate income tax due. Yet another motive, not as transparent, has to do with reputational capital, and that motive may also explain corporate social responsibility.

At the end of 2013, the American news media reported that Bernie Madoff had donated a lot of money to charity. In 2004, the Ponzi man claimed $3,918,347 as “gifts to charity” in 2004. His taxable income for the year was $12,912,498.[1]He owed just $2.8 million in income taxes, a 12.6% tax rate on his adjusted gross income of $22.2 million. “That’s really low by anyone’s standards,” Adam Fayne, a lawyer practicing in Chicago, said.[2]

  Bernie Madoff, surrounded by police, after having been arrested. Wikimedia Commons

Achieving the low 12.6% effective tax rate was undoubtedly on Madoff’s mind in making his charitable contributions. This rationale was by no means unusual at the time.  Additionally, Madoff would not have been above using charity in order to display himself as a very wealthy person. According to Martin Press, a tax attorney, “If [Madoff] actually gave the money to charity, it is a common theme of Ponzi scheme people to make large charitable contributions to show people how wealthy they are.”[3]The perception of Madoff as a financially successful personally rendered him trustworthy in being capable of making investors rich, and the apparent charitable giving gives the impression of trustworthiness in its normative sense (e.g., honesty and integrity).

Similarly, moreover, corporate strategies may include programs under the rubric of corporate social responsibilityas a means of cultivating the impression that the corporation itself is financially successful and trustworthy both in terms of competence and fairness. In other words, corporate social responsibility may be more about amassing reputational capital for the corporation than any acknowledged responsibility to society (other than to provide consumers with effective products). Perhaps the real question is why we are so gullible.


1.  John Waggoner, “Madoff ‘Donated’ a Lot to Charity,” USA Today, December 13, 2013.

2.Ibid.

3. Ibid.

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Pope Francis Urges an Ethical Basis for Markets: Taking on the Prosperity Gospel?

Going after the “profit-at-all-cost mentality . . . behind Europe’s economic crisis,” Pope Francis told reporters travelling with him to the Church’s Youth Day 2011that morals and ethics must play a greater role in future regulatory policies. “The economy doesn’t function with market self-regulation,” the Pope claimed. Like Adam Smith who had situated his own theory of perfect competitive on a foundation of moral sentiments to keep markets from going to excess and thus self-destructing, Pope Francis asserted that a market needs “an ethical reason to work for mankind.” He added that the moral dimension is “interior and fundamental” to economic problems.
The Pope’s appeal to the ethical dimension as the foundation of a market begs the question: What would a theological, or distinctly Christian, basis look like? The prosperity gospel would not stand a very good chance of being chosen, for it holds that God rewards true believers with earthly wealth rather than only with salvation. The basis for this interpretation is well represented in the Old Testament. During the years leading up to the financial crisis of 2008, a significant number of subprime mortgage borrowers were convinced that their Christological belief qualifies as true belief and, furthermore, that God would provide, even miraculously if necessary, so said borrowers would be able to make even the higher (ARM) mortgage payments on houses beyond the borrowers’ own financial means. Viewing God as the font of earthly treasure is to leave Christianity impotent in acting as a constraint against greed and wealth.

Facing the headwinds of deregulation and a Wall Street government, religious Americans weary of the excesses of uninhibited greed in the financial sector may want to press the Roman Catholic Pope to provide a constraining theologically-based ethic capable of counterpoising the hegemony of the prosperity gospel. Historically, the first three or four centuries of Christianity sported many anti-wealth theologians whose arguments could be appropriated to fill the gap left open by insufficient regulation.

Source:

David Roman, “Pope Visits Spain, Says Ethics Should Guide Economics,” The Wall Street Journal, August 19, 2011.

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Insurance Companies Gaming the States’ (Flawed) Regulatory System

In September, 2013, New York pulled out of a framework that the States had agreed to try out. Known as “principle-based reserving,” freed insurance actuaries from having to follow statutory requirements in their calculations, allowing the actuaries “to use their own data and assumptions.”[1]That compromise has resulted in such a loose framework that it had made the “gamesmanship and abuses” in the industry ever worse, according to Ben Lawsky, the financial services superintendent of New York. A sample of sixteen insurance companies were found to have increased their reserves by a combined total of only $668 million, far short of the $10 billion that would have been required had the companies had to follow the statutory formulae.
 
Insurance company executives had argued that the formulae are too formulaic, resulting in far higher reserves than necessary—in the (self-serving) opinions of the executives. Presuming nonetheless that they could not be wrong (and thus that the regulators could be in a better position to make the judgments), those managers approved “secretive transactions to artificially bolster their balance sheets [and presumably bonuses too!], often through shell companies in other states or states abroad.[2]According to Lawsky, the framework made the shenanigans possible.
 

     An insurance company manager smiling innocently for the camera on his way to cutting reserves by carving in stolen (i.e., ficticious) assets. Image Source: www.123rf.com

Five years out from the financial crisis of 2008, just the fact that state insurance regulators would feel the political need (or pressure) to compromise with their regulatees, whom would naturally (i.e., expectedly) exploit any loopholes gained by the compromise. That insurance companies have been able to “create surplus assets out of thin air” should been something more than a minor blimp on the screen.[3]With claims circulating that an even worse financial crisis could be expected next time around, compromised regulators were not exactly inspiring the public’s confidence.

Lest the problem be answered by federalizing insurance regulation, all of the fifty States were giving the framework a try, whereas Lawsky’s rigor-oriented pull-out was singular—that of New York. Rather than the problem being not enough federal consolidation, the fault-line lies at the subterranean level, where wealthy (and thus powerful) companies or entire industries being regulated “capture” their regulators. Whereas the capture theory of regulation falls well short in explanatory power by the sole argument that regulators are dependent on data from the regulated firms, the real capture is effected as government officials are “bought and paid for” through campaign contributions and other favors. The conflict of interest in turn masks the American shift from representative democracy to plutocracy (the rule by wealth over that of the public interest).  


[1] Mary Williams Walsh, “New York Regulator Sees Abuse Increasing Under New Insurance Rules,” The New York Times, September 12, 2013.

[2]Ibid.

[3] Ibid.

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The Financial Crisis: A Systemic and Ethical Analysis

According to a study by the Dallas Federal Reserve, the financial crisis of 2007-2009 “was associated with a huge loss of economic output and financial wealth, psychological consequences and skill atrophy from extended unemployment, an increase in government intervention, and other significant costs.”[1]The study’s abstract goes on to “conservatively estimate that 40 to 90 percent of one year’s output ($6 trillion to $14 trillion, the equivalent of $50,000 to $120,000 for every U.S. household) was foregone due to the 2007-09 [sic] recession.”[2]
 
Interestingly, the Huffington Post “reports” the study’s finding in the following terms:  “a ‘conservative’ estimate of the damage is $14 trillion, or roughly one year’s U.S. gross domestic product. This is based on how much output was lost during the crisis and Great Recession, along with all the damage done to potential future economic growth.”[3] In fact, the article’s title claims that the crisis cost more than $14 trillion! Lest it be thought that the reporter and editor suffer from a learning or reading disability, the gilding here is notably in the direction of “selling more papers.”
 
Ironically, the Huffington Post also published an article pointing to the lack of accountability in that “the executives that [sic] were in charge of Bear’s headlong dive into the cesspool of subprime mortgage lending hold similar jobs at the most powerful banks on Wall Street: JPMorgan, Goldman Sachs, Bank of America and Deutsche Bank.”[4]
 
The upshot is that those stakeholders who played a role in the crisis, most significantly the people running the government, the media, and the banks, have gone on, relatively unscathed, while the systemic risk remained or has actually become even greater.  As a first step toward recovery, a systemic map depicting the interrelated parts in the systemic failure and a related ethical analysis can provide a basis for reforms sufficient to thwart another major financial crisis.

 
 To continue to the systemic and ethical analysis, please click on: Link
 

                                                         

1.Tyler Atkinson, David Luttrell, and Harvey Rosenblum, “How Bad Was It? The Costs and Consequences of the 2007-09 Financial Crisis,” Staff Paper No. 20, Federal Reserve Bank of Dallas, July 2013.

2. Ibid.

3.Mark Gongloff, “The Financial Crisis Cost More Than $14 Trillion: Dallas Fed Study,” The Huffington Post, July 30, 2013.

4.Lauren Kyger and Alison Fitzgerald, “Former Bear Stearns Executives Seemingly Unscathed by Financial Crisis They Helped Trigger,” The Huffington Post, July 31, 2013. The article was originally published by the Center for Public Integrity.

 

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Financial Ethics in the Institute of Religious Works

In probing corruption leads in the Vatican Bank, Italian financial police stumbled on to a plot back in July 2012 to smuggle €20 million into Italy.[i] The alleged culprits include a monsignor, a financial broker, and a former member of Italy’s secret service. For his part, the cleric is said to have had people pretend to have given him donations of €560,000 so he could furtively pay the financial broker for his role. Crime, Italian politics, and the Vatican Bank—hardly a novel discordant tune. That not just any bank, but that of a Church, could stray so far from what would reasonably be expected from a bank whose formal name is the Institute of Religious Works boggles the mind. Even so, the intersection of ethics, religion and business is fraught with complexity.  A religious verdict from ethical premises is possible nevertheless.

Generally speaking, religion does not boil down to ethics. John D. Rockefeller was unethical in restraining trade when he ran Standard Oil. Yet pressing the railroads for excessive rebates and drawbacks (compensation from the railroads serving other customers) does not de-legitimate the titan’s claim to have been a Christ-figure in saving “drowning” competitors. Theological inconsistency, rather than unethical conduct, would be needed to expunge Rockefeller’s industrial-religious identity. Such inconsistency can be found in Rockefeller having forced competitors unwilling to be bought out into bankruptcy; Jesus did not inflict harm on people who refused to follow him. Human ethical systems cannot limit God, which is omnipotent.

Divine-sourced ethical principles, such as those in the Ten Commandments, are regarded as religious in nature, rather than merely soured in a human ethical system. Accordingly, were Rockefeller to have broken one of the Ten Commandments in running Standard Oil, his commercial-religious identity could be assailed. In the case of Msgr. Scarano at the Vatican Bank, his clerical, not to mention Christian,identities are vulnerable to the allegations that he bore false witness and stole money from the Vatican. That Kant concluded from his ethical system that lying can never be ethical is irrelevant. However, that Kant’s categorical imperative can be re-stated as, Treat other rational beings not just as means, but also as ends in themselves, suggests that Kant’s theory can be understood as the Golden Rule, which is binding in religious terms. Hume’s theory that determining something as unethical “just is” the psychological sentiment of disapproval finds no such corresponding theological ethic and is thus invalid in assessing the commercial-religious identities of either Rockefeller or Scarano.

As with Rockefeller, the case of Scarano begs the question, how can a person so religiously inclined so delude oneself in such matters?  If driving a car well were important to me, I would be double sure that my driving is as flawless as possible. I would ask friends to ride along or follow me from behind to assess my driving. Were one of them to tell me that my passing skills leave much to be desired, I would work on them—maybe even take a driving lesson. Of course, no one can be a perfect driver. So too, Scarano cannot be sin-free. Even so, were I to be a really bad driver and yet represent myself as highly skilled, people would naturally wonder about my state of mind. At the very least, the sustained cognitive dissidence (i.e., allowing for or ignoring hypocrisy in one’s conduct) likely in Scarano’s mind raises the question of the clerical screening process for mental health.

Moreover, that the Institute for Religious Works has been embroiled in charges of corruption time and again suggests that cognitive dissidence has come to characterize the Vatican’s culture. Considering the questionable prioritizing of avoiding a scandal over defrocking and turning in rapist priests, a pattern of cognitive dissidence can be suspected. The question is perhaps what religious works would look like. From this answer, the question would pertain to how finance could be put into service without undercutting the religious nature of the works.

In conclusion, ethical conduct, religion and finance are a tricky business not easily disentangled. A preliminary point can nevertheless be made with some certainty. Specifically, unethical conduct does not necessarily invalidate a religious identity in a person’s commercial or financial role. The ethical principle would have to be part of a divine decree, such as in the Decalogue, to contradict the assumed commercial religiousity.  A human-constructed ethical theory or principle cannot by definition limit God’s omnipotence (i.e., all-powerful), whereas God’s making of a moral divine decree cannot contradict God’s nature, or essence. Both Rockefeller and Scarano can be found culpable in religious-ethical terms bearing on Christianity even though it is possible to be both unethical and religious without contradiction.


[i] Gilles Castonguay and Liam Moloney, “Vatican Bank Probe Leads to Three Arrests,” The Wall Street Journal, June 28, 2013.

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