Last night, my wife and I watched “A Night to Remember” on TCM. For those who haven’t seen it, this is a starkly different take on the Titanic than you may remember from the recent James Cameron version. There’s no epic Celine Dion anthems, no naked Kate Winslett and it’s about 60 minutes shorter, too.

Of course, all the historical basics are much the same– the boat still sinks and the steerage still gets locked below the deck as the water rises (women and children and the wealthy first, apparently) – but the biggest contrast is the scope of the drama. In James Cameron’s bodice ripper version, the camera homes in on a story of singular love and the tragedy is in the fleeting romance ended by unthinkable disaster. It is a story of heroic, selfish love.

But in the 1958 film, the heroes are the officers of the White Star Line, who, in spite of certain death, keep cool heads and dutifully and selflessly work diligently to save as many lives as possible.

The officers do an admirable job of keeping the panic in check. The gentleman calmly move about the ship, relating the captains orders to place the women and children in the lifeboats “as a mere formality. Meanwhile, the outwardly unshaken men wryly comment to one another, “I take it you and I might be in the same boat later?”

Even after the captain declares “every man for himself!” and widespread panic sets in, the officers continue to implore the crowd, “Don’t panic! Have some pride in yourselves! If we can get organized, we’ll survive.”

The hero in the 1958 film is the courageous, honor-bound staff of the White Star Line, not an uppity, handsome churl who wins the heart of an icy, high-bred maiden. Likewise, the villain is not a spoiled, jilted lover he’s a man who shamelessly sneaks onto a lifeboat, abandoning hundreds of women, children and his dignity on the sinking ship. This message is clear, as the camera frames his guilt-racked visage as the ship slips into the ocean in the background.

The Sinking Ship, The Grand Applause

Okay, so what does this have to do with credit cards? Nothing, really. It has more to do with the attitudes we take towards our occupations. As Hollywood reframes our historical tragedies – Pearl Harbor, Titanic – we make them interesting to modern audiences by making them very personal stories, where love and loyalties between individuals are more important than the suffering of society as a whole. It’s no stretch to compare the current state of our economy and the financial industry to a sinking ship. And who is at the helm of the consumer finance industry? Who are the White Star Line officers to the dire situation that is the credit industry?

As far as we’ve seen in America, there are none. From the outset, it has been “every man for himself!” In fact, even after the CARD Act was made law, one hundred percent of credit cards offered online by leading bank card issuers continue to include practices that will be outlawed once the Act takes effect next year.  (Pewtrusts.org) That shows that the lenders, the bankers, the credit card issuers will do anything that they can get away with to turn a buck, simply because that’s the American way of doing business. When the government clamped down on rampant unfair lending practices, the industry responded by ratcheting up interest rates an average of 20 percent while they still could, again, according to Pew Health Group.

Where is the dignity? Where is the concern for the fellow man, woman and child? How come the lifeboats are filled with the ones who steered us into this iceberg, while the steerage is left locked beneath the deck and the engine room workers are vainly attempting to bail themselves out?

Codes of Ethics

As we all know, when doctors graduate from medical school they traditionally take what is called the Hippocratic Oath. In a nutshell, it says that the doctor will be true to his practice, he will serve the sick before himself. Essentially, the individual says that he (or she) is a doctor before they are a human being with their own selfish wants, anxieties, political biases and families.

The Hippocratic Oath differs from the volumes of medical laws and legislation that protect us from medical malpractice and incompetence in that it is a code of ethics and is not regulated by the government. Depending on your ideals, those following a code of ethics answer to a higher power than the government. Like most industries, there is a heavy amount of self-regulation as far as professional ethics goes. But as we’ve seen from the recent failures in oversight by the SEC and the NASD (Hello, Madoff and Stanford)  it doesn’t always work to let criminals police themselves. But by failing to have a code of ethics, you send a tacit message to those in the industry: “Do whatever you can get away with. If the government doesn’t catch you, it’s fair game.”

Credit card and consumer finance legislation has received much coverage in the press and blogosphere. But what’s conspicuously absent from the conversation is the question of ethics. Where is the code of ethics among banks and lenders? Why didn’t somebody step in before the subprime crisis and say, “Look, this is going to hurt everyone in the long run. This isn’t right.” Who, within the industry, is denouncing the payday loans and refinancing and loan modification scams – which are baldly targeted at those who are already on the ropes, financially – being advertised on the television?

Where is the Hippocratic Oath equivalent for the credit card and consumer finance industry?

I bring this up now because, in the U.K., they’ve rolled out just that. While Americans are looking to Washington to deliver them from usurers, British banks and lenders have come together to enforce what they call The Lending Code. The Code is meant to protect consumers, “micro-enterprises” (i.e. small businesses) and charities from unfair finance practices associated with overdrafts, credit cards, charge cards and personal and small business loans. This is, however, a voluntary code of practice, and is overseen by an independent organization known as The Lending Standards Boards. Here is how they describe what they do:

The Lending Code covers good practice in relation to loans, credit cards and current account overdrafts. It does not apply to non-business borrowing secured on land or to sales finance.  The Code contains key commitments and detailed notes on how customers should be dealt with through the whole product life cycle, from marketing and account opening, maintenance and the provision of information on changes to term, conditions and interest rates. Important protection is also included to help when something goes wrong, including when someone is experiencing financial difficulties.

The code is sponsored by the British Bankers’ Association, The Building Societies Association and the U.K. Cards Association and it is, in every sense, self-regulation. How effective it is in actually serving consumers remains to be seen – but the mere acknowledgment that the industry needs to be watching out for the best interests of the consumer is a giant step beyond anything that the U.S. financial industry has done.

In the end, it boils down to this: You can legislate all you want. You can write laws and tie things up in red tape and deliver occasional regulatory slaps to the wrist. But as long as there are laws, there will be loopholes. And as long as there is money to be made, corporations and mammoth financial institutions will find ways to weave their profiteering through those loopholes. Laws are good, of course. But what the lending industry needs now is ethics. Because honor has no loophole.

Photo by vsmoothe.

Related posts:

1. Money and Ethics: Do They Mix?
2. The Lending Game: Part 1
3. The Lending Game: Part 2
4. Get Low Rate Loans From Your Peers with Lending Club
5. Bank of America: The Nice Guys?