Financial Officials Must Keep In Mind: Public's Trust Is A Finite Resource

[Lite Beer]

EDITORIAL

Financial officials must keep in mind: Public's trust is a finite resource

The Nation

US Fed's response to news report carries a lesson for Thai govt on flood spending

US Federal Reserve Chairman Ben Bernanke recently took the unusual step of issuing a four-page memo in an apparent response to a report by Bloomberg news service. According to the news report, the Fed had secretly committed more than US$7 trillion (Bt216.37 trillion) to saving banks during the financial crisis and these banks had reaped an estimated $13 billion of income at below-market rates.

In his letter and memo, posted on the Fed's website, Bernanke did not mention any news organisations by name. It is, however, understood that it was a response to Bloomberg, which has published a series of articles this year examining the bailout. The latest, "Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress," appeared on November 28.

The swift response from the Fed should shed some light on the issue, which is of strong interest to the public. Amid high unemployment, the American public is anxious to get information about the rescue package for the banks, which the US administration said were too big to fail. They felt that these banks might have received preferential treatment while ordinary people are left in the cold, struggling to survive.

The release of the information came on the heels of the Occupy Wall Street protests, in which participants vented their anger against the widening gap between the rich and the poor. Unequal access to information and a lack of transparency have contributed to social inequality. Therefore, the Fed responded to the report by making a point-by-point denial of the alleged secret financial dealings.

The response shows that public institutions should be accountable to the public. These institutions have been operating on tax money with the public interest at stake. Transparency and effective management are means of gaining the public's trust.

Constituents and the public deserve the truth from these institutions. The politicians, decision-makers and people in power must be accountable.

Sometimes, members of the public feel they have not been sufficiently informed about the decision-making process, or have not been invited to take part in decision-making. Some have the feeling that a small group of people has received special treatment. There is always a danger that this simmering discontent will spark conflict and bring people into the streets.

To be fair to the key financial authorities, decisions involving financial dealings are often highly sensitive. It is very hard to gauge the scope and magnitude of a financial crisis when it first strikes, as was evident in the US in 2008-2009 and currently in the European Union.

Often, economic information can be complicated and difficult for the public to grasp, but it is essential that the government should try to inform the public. The bailout plan involved the recipients of a rescue package and some who feel that they might not get sufficient help. Nonetheless, the best way to handle politically sensitive issues is through transparency and equal access to information. Transparency of information would allow for public insight and could even lead to better policy co-ordination when the government has to deal with different groups of stakeholders.

Thailand may not have to deal with such sensitive financial dealings any time soon. But the government plans to roll out a massive budget to stimulate growth and help the economy recover after the flood. Decision-makers should not underestimate the public's appetite for information. Otherwise, the public's trust in their institutions could be damaged.

-- The Nation 2011-12-11

[edgarfriendly]

To be fair...After getting shafted by their respective governing bodies for centuries/millennia, the public probably won't stand for it much longer....

Now THAT'S sarcasm!!

Quick!! Somebody shoot a messenger!

[jayjayjayjay]

Thailand may not have to deal with such sensitive financial dealings any time soon

Thailand might not have to do something soon, but the people never really got a summary of what the '97 crash cost the country and the tax payer. FinOne, BCC and many other smaller finance co's and a few small banks were let to go to the wall, but what assistance did the big banks get? The question bids, where the elite protected?

[travelmann]

What trust?? I dont see any trust in Thailand anywhere for anything because there is almost never any consequences to being untrustworthy in govt circles it appears

[seaeagle]

And, what exactly would the public do?

Shrug shoulders, mai pen rai, ................. and the thumbprint remains on the forehead of the populace.