On the Ethics of the Banks' War Against WikiLeaks

Should the financial industry, which manages and controls the payments system (which can be viewed as a public good), be able to bar a legal entity like Wikileaks (which has yet to be charged with any crime) from the payments system?

From today's NY Times:

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...the Federal Reserve, the banking regulator, allows this.

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.

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.