Tag Archives: Bank of America

Foreclosures and the Credit Crunch in America: Did God Want You to Get That Mortgage?


By David Van Biema

Pulpit Pimps

Pulpit Pimps

Has the so-called Prosperity gospel turned its followers into some of the most willing participants — and hence, victims — of the current financial crisis? That’s what a scholar of the fast-growing brand of Pentecostal Christianity believes. While researching a book on black televangelism, says Jonathan Walton, a religion professor at the University of California at Riverside, he realized that Prosperity’s central promise — that God will “make a way” for poor people to enjoy the better things in life — had developed an additional, dangerous expression during the subprime-lending boom. Walton says that this encouraged congregants who got dicey mortgages to believe “God caused the bank to ignore my credit score and blessed me with my first house.” The results, he says, “were disastrous, because they pretty much turned parishioners into prey for greedy brokers.”

Others think he may be right. Says Anthea Butler, an expert in Pentecostalism at the University of Rochester in New York: “The pastor’s not gonna say, ‘Go down to Wachovia and get a loan,’ but I have heard, ‘Even if you have a poor credit rating, God can still bless you — if you put some faith out there [that is, make a big donation to the church], you’ll get that house or that car or that apartment.’ ” Adds J. Lee Grady, editor of the magazine Charisma: “It definitely goes on, that a preacher might say, ‘If you give this offering, God will give you a house.’ And if they did get the house, people did think that it was an answer to prayer, when in fact it was really bad banking policy.” If so, the situation offers a look at how a native-born faith built partially on American economic optimism entered into a toxic symbiosis with a pathological market.

Although a type of Pentecostalism, Prosperity theology adds a distinctive layer of supernatural positive thinking. Adherents will reap rewards if they prove their faith to God by contributing heavily to their churches, remaining mentally and verbally upbeat and concentrating on divine promises of worldly bounty supposedly strewn throughout the Bible. Critics call it a thinly disguised pastor-enrichment scam. Other experts, like Walton, note that for all its faults, the theology can empower people who have been taught to see themselves as financially or even culturally useless to feel they are “worthy of having more and doing more and being more.” In some cases the philosophy has matured with its practitioners, encouraging good financial habits and entrepreneurship.

But Walton suggests that a decade’s worth of ever easier credit acted like a drug in Prosperity’s bloodstream. “The economic boom ’90s and financial overextensions of the new millennium contributed to the success of the Prosperity message,” he wrote recently. And not positively. “Narratives of how ‘God blessed me with my first house despite my credit’ were common. Sermons declaring ‘It’s your season to overflow’ supplanted messages of economic sobriety,” and “little attention was paid to … the dangers of using one’s home equity as an ATM to subsidize cars, clothes and vacations.”

With the bubble burst, Walton and Butler assume that Prosperity congregants have taken a disproportionate hit, and they are curious as to how their churches will respond. Butler thinks some of the flashier ministries will shrink along with their congregants’ fortunes. Says Walton: “You would think that the current economic conditions would undercut their theology.” But he predicts they will persevere, since God’s earthly largesse is just as attractive when one is behind the economic eight ball.

A recent publicly posted testimony by a congregant at the Brownsville Assembly of God, near Pensacola, Fla., seems to confirm his intuition. Brownsville is not even a classic Prosperity congregation — it relies more on the anointing of its pastors than on Scriptural promises of God. But the believer’s note to his minister illustrates how magical thinking can prevail even after the mortgage blade has dropped. “Last Sunday,” it read, “You said if anyone needed a miracle to come up. So I did. I was receiving foreclosure papers, so I asked you to anoint a picture of my home and you did and your wife joined with you in prayer as I cried. I went home feeling something good was going to happen. On Friday the 5th of September I got a phone call from my mortgage company and they came up with a new payment for the next 3 months of only $200. My mortgage is usually $1,020. Praise God for his Mercy & Grace.”

And pray that the credit market doesn’t tighten any further.

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Lehman Files for Biggest Bankruptcy in American History, rumors of warnings with AIG and Citibank and the coming market meltdown


Sept. 15 (Bloomberg) — Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, succumbed to the subprime mortgage crisis it helped create in the biggest bankruptcy filing in history.

The 158-year-old firm, which survived railroad bankruptcies of the 1800s, the Great Depression in the 1930s and the collapse of Long-Term Capital Management a decade ago, filed a Chapter 11 petition with U.S. Bankruptcy Court in Manhattan today. The collapse of Lehman, which listed more than $613 billion of debt, dwarfs WorldCom Inc.’s insolvency in 2002 and Drexel Burnham Lambert’s failure in 1990.

Lehman was forced into bankruptcy after Barclays Plc and Bank of America Corp. abandoned takeover talks yesterday and the company lost 94 percent of its market value this year. Chief Executive Officer Richard Fuld, who turned the New York-based firm into the biggest underwriter of mortgage-backed securities at the top of the U.S. real estate market, joins his counterparts at Bear Stearns Cos., Merrill Lynch & Co. and more than 10 banks that couldn’t survive this year’s credit crunch.

“There is likely to be a domino effect as other firms and individuals who relied on Lehman for financing feel the effects of its meltdown,” said Charles “Chuck” Tatelbaum, a bankruptcy lawyer with Lauderdale, Florida-based Adorno & Yoss and former editor of the American Bankruptcy Institute Journal. “The whole thing is frankly frightening for the U.S. economy.”
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