Taking a step back from the daily news cycle, Edward Hadas wants to know why people see corporations and government as purely antagonistic actors, with one interfering in the others business.

Banks Public

“The banking system is an excellent example of an economic organisation that defies a simple state-private division,” writes Hadas in a recent Reuters editorial. “Banks cannot be understood in isolation from – or in opposition to – central banks, regulators, elected politicians and customers on both sides of their balance sheets. All these institutions are better considered diverse members of a single financial community.”

Banks are repositories of financial trust: Hadas

He argues that banks, because they have the power to essentially create money through loans and other forms of credit, have strong obligations to the communities they serve including depositors, borrowers, and the taxpayers who may one day bail them out, not only the shareholders that they routinely answer to.

“It is not too grandiose to say that banks should act as repositories of financial trust,” he writes. “When bank shareholders and employees are particularly well rewarded, this trust is being violated.”

Reference to Fannie Mae, Freddie Mac?

Hadas doesn’t make any specific policy recommendations, though you get the impression he’d like everyone in the finance industry to stop and familiarize themselves with economists Mariana Mazzucato and Elinor Ostrom, so the op-ed could be seen as something of a non-sequitur.

While he doesn’t mention them, his comments are especially interesting in light of the ongoing fight between Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) shareholders and the government over whether the former should be getting some form of compensation now that the two government sponsored enterprises (GSE) are profitable.

Whatever outcome you think is most appropriate, and without trying to extrapolate Hadas’ opinion on the matter from his op-ed, Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) shareholder activism shows how difficult it can be to untangle public and private obligations. The GSEs were created to ensure that middle-class Americans could get affordable mortgages, a role that many worry will go unfilled if the GSEs are wound down, but this mandate can conflict with their obligations to private shareholders. Closing shop gets rid of the most obvious example of how public and private interests are intertwined, but it doesn’t confront the issue head on.

“The widespread adoption of the Mazzucato-Olstrom view would lead to some significant changes in economic management,” Hadas argues. “In industry, finance and government, a less dogmatic and more comprehensive approach could produce a better outcome.”