Regulators are opaque, too
It’s hard for regulators to demand greater transparency from Wall Street banks when they can’t even live up to their own standard of greater disclosure. A case in point is the Treasury Department’s press release touting its decision to permit “10 of the largest U.S. financial institutions” to begin repaying $68 billion in federal bailout money. The only trouble is Treasury doesn’t name any of the banks that can begin repaying money to the Troubled Asset Relief Program.
Treasury, it appears, has left it up to each of the “10 of the largest U.S. financial institutions” to make their own announcements about their intentions to repay the TARP. And some, like Morgan Stanley, didn’t waste anytime putting out a PR trumpeting its plan to repay $10 billion in TARP money.
Now it’s not like this list of banks is any big secret. For weeks now, it’s been well-known that Goldman Sachs, JPMorgan Chase, American Express, Bank of New York Mellon–to name a few–were itching to repay the bailout money.
But this is a question of government accountability. If Treasury has made a decision to allow banks to repay TARP, it should tell us which banks it has given the all clear to. Why should it be left up to the banks to tell us? After all, isn’t it the taxpayers’ money that’s being passed around here.
Nor should Treasury officials pass on the names of the banks in so-called “background” sessions with favorite reporters. The best government is one that is run in the open–not in some closed-door Washington, D.C. conference room.
This refusal on Treasury to do something as simple as print the names of the “10 of the largest U.S. financial institutions” is similar to the same kind of arrogance the NY Fed displayed during the early days of the goverment’s bailout of American International Group. The NY Fed, if you recall, refused to provide a list of the banks it was buying rotting CDOs from, in order to retire some $70 billion in credit default swaps that AIG had written on those securities backed by subprime mortgages.
At the time, the NY Fed claimed if it divulged the names of the banks selling CDOs to a Fed-sponsored entity called Maiden Lane III, the financial firms might be wary of doing business with the government. That argument sounded like a bunch of rubbish back then because the arrangement was beneficial to both the banks and AIG.
But wait a minute. Who was the president of the NY Fed when Maiden Lane III was put together. That’s right Tim Geithner, the man who now runs Treasury.
It’s hard to see how Geithner will have the courage to really reform the financial system when he still too willing to play footsie with Wall Street bankers and can’t even do what he preaches on the need for transparency.