LONDON // Traders whose short selling has contributed to the chaos on the world's financial markets have been condemned in extraordinary attacks by the two most senior church figures in the UK. As US President George W Bush yesterday grimly battled in Washington to win approval for a Wall Street rescue package, the churchmen across the Atlantic criticised the practices that have brought turmoil to the markets.
In what commentators were calling an unprecedented intervention in the money markets by the clergy, the archbishop of Canterbury, the worldwide leader of the Anglican communion, launched his attack in an article in The Spectator magazine. Dr Rowan Williams described the current financial crisis as exposing "the truth that almost unimaginable wealth has been generated by equally unimaginable levels of fiction, paper transactions with no concrete outcome beyond profit for traders".
Meanwhile, Dr John Sentamu, the archbishop of York - the number two in the Anglican hierarchy - branded share traders who cashed in on falling prices as "bank robbers and asset strippers". Backing the UK and US governments' temporary ban on short selling, Dr Williams said short sellers had now caused "real and crippling damage". "Given that the risk to social stability overall in these processes has been shown to be so enormous, it is no use pretending that the financial world can maintain indefinitely the degree of exemption from scrutiny and regulation that it has got used to," he said.
"The biggest challenge in the present crisis is whether we can recover some sense of the connection between money and material reality - the production of specific things, the achievement of recognisably human goals that have something to do with a shared sense of what is good for the human community in the widest sense." In addition to the ban on short selling, the archbishop urged governments around the world "not to lose their nerve as they look to identify a few more targets" to legislate against.
For his part, Dr Sentamu said in a speech to a meeting of bankers that the proposed US bailout was in stark contrast to the efforts of wealthy governments to finance schemes to end poverty in the developing world. "One of the ironies about this financial crisis is that it makes action on poverty look utterly achievable," he told the annual dinner of the Worshipful Company of International Bankers.
"It would cost US$5 billion (Dh18.4bn) to save six million children's lives. World leaders could find 140 times that amount for the banking system in a week. "How can they tell us that action for the poorest is too expensive?" Dr Sentamu went on to savage the way that financial institutions currently operate, saying that "we find ourselves in a market system which seems to have taken its rules of trade from Alice in Wonderland". He pointed to last week's £12.2bn (Dh82.6bn) takeover of Halifax Bank of Scotland (HBoS) by Lloyds TSB after a crisis that many have blamed on short selling.
"To a bystander like me, those who made £190 million deliberately underselling the shares of HBoS, in spite of a very strong capital base, and drove it into the arms of Lloyds TSB, are clearly bank robbers and asset strippers," he said. But the call from the two archbishops for the ban on short selling to be made permanent was condemned by the Association of Private Client Investment Managers and Stockbrokers, the representative body of the stockbroking industry.
"It is market abuse which is wrong and this can occur when holding either long or short positions," said David Bennett, the association's chief executive. "Transparency is the key here. "Markets need both the views of people who think the share price is going to fall as well as people believing the market will rise in order that the markets can function efficiently." @Email:firstname.lastname@example.org