In our colleague David Nicklaus’ column in Sunday’s Post-Dispatch, Stuart Greenbaum, professor emeritus at Washington University’s Olin School of Business, rose to the defense of the U.S. banking industry, which has been under fire for its continued tight-fisted lending policies.

“People not spending as much for Christmas is the same behavior as the banks not lending,” Mr. Greenbaum told Mr. Nicklaus. “It’s the same as Pfizer sitting there with $30 billion in cash, when they could be investing it or distributing it to their shareholders. Everybody is hoarding.”

That argument would be more persuasive had the U.S. government not already invested $189 billion in Troubled Assets Relief Program funds in 257 banks in 42 states. The TARP funds — part of the infamous $700 billion bailout package passed hurriedly last fall — were expressly designed to free up the credit markets.

They haven’t. Banks, as Mr. Greenbaum suggested, have been hoarding the money, or using it to buy other banks or otherwise shore up their own financial situations. This may be sound banking policy, but it was not why President George W. Bush — as he put it Monday — “chucked aside some of my free-market principles” and proposed the bailout.

Making things worse is that bankers and Treasury Department officials have been less than forthcoming in accounting for how they’ve spent the TARP funds. Neel Kashkari, the assistant Treasury secretary in charge of the bailout program, put it like this in testimony before the Congressional Oversight Panel last month:

“Each individual financial institution’s circumstances are different, making comparisons challenging at best, and it is difficult to track where individual dollars flow through an organization. Nonetheless, we are working with the banking regulators to develop appropriate measurements and we are focused on determining the extent to which the CPP [capital purchase program] is having its desired effect.”

Translation: We have no idea where the money went.

On Monday, Mr. Bush asked Congress to release the second not-quite half — $355 billion has been spent — of the bailout funds. He did so at the request of President-elect Barack Obama, who explained that he thought it would be “irresponsible for me, with the first $350 billion already spent — to enter into the administration without any potential ammunition.”

Mr. Obama said he had been “disappointed with the lack of clarity, the absence of transparency” in the TARP spending. He said that in the second round of spending, more funds would be directed specifically at troubled mortgages.

In a letter to congressional leaders, Lawrence Summers, Mr. Obama’s designee for director of the National Economic Council, promised that the Obama administration would impose tougher restrictions and oversight on how the second round of bailout spending was spent. Mr. Summers also said the new administration would seek to limit executive pay and shareholder dividends in any company receiving TARP funds.

Meanwhile, the Federal Deposit Insurance Corporation ordered the 5,100 banks that it regulates to account for how they’ve spent any federal funds they have received.

All of this promised oversight may assuage congressional critics, but authorization for the second round of spending is not a sure thing. Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, wants a guarantee that at least $40 billion of the new spending will be directed at preventing foreclosures.

The posturing by the banking industry — how dare they tell us how to run our business — isn’t helping the cause. It only reinforces the suspicion that banks and businesses are using public dollars to finance another round of profiteering. If banks and businesses want the public money, they must take it, strings and all. And account for every dime of it.