Editor’s Note: This is the second post in a six-part series written by Donald J. Munro of the University of Michigan. You can follow the whole series here.
By Donald J. Munro
The human values of love and compassion, empathy and altruism emerge first in the bond between care-giver and infant. Later, the emotions associated with these values extend to other kin, friends, and then, often, to one’s community. They help hold these groups together.
Biologist E.O. Wilson says” “Among the traits with documented heritability, the closest to moral aptitude are empathy to the distress of others and … [the] attachment between infants and their caregivers” [Consilience 1998, 253]. In these relationships, love may motivate acts of altruism. Wilson notes that, “Kin selection is especially important in the origin of altruistic behavior.” Kin selection means we are more likely to help our blood relatives than those not related to us, favoring their ability to have babies and survive, even at a cost to our own survival.
Such altruistic behavior can solidify community relations. As sympathy or empathy, this emotion involves seeing things from the point of view of another person, especially someone whose well-being is linked to ours. Mirror neurons help us judge how others are thinking or feeling. So the emotion begins in the family and as the person matures, expands beyond it. Biologists and psychologists have repeatedly discovered through their research that empathy and compassion derive at least in part from our basic human biology. At the same time, they have deep roots in classical Chinese Confucian (Mencian) ethics. Mencius (4th century BCE) said that “The heart/mind of compassion is possessed by all men,” along with the heart of shame and of respect (see next blog, on Respect or Dignity/Avoidance of Shame) [Mencius vi.A. 6] The Analects of Confucius said that “Filiality towards parents is the root of the humane treatment of others.”
So bonding with friends and others has some roots in our family love; those bonds result in our having empathy for both family and friends, and ultimately our community. Corporations do not experience compassion or empathy; people do.
Once again, the banks’ foreclosure record is relevant, this time because of its assault on basic family and community social relations, which derive from and are sustained by love, empathy, and altruism. Just Cause and the Alameda County Health Department developed a frame work for understanding the relationship between foreclosure and health:
“Foreclosures do not only impact an individual’s or household’s health, but can affect community health as well, through the disruption of social networks, increases in blight and crime and loss of revenue for the city…The displacement of families can result in the disruption of the sense of community in a neighborhood and the social networks that existed…”
Not only did the behavior of JPMorgan Chase, along with that of a number of other big banks, help to rupture some community bonds through their mortgage practices, but their actions indirectly led to other community stresses. Let me illustrate with the case of a community bank in my town, Ann Arbor, Michigan.
Regulations to control fraudulent and risky actions by some global banks inadvertently had an impact on community banks, which are very different. Community banks typically have assets of $1 billion or less ( c/fChase has $2 trillion plus), serve borrowing needs of small businesses, and have local officers, known in their communities. But the legal problems of the global banks, in part related to the Great Recession beginning in 2008, have led also to the treatment of community banks as though they were global banks.
Senator Christopher J. Dodd, one of the authors of the regulations (“Wall Street Reform and Consumer Protection Act of 2010,” known as the Dodd-Frank law) wrote: “…the bulk of the bill’s new regulations apply only to a few dozen of the largest ones [banks], each holding more than $50 billion in assets.” [See “Five Myths about Dodd-Frank”, Washington Post October 21, 2011]. But the regulators are not doing this
The Bank of Ann Arbor, founded in 1996, has assets just short of $1billion. However the federal regulators have been relying on Dodd-Frank rules as the “best practice” during their examinations here. As a result, this bank has been negatively affected by some of the new Dodd-Frank regulations, in these ways:
- It has had to increase from one to four and a half persons, staff members who deal with compliance issues, with which both the CEO and the COO also deal. This is a large cost.
- The new laws have strict and detailed requirements for a possible borrower to receive a “qualified mortgage,” having “Ability to Repay.” The eight categories of rules concern such matters as credit history and debt-to-income ratio. The new rules reduce the number of applicants who, though locally deemed qualified to borrow, still fail the federal eight items. For example, a foreigner may have no credit history. The Bank of Ann Arbor regards itself as now unable to assist clients in unique situations, applying its knowledge of local employers and local customers. The bank believes that a community bank should be able to make a loan on local rules at the local level, but agree not to sell it on any secondary market.
Sources: Interview with Bank of Ann Arbor President and CEO Timothy G. Marshall, and Chief Operating Officer Patti H. Judson, January 6, 1014. Also IPPA.US online essays by Donald J. Munro, “Consumer Debt and Its Social Consequences” and “Community Banks vs. Global Banks.”
The F.D.I.C., which oversees community banks, and the Federal Reserve can fix this situation by constructing new rules applicable specifically to community banks such as the Bank of Ann Arbor (and not to global banks).
Image credit: Flickr/picken
Next: Respect or Dignity/Avoidance of Shame
Donald J. Munro is professor emeritus of philosophy and Chinese at the University of Michigan. Munro connects venerable philosophical traditions to modern scientific discoveries, always with a concern for the ethics of human action. His books include The Concept of Man in Contemporary China, Images of Human Nature: A Song Portrait, and Individualism and Holism: Studies in Confucian and Taoist Values. In recent years he has been the Ch’ien Mu Lecturer in Chinese History and Culture (2006) and the Tang Junyi Visiting Professor (2009) at the Chinese University of Hong Kong. He is a founding member of the Interfaith Partnership for political Action (ippa.us).