Pubdate: Sun, 05 Aug 2012
Source: St. Louis Post-Dispatch (MO)
Copyright: 2012 St. Louis Post-Dispatch
Contact: http://drugsense.org/url/qFJNhZNm
Website: http://www.stltoday.com/
Details: http://www.mapinc.org/media/418
Author: Jonathan Weil

'COCAINE COWBOYS' ALWAYS KNOW BEST PLACES TO BANK

To grow up in South Florida during the 1970s and 1980s, as I did,
wasn't your typical American childhood experience. Back then the area
was known as the most dangerous place in the country.

Carnage from the drug wars filled the local news long before "Miami
Vice" became a hit TV show. By elementary school, my friends and I
knew some of the lingo. A Colombian necktie wasn't a piece of
clothing, but a gruesome execution method. When I was 7 years old my
barber was murdered in his shop, apparently over a drug deal.

It had been a long time since I thought much about those days. By
chance I recently came across a fabulous documentary, "Cocaine
Cowboys," by Miami filmmaker Billy Corben. Then last month a Senate
panel held a hearing on the U.K. bank HSBC Holdings Plc and its ties
to drug lords, money laundering, al- Qaida and rogue nations such as
Iran and North Korea.

Here's a bank with $2.7 trillion of assets that flouted U.S. laws for
a decade, according to last month by the Senate Permanent Subcommittee
on Investigations. HSBC turned a blind eye to organized crime, Mexican
drug cartels and overseas terrorism financiers, and gave them access
to the U.S. banking system. HSBC's main U.S. regulator, the Office of
the Comptroller of the Currency, for years tolerated its violations of
anti-money laundering laws.

For this, HSBC and the OCC apologized. Justice Department fines are
likely. It's an outrage HSBC hasn't had its U.S. banking licenses
revoked, assuming the Senate panel's report is accurate -- and there's
no reason to believe it isn't.

Let's try out a novel idea: Banks that help drug cartels launder money
and give cover to those tied to terrorism should be put out of
business. Is that really so hard for everyone to agree on? Free
markets have worked in the U.S. because we have the rule of law. It's
why so many investors from other countries want to do business here.
When contracts are breached, courts can be accessed to enforce them.
When individuals or companies commit crimes, they're supposed to be
prosecuted and punished.

Except we have this mutant species of corporation called
too-big-to-fail banks whose collapse might wreck the global economy.
No financial institution in the U.S. can survive a felony indictment.
So these companies have become unindictable, creating a perverse
nonchalance regarding financial crimes.

In 2010, Wachovia paid $160 million to settle criminal allegations of
laundering Mexican drug money. By then the bank had been bought by
Wells Fargo & Co., and the Justice Department let it off with a
deferred-prosecution deal. Usually the most that happens to management
is someone resigns, as HSBC's head of compliance, David Bagley, said
he would at last month's Senate hearing.

What would it take for the government to really crack down on
wrongdoing in the financial-services industry? What finally prompted
the feds to do something about cocaine smuggling into South Florida
long ago was the epidemic of violence it spawned.

A defining moment came in July 1979, when drug traffickers went on a
shooting spree in broad daylight at the Dadeland Mall in Kendall,
southwest of Miami. This was unprecedented. The gunmen arrived in a
delivery van that had been converted into an armored personnel
carrier. Two people were killed. Bystanders dove for cover. Cars in
the parking lot were riddled with bullets from machine-gun fire.

Attacks like that became frequent over the next few
years.

In 1979 there were 349 murders in South Florida, according to the
Justice Department, triple the number of two years earlier. By 1981
murders had climbed to 621. The local police were outgunned,
outnumbered, easily corrupted and often stoned.

Finally in 1982 President Ronald Reagan formed a task force and
devoted hundreds of additional federal agents to South Florida to
restore law and order.

Back then, too, the cartels' enablers included dirty
banks.

As Corben's film noted, in 1979 the Federal Reserve's Miami branch
reported a $5 billion cash surplus -- more than the country's other
Federal Reserve banks combined. One crucial difference, compared with
today, was the drug banks in those days were relatively small. When an
outfit such as Sunshine State Bank got busted, it didn't threaten the
economy.

In terms of stray bullets, Miami is a much safer place today. But
mainly what the U.S. did was drive the cartels, the turf battles and
the killings into Mexico, where the violence is out of mind for most
Americans even while much of that country has turned into a
narco-state.

Maybe if the bankers were the ones spraying machine-gun fire in the
streets, that might spur the U.S. government to take meaningful,
punitive action. Short of that, you have to wonder if anything would.
Too-big-to-fail isn't merely an economic problem. It is a great moral
failing of our society that poisons our democracy. Something has to
give.
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MAP posted-by: Matt