Banks must be accountable
Nation’s banking leaders should be told to detail spending of taxpayers’ cash
Look out, lawyers. Bankers are working to displace you on the list of most hated professions.
That is one of only two plausible explanations for why some American banking leaders are refusing to explain to the public how they are using the billions of taxpayers’ dollars that were shoveled their way as the subprime lending fiasco sabotaged the American economy — the fiasco they caused. The other possibility is that they are as arrogant and as out of touch as the carmakers who flew to Washington in private jets to beg for money.
Let’s just say it: When they accepted public money, banks took on an obligation to the public — just as any borrower does when he takes a loan from a bank. Yet many bank officials are bluntly refusing to answer basic questions about how they are using aid that was meant to thaw the country’s frozen credit markets.
“We’re choosing not to disclose that,” a spokesman for Bank of New York Mellon told the Associated Press. A spokesman for JPMorgan Chase echoed that arrogance. “We have not disclosed that to the public,” he said. “We’re declining to.”
That’s arrogant, indeed.
And it gets worse, because the banks won’t even say why they won’t say.
The federal government should have ensured that banks would be held accountable for how they used this money, but in Washington’s defense, it rushed the package into law, working at top speed to prop up the entire national financial sector. In getting the money to the banks, it failed to provide any detailed monitoring mechanism.
“What we’ve been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and then we need to monitor them while we’re doing this,” Treasury Secretary Henry Paulson said recently. “So we’re building this organization as we’re going.”
Still, the job needs to be done, and the only option may be to embarrass the banks into disclosing how they are using this historic infusion of taxpayer money. That’s the plan of Elizabeth Warren, the watchdog appointed by congressional Democrats to oversee the bailout.
“It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry,” said Warren, who says her panel will try to force the banks to say where they have spent the money.
“It would take a lot of nerve not to give answers,” she said. That’s true, but the banks have already shown they have a
lot of nerve. She needs a Plan B.
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