Pubdate: Sun, 26 Dec 2010
Source: New York Times (NY)
Page: WK13
Copyright: 2010 The New York Times Company
Contact: http://www.nytimes.com/ref/membercenter/help/lettertoeditor.html
Website: http://www.nytimes.com/
Details: http://www.mapinc.org/media/298
Refrerenced: WikiLeaks http://drugsense.org/url/UGmv4pQE
Bookmark: http://www.mapinc.org/topic/WikiLeaks

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.

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.  
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MAP posted-by: Richard Lake