Brother Louis speaks on economy

By Lauren Rothering
Copy Editor

Former President and current Saint Mary’s University Chancellor Brother Louis DeThomasis spoke about the cause and possible long-term effects of the current global economic crisis to students, faculty and staff on March 12.

Brother Louis classified current global economic conditions simply as “not good.” The constant flux of information about the economy has left many people confused, said Brother Louis.

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“The more I’ve been reading, the more I didn’t understand,” said Brother Louis. “What is going on is unprecedented - even God doesn’t know what’s going on.”

Brother Louis said that the current crisis originated in London, not the United States as many people choose to believe. According to Brother Louis, the root of the crisis began when AIG in London guaranteed half a trillion dollars in faulty loans through several years of deregulation.

Banks would bundle these faulty mortgages, said Brother Louis, and sell them to investment firms. Investment firms would then bundle these derivatives into structure investment vehicles (SIVs) and start selling those.

The current crisis, said Brother Louis, occurred when investment firms attempted to gauge the value of the triple-bundled SIVs, as they were far removed from the original, already faulty loans.

“Money was being created, money that wasn’t there,” said Brother Louis. “We forgot basic, common sense Economics 101, everyone did. For every winner there must be a loser, (but) for the past three to four years, there was no loser.” Now, “we all lost, it’s as simple as that.”

Although the current economic status is grim, Brother Louis emphasized an eventual revitalization of the economy.

“It’s going to take a couple of years, with tremendous amounts of suffering,” said Brother Louis, but “this is the best thing that could have happened - our economy had to be cleaned up. This is healthy. If this had happened in five to 10 years, we may not have been able to recover.”

In order to prevent a crisis of this magnitude from occurring again, said Brother Louis, there must be a return to ethical business practices in all areas of the world. “We can’t afford an unethical system,” said Brother Louis. “(A return to ethics) is what will solve our current economic problems more than any stimulus package.”

Brother Louis is a founder of Christian Brothers Investment Services, which manages over $5 billion in assets. He was also a director of Galaxy Funds, which manages mutual funds totaling $26 billion.