by Conor Friedersdorf
The New York Times editorial board is on solid ground when it makes this observation:
The whistle-blowing Web site WikiLeaks has not been convicted of a crime. The Justice Department has not even pressed charges over its disclosure of confidential State Department communications. Nonetheless, the financial industry is trying to shut it down.
And I understand the source of their concern when they write:
The Federal Reserve, the banking regulator, allows this. Like other companies, banks can choose whom they do business with. Refusing to open an account for some undesirable entity is seen as reasonable risk management. The government even requires banks to keep an eye out for some shady businesses like drug dealing and money laundering and refuse to do business with those who engage in them.
But a bank’s ability to block payments to a legal entity raises a troubling prospect. A handful of big banks could potentially bar any organization they disliked from the payments system, essentially cutting them off from the world economy.
They go on to argue that banks "are not like any other business" they're "not too unlike other utilities." And here's how they conclude:
What would happen if a clutch of big banks decided that a particularly irksome blogger or other organization was “too risky”? What if they decided one by one to shut down financial access to a newspaper that was about to reveal irksome truths about their operations? This decision should not be left solely up to business-as-usual among the banks.
The editorial makes it sound so reasonable for the government to invasively regulate who gets access to a bank's money money that is sent through banks. Its authors nowhere grapple with the fact that our financial institutions severed ties with Wikileaks amid a concerted campaign by the federal government to demonize it, and assertions made by a number of powerful political actors that its leader, Julian Assange, is akin to a terrorist.
The behavior of the Bush Administration and the Obama Administration during the recent financial crisis has brought us to a point where, more than ever before, the bottom line on Wall Street is tied to arbitrary political acts and how favorably one's firm is treated in Washington DC. It borders on myopia to imagine that, if only the FCC regulated big banks like a utility, those financial institutions would've continued to facilitate the ongoing operations of Wikileaks! Far more likely is that the organization would've been cut off much sooner.
There is a larger point to be made, too. After the excesses of the Bush Administration, the failure to prosecute those within it who committed illegal acts, President Obama's claim that he is empowered to order the extra-judicial assasination of American citizens far from any battlefield, the treatment of Bradley Manning in custody, TSA's recent behavior, the growth of the DEA, the expansion of the surveillance state, and the bipartisan stamp of approval on indefinite detention among other things! the federal government has shown itself to be the most likely entity in American life to behave abusively toward American citizens.
I'm as keen as the New York Times to safeguard the ability of future organizations to challenge the status quo. But I have very different ideas about the nature of power and who is most likely to abuse it to terrible effect. Give me a competitive banking industry with lots of firms and a minimal federal role in determining which ones profit. That is the best guarantor that Wall Street won't collude against a private entity.