Why Not Tell the Truth?: Deceptive Practices and the Economic Meltdown

Charles W. Murdock, Loyola University Chicago

Abstract

Today we are witnessing a crisis caused by economic formulae developed without a responsible exercise of judgment and, in many instances, with a shocking disregard for the truth. The virtue of truthfulness is not just some abstract moral principle. Rather, it is a critical component of a well functioning society. As the current situation demonstrates, the lack of regard for truthfulness can have disastrous consequences, not just for our own country, but around the world.

This article will first examine how broadly truth is devalued throughout our society. Second, it will focus on the lack of truthfulness in politics and government. Third, the article will analyze the deception and lack of accountability that led to the corporate corruption scandal at the turn-of-the-century. Fourth, it will analyze the deceitfulness which has triggered the current crisis, which reflects the apogee of lying. Losses are no longer measured in tens of billions of dollars, but rather hundreds of billions of dollars and maybe even trillions. Seldom has lying been so pervasive throughout a system&#;from customers, mortgage brokers, and banks, in creating the mortgages, to investment bankers and credit rating agencies in bundling, securitizing and selling mortgages and their derivatives, to the government and its lack of candor in informing Congress and the American people about the nature of the problem and what will be done to solve it.

The article will conclude by analyzing the real causes of the crisis and suggest at least a partial solution to the problem of toxic assets which have precipitated the crisis.