Vol. 1999-4

            ‘When I use a word,’ Humpty Dumpty said in a rather scornful tone, ‘It means just what I choose it to mean – neither more nor less.’ 

(Lewis Carroll, Alice’s Adventures in Wonderland)

I don’t recall when I encountered the word "transparency" for the first time in the current debate over modernizing banking law. Probably it was not more than just a few years ago. Today, I am told that it is one of the "hottest" words in town, in the same class, say, as "systemic risk" or "moral hazard." Initially, transparency puzzled me, so much so that I had to resort to my dictionary where I found what I had expected, namely, that it simply means the "quality or state of being transparent," and that "transparent" itself is an adjective that may describe an object one can see through, as a pane of clear glass, or something "easily seen through, recognized, or detected, as in transparent excuses." In other words, to be "transparent" is to say that an individual, company, or association had not been successful in concealing something it wanted kept out of sight. For example when we were in high school, if my sister returned from a date and described her escort as "so transparent," she was implying that his intentions had been less than honorable.

But today apparently, transparency is not a minor vice but a major virtue. It implies openness, honesty, and candidness. Thus, in a recent article on strengthening the global financial system, "transparency" is identified as assuring that "global lenders and investors have the quantity and quality of information they need to make informed judgements about risks and returns." Presumably dictionaries will catch up eventually with the new meaning for the word.

It is this ever-changing meaning of words and groups of words that is so fascinating to me and other writers. How and why new meanings are fashioned, the uses to which they are put, the frequent differences between intended and actual meanings, and the reasons why some words or phrases attain great popularity, even becoming fixtures in the language, while others never make it or last only briefly -- all of this helps us better understand the world about us. No discipline or activity is more productive of illustrations than the world of banking and bank regulation. So when I came across an interesting commentary in the financial section of The Economist (March 13, 1999) identifying a few favorite words that economists use when making arguments on public policy issues, it occurred to me that expanding on this subject could provide a report that readers might find interesting – possibly even eye-opening.

Accordingly, Section I begins with a review of The Economist article to which I have just referred. Section II deals with another cluster of words that are intended to convey the prospect of an ominous, even frightening, set of developments. Section III discusses the origins and present status of a term well known to all bankers, namely, "too-big-to-fail." Finally, in Section IV, there is a tongue-in-cheek explanation of the remarkable facility that the Federal Reserve has long displayed in devising some of the more colorful and persuasive words that one encounters almost daily in public policy debates.