Church of England leaders criticize markets

Traders who drove down the value of a major British bank are simply "bank robbers and asset strippers," the Archbishop of York has told a gathering of international bankers.

Archbishop John Sentamu, speaking to The Worshipful Company of International Bankers in London, said the markets had become an Alice in Wonderland world in which the value of a bank did not depend on its performance, but on the willingness of the government to bail it out.

Archbishop of Canterbury Rowan Williams, meanwhile, said in an article for the Spectator magazine that the credit crisis had exposed the unreality of the global trade in debts, in which "almost unimaginable wealth has been generated by equally unimaginable levels of fiction, paper transactions with no concrete outcome beyond profit for traders."

Williams and Sentamu are the top two officials in the Church of England. Williams also serves as the spiritual leader of the 77 million-member worldwide Anglican Communion.

HBOS, parent company of the Bank of Scotland and Britain's biggest mortgage lender, the Halifax, agreed last week to a takeover by Lloyds TSB PLC following a sharp fall in HBOS shares.

Halifax is based in northern England, in Sentamu's archdiocese.

The government reacted this week by temporarily banning short-selling in shares of a range of financial institutions.

Traders who engage short selling borrow shares from others, then sell them in the hope of buying them back at a lower price and collecting the profit.

"To a bystander like me, those who made 190 million pounds (US$350 million) deliberately underselling the shares of HBOS, in spite of its very strong capital base, and drove it into the bosom of Lloyds TSB Bank, are clearly bank robbers and asset strippers," Sentamu said.

"We find ourselves in a market system which seems to have taken its rules of trade from Alice in Wonderland, where the share value of a bank is no longer dependent on the strength of its performance but rather on the willingness of the government to bail it out, or rather on whether the government has announced its intentions so to do."

Referring to the proposed US$700 billion plan to shore up the U.S. financial system, Sentamu said that much smaller sums could have a dramatic impact on alleviating global poverty.

The Church of England has a worldly interest in financial markets. Its investments in shares, property and other interests earned 144.6 million pounds (US$268 million) in 2007, the Church Commissioners reported.

The Church Commissioners administer some 5.6 billion pounds (US$10.4 billion) in assets.

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On the Net:

Archbishop of York, http://www.archbishopofyork.org

Archbishop of Canterbury, http://www.archbishopofcanterbury.org