In an editorial, the New York Times says:
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.
Visa, MasterCard and PayPal announced in the past few weeks that they would not process any transaction intended for WikiLeaks. Earlier this month, Bank of America decided to join the group, arguing that WikiLeaks may be doing things that are “inconsistent with our internal policies for processing payments.”
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.
The fact of the matter is that banks are not like any other business. They run the payments system. That is one of the main reasons that governments protect them from failure with explicit and implicit guarantees. This makes them look not too unlike other public utilities. A telecommunications company, for example, may not refuse phone or broadband service to an organization it dislikes, arguing that it amounts to risky business.
Our concern is not specifically about payments to WikiLeaks. This isn’t the first time a bank shunned a business on similar risk-management grounds. Banks in Colorado, for instance, have refused to open bank accounts for legal dispensaries of medical marijuana.
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.
Although the financial companies have used the pretext that WikiLeaks is not complying with the terms each firm specify in the user agreements, we can strongly infer that in each instance these are cases of corporate lying — the kind of lying that lubricates the wheels of commerce. After all, when WikiLeaks in conjunction with several major newspapers started releasing US diplomatic cables, two things were clear:
- Whatever impermissible action WikiLeaks was being accused of, The Guardian, New York Times and other newspapers engaged in the same actions and yet MasterCard, Visa, Paypal and Bank of America din’t seem to mind — flagrant double standards were in operation.
- When WikiLeaks launched CableGate, there was no intrinsic difference from its release of intelligence reports about the war in Afghanistan or its earlier leaks. So why did the financial companies wait until now to enforce policies that they apparently had no interest in enforcing before?
What changed was the political climate.
For the Obama administration, WikiLeaks’ actions had crossed the threshold from irritating to intolerable and a few players in the financial industry — perhaps recognizing that they could win a little more favor from an administration that had already treated the sector so kindly — jumped at the opportunity to stand shoulder-to-shoulder with Washington.
What else should we expect from those whose fortunes are so intimately intertwined?
The answer for an honest and responsible society would be to nationalize these companies as public utilities. Progressives should keep shouting this — we can take advantage of our enemies’ actions to forward our policies too.
In passing, note that Toronto Star today had an article on pre-paid credit cards as Christmas gifts, and noted that Visa deduct a $2 ‘service’ charge every month from the gift amount until the card is used up. As the reporter asked — what service?
I wonder in fact how “low cost” it proved to be. Certainly my own turnover in these institutions on its own made little difference to their usual fat bottom lines, but I’m sure I was not alone at closing my accounts with them and leaving them with no uncertainty as to my reasons.
When major oligopolies use their power in concert with a government to either promote or suppress information irrelevant to their function but for purely political interests outside their purview it reminds me of the large companies in Germany in the 1930’s or those in Italy a decade earlier. It is called fascism and I too certainly can choose the companies and individuals I will or will not do business with.
If many millions of others felt the same, and I wonder if we will ever know the truth of just how many did, I think this low-cost ploy will have cost those firms far more than they wish to be known.
It’s very hard to change the mind set of the population, when they are indebted to the vern banks, card issuers, etc. Now that the cards got away with raising the interest rate to an average 29% for new card holders, then they will nickle & dime to death each & every one who uses one. Perhaps it might be useful to ban Lawyers, Accounting firms, bring back the monopoly laws with a vengeance, perhaps even change the currency, thereby allowing the trade in of but $1,000.00 with the rest being good bird cage bottoms. Or, perhaps a vaccine to eradicate the greed that has taken over the country.