This month began with a report from our Government Accountability Office (GAO) that basically took the Treasury Department to task for failing to monitor just how funds from the $700 billion bailout package would be spent. So, if the Treasury Department is not interested in following the money and if our Congressional representatives are not doing anything because they are on vacation, does that mean that we, as the public, have no right to know what is happening to our money? Associated Press Writer Matt Apuzzo decided to take on the role of concerned citizen and address that question by going directly to banks that had received bailout money. He filed his story last night, and it is not particularly pleasant reading.
The bottom line is that, when asked to give an account of what they were doing with the government support money they received, the banks chose to pull a Bartleby and reply that they would prefer not to do so:
After receiving billions in aid from U.S. taxpayers, the nation's largest banks say they can't track exactly how they're spending it. Some won't even talk about it.
"We're choosing not to disclose that," said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.
Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money, said that while some of the money was lent, some was not, and the bank has not given any accounting of exactly how the money is being used.
"We have not disclosed that to the public. We're declining to," Kelly said.
The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest?
None of the banks provided specific answers.
"We're not providing dollar-in, dollar-out tracking," said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars.
Some banks said they simply didn't know where the money was going.
Depressing as this may be, it is hardly surprising. If our current Administration has turned laissez-faire policy into "a failure to govern at all," why should the public assume that their representatives through the press will be any more effective than their representatives in the Congress? We are back on the turf that Jürgen Habermas tried the chart in The Theory of Communicative Action in his examination of Max Weber's "Diagnosis of the Times." I examined this diagnosis on my old blog, and this seems like a good time to review it. Here is how Habermas introduced his findings:
In his diagnosis of the times Weber keeps closer than usual to the theoretical perspective in which modernization is represented as a continuation of the world-historical process of disenchantment. The differentiation of independent cultural value spheres that is important for the phase of capitalism's emergence, and the growing autonomy of subsystems of purposive-rational action that is characteristic of the development of capitalist society since the late eighteenth century, are the two trends that Weber combines into an existential-individualistic critique of the present age. The first component is represented in the thesis of a loss of meaning, the second in the thesis of a loss of freedom.
If we do not believe we are suffering from a loss of meaning, then consider the basic concept of banking in terms of the models of operation initially conceived, the motives for those models, the disconnect between those models and the practices that brought about economic collapse, and now what appears to be the willful disregard of that disconnect. Were we to reduce it all to a question of "production," then our banks are no better at putting out beneficial products that the public wants than General Motors, Ford, and Chrysler are. By placing the needs of the customer below the needs of the shareholders (whose latter needs have never amounted to anything more than greed-satisfaction), every bank now on the Government dole has basically sacrificed the very meaning of banking; and, as always seems to be the case, we get stuck paying for that sacrifice. That, of course, is Weber's second loss: Because our collective voice, even when we vote, is ultimately drowned out by the more powerful voices of those who deal in the exchange of shares, the concept of banking may have lost its meaning; but we have lost our freedom (perhaps best illustrated in my recent attempt to describe our "hostage situation") through "collateral damage."
Both Weber and Habermas chose to attribute these losses to the underlying nature of capitalism itself, and I think there are some valid grounds for doing so. However, I am optimistic enough to believe that these losses can be regained not through the abandonment of capitalism but through a rejection of faith in "free markets" in favor of an ongoing regulatory framework that provides a cushion against the greatest hazards of poorly calculated risk. As I previously suggested, the danger of "serfdom" that so concerned Friedrich Hayek does not necessarily come from the control of fascist authority; it can also come from a willingness to accept the control of instruments we do not really understand, such as those instruments used in the exchange of "shares of debt" as if they were shares of a corporation, which played such a major role in debilitating our economy. More important, however, is that, as is the case with addiction, we seem to be either unwilling or unable to acknowledge our losses; and we shall not regain them until we are willing to recognize that they have been lost. In the wake of the Great Depression, Franklin Roosevelt was remembered by history as our "recovery president." Will Barack Obama summon the necessary leadership to be remembered as our "rehabilitation president?"