Mexicans blame the profoundly corrupt political class for the sorry state of their nation and these crimes, as well they should. They also blame the police forces, known as the enforcement wings of a variety of narco gangs, and the military, which stands by placidly while the citizenry is chopped to pieces, not so metaphorically. Not much of all this reaches the pages of our newspapers or our iPhone screens, and until the slaughter reaches our own states—which, incidentally, I think will happen in due course—people will continue to think it’s something happening down there with which we have little to do.
But there is one key element of this story that is directly related to us, and I do not refer to our insatiable national appetite for the mind-altering substances whose sale constitutes the Mexican gangs’ most lucrative criminal activity. No, I refer to our banks’ essential role in laundering the profits.
The highly entertaining William Black, professor of economics at the University of Missouri-Kansas City, lays out in tragicomic detail the latest of many episodes of bankster impunity, in this case the ongoing scandal of Standard Chartered’s bosses’ resistance to any punishment for their vast criminal enterprise. Standard Chartered was fined $667 million by New York State and federal regulators in 2012 for tens of thousands of felonious transactions in defiance of a U.S. ban on fund transfers to Iran and is now howling with offended outrage at this terrible persecution.
As Black notes, the reasonableness of the ban itself is ‘not within my areas of expertise.’ However, he continues,
I guarantee that Standard Chartered’s officers did not aid Iran in evading U.S. sanctions because they conducted an investigation and determined that that Iran was not actually seeking to develop nuclear weapons.
The question is irrelevant to the bank’s behavior, says Black, because Standard Chartered’s officers’ conduct reveals to us that:
. . . they would enthusiastically aid any nation in violating sanctions in order to develop, deploy, and use weapons of mass destruction for genocidal purposes. If Iran isn’t that nation, then we will all have experienced immense luck that Standard Chartered’s officers’ crimes didn’t lead to massive losses of life.
But that doesn’t mean that bankster crimes haven’t led to ‘massive losses of life’ elsewhere, which brings us back to Mexico. It was no more than a year ago (January, 2014) that HSBC, the huge British-based bank, agreed to pay $1.2 billion to settle—without criminal penalties—its long-standing cash-recycling services to the cartels. This follows the 2010 Wachovia wrist-slap for laundering a staggering $300-plus billion for the same friendly guys. Argentine journalist Andres Oppenheimer wrote about Citibank’s narco dry-cleaning operations 20 years ago, in which that U.S. bank got off scot-free.
In short, banks are and have always been complicit in the rise of the drug gangs, and as long as there is profit to be made and regulators to be bought off or intimidated, they always will. Without sustained and consistent prosecution of money laundering with severe criminal penalties applied to the perpetrators, including loss of their ill-gotten gains and prison terms, U.S. and other banks will happily do the narcos’ bidding and enjoy their slice of the proceeds in fancy London and Manhattan bars with hot babes on their arms. Or as Black says, quoting J.K. Galbraith, Do not confuse good tailoring with integrity.
The reason this will continue to occur is that the worst bank clients, i.e., kleptocrats, assassins and con artists, will pay the juiciest fees to bankers. If no one is minding the store at the government level, supervising banking activities and punishing crime when it is discovered, the worst bankers will rise to service these worst customers. It is painfully clear to anyone with a working brain that banking crimes are now considered part of the fun and that no real penalties will be extracted from those engaging in them. Moral opprobrium and ostracism, which once might have been feared by white-collar crooks, are now sufficiently old-fashioned that few need fear them—a possible exception might be for those who provide funds for the Islamic State, though we will have to wait and see on that.
Our banks are, in Black’s terse and descriptive phrase, ‘recidivist criminal enterprise[s],’ [plural mine]. They plundered us all through mortgage fraud, Libor and foreign exchange market rigging, and other crimes too numerous to list. No one engaging in these felonies is ever punished, and the responsibility for that, I regret to inform the Democratic faithful, lies at the feet of outoing Attorney General Eric Holder and his boss, one B. Obama.
Their failure to rein in the rampant criminality at the apex of our financial system makes them directly complicit with the horrible deaths of the 43 Mexican students and that country’s agony. Does that sound harsh?