Tuesday, April 5, 2011

Wachovia and Other Disasters - Where is the Outrage?

a Katie Foley rant

There's a lot of outrage lately. People are outraged that insurance companies may be forced to continue covering someone who gets sick. Others are outraged about the acceptance of things outside of the Biblical mainstream, thinking that the whole "Freedom of Religion" thing was clearly meant as "Freedom of Religion(s that do not threaten Christianity's dominance or freak us out)." Some are outraged that openly gay service members will now be tolerated because their sons may become the targets of sexual assault - never mind that the nation's daughters experience rape while serving in the military at twice the rate of their civilian counterparts. [1]
With so much outrage flying about I think one topic has seriously lacked the attention that it deserves, and that is the lack of penal accountability for the outright fraud committed by many banks over the past decade. Numerous investigations have revealed that that banks cut corners at the front end, misrepresenting information on up to 70% of the loan applications involved in the Early Payment Defaults - those that lost their homes when they could not afford their adjustable rate mortgage anymore. [2]

Then banks didn't agree to negotiate lower payments with mortgagees until Congress told them they had to by establishing the Making Homes Affordable program. [3] Next we find out that banks often could not find the proper legal paperwork for many of the transactions involving the sale of mortgage backed securities, causing  delays in countless foreclosure proceedings.  Then we find out that the documents, though once missing, have been found - except that they are themselves fraudulent.  The fraud spanned from erroneous dates and non-existent mortgage companies to forging the signatures of non-existent bank vice presidents.[4]
These are things that banks did to people's homes.  Now we find out that the actions of one, Wachovia Bank (purchased by Wells Fargo as a result of the 2008 mortgage meltdown) may have actually facilitated murder by laundering billions of dollars for Mexican cocaine cartels.  According to The Guardian, U.S. authorities from multiple agencies 
"uncovered billions of dollars in wire transfers, traveller's cheques and cash shipments through Mexican exchanges into Wachovia accounts.  Wachovia was put under immediate investigation for failing to maintain an effective anti-money laundering programme. Of special significance was that the period concerned began in 2004, which coincided with the first escalation of violence along the U.S.-Mexico border that ignited the current drug wars."
The criminal charges levied under the Bank Secrecy Act were settled out of court, with punishment being a deferred prosecution agreement (now expired) and "$110 million in forfeiture, for allowing transactions later proved to be connected to drug smuggling, and...a $50 million fine for failing to monitor cash used to ship 22 tons of cocaine." [5]
To put this into perspective, let's look at the consequences of cocaine possession.  Under Minnesota law, if you possess enough cocaine to equal the weight of two tablespoons of water (25 grams) you can be imprisoned for up to 30 years.  Wachovia laundered $378.4 billion which helped cover the cost of shipping 22 tons of cocaine and were fined less than 2% of Wells Fargo's 2009 profits [6] So, in review, 25 grams =  30 years in prison; providing the laundering service for $378.4 billion used to ship 22 tons of cocaine = a swat on the rear end (you can't even call it a spanking) and a "shame on you" fine. If we are to accept corporations as persons then I demand that they, too, be treated equally under the law - including laws related to criminal culpability and punishment.
There is evidence of one fraudulent action after another coming out of the banking crisis that lead to the Great Depression 2.0; one family after another watched their American dream shatter into a million pieces because of the greed sitting around bank boardroom tables. Now we find out that at least one bank may have flouted international and federal banking laws to the tune of $378 billion during a time when those benefiting from the bank's actions were engaged in one of the most violent drug-related street wars in recent history.  Not only that, but said bank had reason to know exactly what it was doing.  
No person, corporations included, should be above accountability for his/her/its complicity in a violent criminal enterprise. We give corporations tax breaks, they have the people creating the laws in their pockets and now even the courts have found corporations to be somehow less deserving of punishment for their engagement in conduct that is outright criminal.  Banks are a prime example of how we have allowed corporations to get out of control. 
Where is the outrage? People are shouting about distrusting the government - at least the government has some level of transparency and is accountable to the people.  Rather than blanket distrust of the government we should demand that our government "for the people" encompass only naturally born people, not corporate people.  At the very least we can hold corporations such as Wachovia as accountable as Mark Dayton would be if he helped launder billions of dollars for a Mexican cocaine cartel.  

[1] http://www.time.com/time/magazine/article/0,9171,1968110,00.html
[2] http://www.fbi.gov/stats-services/publications/mortgage-fraud-2006
[3] For more information on this communist plot, visit http://www.makinghomeaffordable.gov
[4] http://news.yahoo.com/s/yblog_thelookout/20110404/bs_yblog_thelookout/the-foreclosure-mess-isnt-going-away I recommended watching the clip from 60 Minutes
[5] Both quotes are from http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs
[6] https://www.revisor.mn.gov/statutes/?id=152.021http://www.asknumbers.com/tonnes-to-grams.aspxhttp://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs 

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