What happened to the transparency we were promised?
When President Obama took office, he pledged that the American people would have a window on Washington.
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Right now, as a taxpayer looking in, I don’t have a clear view of what’s being done with my money.
Nowhere is this truer with than with TARP – the Troubled Assets Relief Program.
Americans have the right to know how their money has been spent and what financial institutions have done with their bailout funds. Yet the operations of the TARP are opaque and lack accountability. The public has spent a colossal sum of money providing assistance to financial institutions who were the architects of their own demise; yet we know far too little about what these institutions did with our money.
Why Transparency Is Crucial
No one disputes that what the President is trying to do is complicated. It’s not a precise science. As far as I can tell, there are no real formulas from which policymakers can derive a predictable answer. There are simply too many variables.
This level of complexity makes it even more essential for the President redouble his efforts towards greater transparency.
Resolving the present economic crisis is as much about sales and psychology as it is about programmatic content and regulatory reform. The President must assume the mantle of First Salesman and Chief in order to sell the American people on the notion of a recovery.
The President has already told us that he’s going to make mistakes. Most Americans have accepted the idea that there will be missteps along the way. Mr. Obama’s predecessor made the mistake of keeping too much from the American people, and then failing to admit his shortcomings when his blunders came to light.
Mr. Obama has raised the bar on accountability. At the same time, he’s dimmed the lights blurring the clarity of the programs he’s implementing.
No Strategy. What Geithner Plan?
As a first step, the President must direct his Treasury Secretary Tim Geithner to disclose greater details about his bank recovery plan, in particular, the means and the methodology for neutralizing the multitude of toxic assets currently plaguing our banking system.
If Geithner is looking for a model, he need look no further than to the success of the RTC (Resolution Trust Company), the public/private mechanism used to dispose of troubled assets during the savings and loan crisis of the 1980s. It wasn’t perfect, but it’s a good place to start.
Treasury also needs to be more forthright about “stress tests” being given to our nation’s largest banks. Most Americans believe that there is no way that the government is going to declare that any major bank is effectively insolvent.
If that’s the case, why are we wasting our time with this charade? It just prolongs the uncertainty and further clouds our view of the finish line.
Save the big banks or break them into more economically viable units. We don’t care.
Just do something soon, and do it in the light of day.
John Cohn is a senior partner in the Globe West Financial Group, based in West Los Angeles. He may be contacted at www.globewestfinancial.com
