Trying Times

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Banks and WikiLeaks

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.

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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.

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Still, there are troubling questions. The decisions to bar the organization came after its founder, Julian Assange, said that next year it will release data revealing corruption in the financial industry. In 2009, Mr. Assange said that WikiLeaks had the hard drive of a Bank of America executive.

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.

I’m no fan of banks, and I think anything that is “too big too fail” is too damn big. But this situation is problematic because WikiLeaks is threatening to leak damaging information about the banks that don’t want to do business with them.

If I wanted to run an ad criticizing the NY Times should they be forced to accept my advertising?

If we require banks to do business with everybody we’ll have to indemnify them from criminal and civil liability. There’s some real potential for abuse there too. Perhaps a better solution is to break up the big banks. Don’t hold your breath waiting for that to happen.

It should be noted that the NYT is hardly a disinterested player here. They have been publishing the leaked documents and were getting them direct from WikiLeaks until they published an unfavorable profile of Julian Assange.

Here’s an example:

Cables Portray Expanded Reach of Drug Agency

The Drug Enforcement Administration has been transformed into a global intelligence organization with a reach that extends far beyond narcotics, and an eavesdropping operation so expansive it has to fend off foreign politicians who want to use it against their political enemies, according to secret diplomatic cables.

In far greater detail than previously seen, the cables, from the cache obtained by WikiLeaks and made available to some news organizations, offer glimpses of drug agents balancing diplomacy and law enforcement in places where it can be hard to tell the politicians from the traffickers, and where drug rings are themselves mini-states whose wealth and violence permit them to run roughshod over struggling governments.

This is also an example of what I mean when I say the information coming from WikiLeaks isn’t exactly earth-shattering. Anyone who has been paying attention to the war on drugs knows that the DEA has been engaged in some dubious activities in foreign countries.

Missionary plane shot down in Peru: collateral damage in US “drug war”

How Much Did the DEA Spend on its Africa Vacation?

What have the leaked cables told us that the NYT didn’t already know or couldn’t have easily found out on their own?

The New York Times threw away it’s credibility in the run-up to the war in Iraq and the outing of Valerie Plame. The past couple of years they have been Obamafluffers.

I hope you’ll understand if I’m somewhat less than hopeful that they have suddenly seen the light.

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