Monday, December 22, 2008

Banks Refuse to Detail Bailout Money Useage

There is an old saying, "A fish stinks from the head," which means that corruption (in both the moral and physical sense) begins with those in leadership. A few weeks back, the Treasury Department began refusing to disclose how the TARP bailout money was being used. Other than theatrical cries of outrage, no one did anything about it. No lawsuits, no independent investigations, no press outlet pledging to track the money to the ends of the earth. (Please correct me in the comments, if I am wrong and just missed it.) Is it any surprise therefore that apparently banks are following the leader and refusing to account for how bailout money is being used? Why potentially compromise competitive disadvantage when it appears that no one is going to make you play by the rules of the game?

This "secrecy" needs to be broken ASAP. I understand the attitude of banks - they are not used to publicly accounting for where the money raised from stock sales are used and such an accounting could well inadvertently disclose information that could be used by a competitor. (For example, if a big bank were about to roll out an innovative new lending product that they expect to capture a good deal of the market.) But the fact is that he who pays the piper, gets to choose the tune. The cost of taking this money was to be held accountable for its use. And every day that the money's use is "kept secret" is undermining trust in banks and the economy, and simply making things worse.

Mr. President, Give the order. Force banks to disclose the use of bailout funds before the inauguration of Barack Obama. Otherwise, there is little hope for a restoration of trust in the drivers of the American economic system. "Trust me," only works BEFORE the Fall.

1 comment:

BH said...

that takes some gaul but they think that they can say "screw you" right before christmas and no one will do anything about it.