American balladeer Woody Guthrie was fond of saying during the Great Depression that he did not know which was the bigger crime: to rob a bank, or to own one. In that era thousands of banks failed, while the remainder foreclosed on mortgages with a vengeance which resonates in today's difficult housing market. While it makes little sense for banks to throw families out of their homes rather than to re-negotiate subprime and other mortgages, that is just what many banks are doing.
Meanwhile, some of those same banks, particularly the giant ones such as Bank of America, have received billions of dollars of Federal bailout funds under the TARP program, funds for which they refuse to provide a full accounting. Indeed, when questioned about what they are doing with all of that taxpayer money (even if much of those funds come from increases in the public debt, taxpayers will have to pay off the interest on that debt), most of the recipient banks turn a deaf ear and blind eye. Those same banks, however, have far from a deaf ear and blind eye to the slightest infraction of their often-arcane and always-complex rules and regulations; when it comes to such infractions, they are all-seeing, all-hearing, and all-knowing. Take, for example, the monthly fees for accounts at the nation's largest bank, Bank of America (it's sort of like Mall of America in Minnesota, but not as much fun.) Thisbank typically charges monthly fees of $11 for the privilege of having an account.When my wife and I moved to Georgia, we explored opening an account at Bank of America, along with several other banks which we checked, and their fees were considerably the highest in our area. When I wrote to the corporate level to protest such excessive monthly fees, I finally received a phone call from a Bank of America honcho who told me their fees were only average – so I did a survey and found that to be untrue, which I conveyed to the honcho. His response could be characterized as: "my mind is made up, don't bother me with the facts."
Bank of America refuses to provide a clear statement or explanation of what they did with the billions of dollars of TARP bailout funds they have received so far; indeed, their utterances are worthy of the Greek Oracle at Delphi. The Godfather, in the classic film series of that title, supposedly made you an offer couldn't refuse. When it comes to providing bailout information, Bank of America makes you an offer you can't understand, using roundabout and vague language to avoid tell you what they did with all of that ultimately-taxpayer money. That is really shameful. Take another example: Sun Trust Bank, based in Atlanta, which is neither sunny nor trustworthy. Should you make a small accidental overdraft, perhaps from paying an item from the wrong account, Sun Trust will charge you a $35 fee which repeats every seven days until they close your account after thirty days. Should this be an account from which periodic payments are made, those payments will start to bounce – even if additional funds are put into the account, as Sun Trust is in no rush to tell you that they closed your account and your payments are therefore not going through. This can have serious financial and even legal consequences, as writing bad checks can be a crime. Sun Trust refuses to change this user-harmful policy, or even to discuss it. But Sun Trust is apparently another recipient of TARP bailout funds; one must say 'apparently', as the U.S. Treasury Department, which distributes those funds, makesit difficult to find out how to find out exactly what was done with those billions of dollars. Nor will Sun Trust itself tell its customers or the general public what TARP money they have received; inquiries go unanswered, even those to top executives.
When it comes to transparency, America's banks and other financial institutions receiving some of the TARP largesse are as opaque as it is possible to be. Yet, in our present economic malaise, every American has an absolute right to know what has been done with our money, and to judge the effectiveness and appropriateness of those actions. When I gave up trying to get that information from several banks,I asked the U.S. Treasury for it – and found no more transparency from the officesof Hank Paulsen, Treasury Secretary, and Neel Kashkari, bailout administrator, thanfrom the bank recipients. That reality is even more shameful. Finally, several weeks ago, I wrote to the Office of the Inspector General at the U.S.Treasury Department, supposedly the watchdogs over Treasury conduct and misconduct. The Inspector General's office has also failed to provide any bailout information, or to tell me how to secure such information, or to provide a real email address for any Treasury official handling the TARP bailout. Perhaps those failures are the most shameful of all.
The 'Godfather' made you an offer you couldn't refuse;the banks seem to make offers you can't understand; but the United States Treasury Department makes no offers of information at all. Shame on them!
Eugene F. Elander is an economist and retired professor of money and banking, as well as a consultant, author, and textbook contributor in these areas.