Dude, Where’s My Money?

As if banks aren’t already facing a credibility crisis in the eyes of the public, now comes word that the first banks receiving public bailout funds are keeping mum about how they plan to use the cash.

While banks have launched public relations campaigns to reassure customers and placate investors about their stability, they get cagey mighty fast when pressed for details. In a recent report, CNN contacted five large money centers that received a combined $120 billion of taxpayer money — and learned little about where the money went. The AP contacted 21 banks that received at least $1 billion each, with similar results.

The TARP watchdog panel led by Harvard Law Professor Elizabeth Warren — a vocal advocate known for her scathing criticisms of the consumer lending industry — yesterday launched their new website. One of the front-page links invites readers to “Ask a Question or Tell Your Story,” no doubt promising a rich source of material for chastising bank executives at future Congressional hearings.

Barely a month old, the formally titled Congressional Oversight Panel for Economic Stabilization (COP), promises to be a tempest in the already stormy ranks of financial executives.  The group published its first monthly report on Dec. 10 that reads like an action plan for consumer-driven accountability: “We are here to ask the questions that we believe all Americans have a right to ask: who got the money, what have they done with it, how has it helped the country, and how has it helped ordinary people.”

While the government may be a day late and about $350 billion short in setting terms for how the banks receiving TARP aid need to spend the money, that’s a story for another day. U.S. banks need to get out ahead of the coming PR nightmare. Bankers with any amount of common sense will realize the one valuable asset they have long held is the American consumers’ trust. If they’re not more forthcoming about how they’re spending this taxpayer-funded aid, banks are on the path to further losing their customers’ respect, regard — and business.