Tell Mitt: Don't run campaign on drug money

Imagine if U.S. politicians took financial contributions skimmed from the ill-gotten gains of bloody Mexican drug cartels and terrorists.

Imagine further that those who profited off the drug gangs used their murder-tinged cash to lobby the U.S. Congress.

You don’t have to strain yourself, this is not some sordid fantasy concocted by Hollywood to horrify and entertain you. This is the reality created by Wall Street’s finest and our leading politicians.

The latest sorry chapter in Wall Street’s waltz with the drug-dealers is laid out in a report by the Senate Permanent Committee on Investigations. Officials of the British too big to fail bank HSBC acknowledged that despite repeated warnings, they failed to stop drug and terror-tainted deposits from moving through the bank.

According to the report, HSBC, one of the world’s largest banks with a strong U.S. presence, “exposed the U.S. financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering controls.”

In 2007 and 2008, the Senate committee found, HSBC moved $7 billion in bulk cash from Mexican to its U.S. operations, even though authorities warned that the money was proceeds from drug sales.

HSBC was doing a thriving business with well-known cash exchange businesses used by the drug cartels known as casas de cambio, despite repeat warnings that they were fronts. Years after other banks had cut them off, HSBC continued to do business with the casas de cambio.

Mexican drug cartels weren’t the only ones taking advantage of HSBC’s lax controls. Middle East bankers with links to Al Queda also found HSBC a hospitable environment in which to conduct business.

You might think that the authorities would have roast HSBC officials on a spit.

Far from it: in 2008, regulators rewarded HSBC with $3.5 billion from taxpayers in a backdoor bailout, in payments funneled to the bank’s U.S. subsidiary through AIG.

Now HSBC’s bankers have been humiliated at a public hearing and the company’s shareholders may be forced to pay as much as $1 billion in fines.

Still, from the bankers’ perspectives, you would have to say money laundering and bailouts have been very, very good to them. Even after they pay the fine, they’d have more than enough to pay for the $125,000 they’ve given to congressional candidates so far this election cycle, and the $5,700 they’ve doled out to Mitt Romney. The left-over laundered money will also help defray the costs of the $900,000 worth of lobbying the bank has done this year.

I’m confident now that the full extent of HSBC’s misdeeds has become known, Romney and the other politicians will want to have nothing to do with this dirty money and will be clamoring to give it to charity.

But just in case it slips their minds in the rush of doing the people’s business, we should help them out. Mitt can provide a good example by being the first to get rid of the drug and terror money.

 

 

 

Bailout Beat Might Be His Last

Most of official Washington operates in a state of slow-mo lethargy when it comes to working on financial reform.

Not Neil Barofsky, who is saddled with the cumbersome acronym SIGTARP.

That stands for Special Inspector General of the Troubled Asset Relief Program, also known as the federal bailout.

He’s a one-time federal prosecutor who in his former life prosecuted Colombian drug gangs and white-collar criminals.

As one Republican senator told him when Barofsky got the inspector general’s job, if he did his job properly, he’d never be able to get another.

Barofsky seems to have taken it to heart.

Last week, along with New York Attorney General Andrew Cuomo, he filed suit against former top Bank of America officials, charging them with fraud for concealing how bad Merrill-Lynch’s losses were from B of A’s own stockholders while B of A was in the process of acquiring Merrill during the melt-down.

Barofsky also recently launched an investigation into the shady federal bailout of AIG and its counterparties, including Goldman-Sachs.

Meanwhile his regular quarterly reports to Congress continue to pack a punch. He has consistently warned against the administration’s rosy predictions of how taxpayers will benefit from TARP.

He’s focused instead on the continuing dangers of doing nothing to rewrite the rigged rules of the financial game that favor bankers’ bonuses and betting with taxpayers’ money over the interests of consumers and homeowners.

“Even if TARP saved our financial system from driving off a cliff back in 2008,” Barofsky wrote in his most recent report, “absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car.”

In fact, the whole focus on whether taxpayers are getting “paid back” is a smokescreen for TARP’s failures. While the administration has touted banks’ repayments of their TARP money, the repayments are backfiring on the administration, giving it less leverage over the banks. Released from their TARP obligations, the banks are free to return to lavishly rewarding their employees for risky trades that rack up short-term profits.

Barofsky, writing in plain language that consumers and concerned citizens can understand, states that while the TARP program stabilized the financial system, it hasn’t met most of its other goals. “Lending continues to decrease, month after month, and the TARP program designed specifically to address small-business lending — announced in March 2009 — has still not been implemented by Treasury,” Barofsky wrote in the January 30 report. “The TARP foreclosure prevention program has only permanently modified a small fraction of eligible mortgages, and unemployment is the highest it has been in a generation.”

Barofsky was appointed by Congress to monitor TARP. Yet Congress has done nothing to hold the current administration accountable for the bailout’s failures. Meanwhile the Senate continues to pursue what appears to be its quest to squelch reform, in direct contradiction of what a majority of Americans want. Specifically Sen. Christopher Dodd appears to be on the brink of negotiating away a stand-alone Consumer Financial Protection Agency, a linchpin of President Obama’s reform plan. The financial industry fiercely opposes such an agency.

Contact your representative and senator today and let them know you support Barofsky’s strong work on TARP. While you’re at it, let your senator know you’re paying attention to the battle over financial reform, and that they should start paying attention to the will of the majority instead of the bank lobbyists.