August 13, 2007
HomeBanc's Faithful Bankruptcy
Christian principles fail to save lender from mortgage crisis.
In today's Wall Street Journal, reporter Valerie Bauerlein chronicles the effect the sub-prime mortgage bust had on an Atlanta lending company that integrated its loan business with Christian faith. At HomeBanc,
executives opened companywide gatherings and internal meetings with Christian prayers. Every branch office kept a chaplain on call. The company's $365,000-a-year human-resources chief, Dwight "Ike" Reighard, was the founder of a mega-church in an Atlanta suburb. He says he encouraged employees to pray, put others first and become better workers -- and also performed weddings and funerals for employees. "People who never attended church would tell me, you're my pastor," Dr. Reighard said in an interview on Saturday. ...
On Thursday, HomeBanc filed for bankruptcy-court protection. It fired most of its 1,100 employees on Friday and is shuttering its 22 branches and 139 kiosks in real-estate and builders' offices, exiting the mortgage-loan origination business and processing no new loans, including ones in its pipeline.
Some people complained of a cult-like atmosphere at the company. Others said it simply allowed people of faith to integrate their beliefs with the business.
"I don't think they saw God as a magic genie that was going to insulate them from the marketplace," said the Rev. Victor D. Pentz, the senior pastor of Peachtree Presbyterian Church, an 8,500 member congregation whose leadership includes several HomeBanc executives. Instead, he said HomeBanc was "a place where the deeper expressions of their values are welcomed as a part of the mix. People want to relate at a deeper level than 'I stand next to you at the copy machine.' "
Barbara Aiken, a human-relations executive who'd been with HomeBanc for 14 years, says, "Everybody said we were a cult, they said, 'You drink the Kool-Aid.' But I really believe the uprightness with which the company held itself really bothered people."
Still, it wasn't enough faith to save HomeBanc. A few former employees are suing the company for unpaid overtime. Efforts to turn the company around as the mortgage crises deepened earlier this year weren't enough. HomeBanc's stock closed on Friday at 4.8 cents.
I have three comments: Reporter Bauerlein doesn't allege that the company's focus on faith had anything to do with its collapse. After all, the sub-prime lending bust has taken down some of the most successful members of Wall Street. Yet, it does hint at the problems of involving religion too heavily in the workings of a company. Undoubtedly, the 1,100 employees who were laid off, yet prayed together and saw their work as an expression of their faith, feel, at least to some extent, betrayed both by the company and by God.
Second, Bauerlein does write that employees felt that religious devotion was valued over productivity. Third, the article exposes the tendency of religious groups (and not only those) to create insular communities where external forces--like the lending crisis--can be ignored or viewed as an attack to be met with more devotion instead of business strategy.