The Wall Street Journal reported today that the TARP’s Congressional Oversight Panel, chaired by Harvard Law Professor Elizabeth Warren, “is investigating the lending practices of institutions that received public funds, following a rash of complaints about increases in interest rates and fees.”
Reportedly, bailed-out banks like Citigroup and Bank of America are jacking up credit-card interest rates and fees on transactions. “The people who are subsidizing the activities of the banks through their tax dollars are the same people who are furnishing the high profits through consumer lending,” Warren said. “In a sense, we’re asking taxpayers to pay twice.”
While discussing the story, CNBC’s Dennis Kneale saw fit to mock Warren’s concern for taxpayers, and then tell her to stop “breathing down the necks of the banks” and “let these guys do what they need to do”:
My real problem is with Elizabeth Warren…She has been crusading against credit card companies for years. She thinks they’re evil…Don’t we already know that credit card companies charge you a ridiculous amount of money? I didn’t need contract legalese to tell me that. I already know that [...] This oversight committee breathing down the necks of the banks…Government ought to get out of the banking business and let these guys do what they need to do to raise the money they need to raise.
Of course, Warren’s panel is tasked with overseeing the TARP, and verifying that taxpayers don’t get gamed by the very banks that they are bailing out. CNBC, meanwhile, has made a habit of defending oil speculators, outlandish bonuses for bailed-out Wall St. executives, and huge tax giveaways for the rich, so it’s not surprising that they’re siding with the banks on this one.
On another level, this whole episode is symbolic of the trouble with effectively nationalizing the banks without taking the requisite control. Now, the government is awkwardly positioned between an action that is good for the banks, but bad for taxpayers. As Aaron Task at Tech Ticker wrote:
This fee-issue speaks to the folly of having banks that are quasi-nationalized vs. either fully private or totally under government control.…[T]hey should be dealt with as insolvent banks have been for generations — put into FDIC receivership — rather than continuing this charade that certain banks haven’t already been nationalized.
How many headaches — from bonuses to hiked up interest rates — could have been avoided if the government had just exercised some control over the banks that it effectively owns?