Wall Street Is Laundering Drug Money And Getting Away With It

Too-big-to-fail is a much bigger problem than you thought. We’ve all read damning accounts of the government saving banks from their risky subprime bets, but it turns out that the Wall Street privilege problem is far more deeply ingrained in the U.S. legal system than the simple bailouts witnessed in 2008. America’s largest banks can engage in flagrantly criminal activity on a massive scale and emerge almost completely unscathed. The latest sickening example comes from Wachovia Bank: Accused of laundering $380 billion in Mexican drug cartel money, the financial behemoth is expected to emerge with nothing more than a slap on the wrist thanks to an official government policy which protects megabanks from criminal charges.

Bloomberg’s Michael Smith has penned a devastating expose detailing Wachovia’s drug-money operations and the government’s twisted response. The bank was moving money behind literally tons of cocaine from violent drug cartels. It wasn’t an accident. Internal whistleblowers at Wachovia warned that the bank was laundering drug money, higher-ups at the bank actively looked the other way in order to score bigger profits, and the U.S. government is about to let everyone involved get off scott free. The bank will not be indicted, because it is official government policy not to prosecute megabanks. From Smith’s story:

No big U.S. bank . . . has ever been indicted for violating the Bank Secrecy Act or any other federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again . . . . Large banks are protected from indictments by a variant of the too-big-to-fail theory. Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets.

Wachovia was acquired by Wells Fargo in late 2008. The bank’s penalty for laundering over $380 billion in drug money is going to be a promise not to ever do it again, and a $160 million fine. The fine is so small that Wachovia will almost certainly turn a profit on its drug financing business after legal costs and penalties are taken into account.

This is several steps beyond what most of us think about when we debate too-big-to-fail. The government isn’t shielding Wachovia from losses on risky bets in the capital markets casinos— it’s shielding the bank from the prosecution of outright criminal behavior. The drug money business did not pose risks to the financial system, and Wachovia wasn’t losing money on it. Wachovia is simply being protected because the

Think about what would happen if you or I were accused of laundering $380 billion in drug money. We could not simply settle the allegations out of court in exchange for an apology and a fine. We’d spend the rest of our lives in jail for financing a ruthless, bloody and illegal business. About 22,000 people have been killed in the Mexican drug trade since 2006, and the drug trade itself can’t happen without extensive money laundering operations. Moving the money is one of the most difficult and critical elements of any criminal enterprise—without ways to convert crooked cash into seemingly innocuous funds, crooks simply can’t operate. Wachovia was doing top-level dirty work for drug dealers.

On the streets of American cities, the mere possession of these drugs can land you with a multi-year prison sentence. But financing multi-billion-dollar drug empires? Don’t do it again, pretty please.

Too-big-to-fail isn’t just a matter of systemic risk and mathematical models gone haywire, It’s about the basic functioning of our democracy. You cannot have a functional democracy in which an entire privileged class of bankers can get away with anything—and if you can get away with laundering hundreds of billions of dollars in drug money, there’s not much you can’t get away with.

Congress is poised to pass a decent Wall Street reform bill, but that legislation will not end this criminal imbalance. If the bill will really end too-big-to-fail, the Justice Department could immediately end its special immunity policies for large financial institutions. That isn’t going to happen. The public deserves tougher prosecutors, but we also need further legislation to break up the megabanks so that they can’t use their economic clout to bully everyone in Washington.

– Article from Alternet.



  1. Anonymous on

    This is the problem with Marc Emery’s libertarianism. He thinks if the government just lifts its fetters on business (including drug laws), this type of corruption is just going to disappear and everyone’s going to be happy? Of course not. Capitalism’s rotten to the core. This is just evidence of how the corporate welfare state benefits the few at the expense of the many. Let’s imagine that we remove ALL regulations on oil. Imagine how much worse the BP oil spill would’ve been and how unaccountable BP would’ve been.

  2. Lawrence Oshanek on

    Laundering proceeds of crime
    462.31 (1) Every one commits an offence who uses, transfers the possession of, sends or delivers to any person or place, transports, transmits, alters, disposes of or otherwise deals with, in any manner and by any means, any property or any proceeds of any property with intent to conceal or convert that property or those proceeds, knowing or believing that all or a part of that property or of those proceeds was obtained or derived directly or indirectly as a result of

    (a) the commission in Canada of a designated offence; or

    (b) an act or omission anywhere that, if it had occurred in Canada, would have constituted a designated offence.

    (2) Every one who commits an offence under subsection (1)

    (a) is guilty of an indictable offence and liable to imprisonment for a term not exceeding ten years; or

    (b) is guilty of an offence punishable on summary conviction.

    (3) A peace officer or a person acting under the direction of a peace officer is not guilty of an offence under subsection (1) if the peace officer or person does any of the things mentioned in that subsection for the purposes of an investigation or otherwise in the execution of the peace officer’s duties.

    R.S., 1985, c. 42 (4th Supp.), s. 2; 1996, c. 19, s. 70; 1997, c. 18, s. 28; 2001, c. 32, s. 13; 2005, c. 44, s. 2(F).

  3. Anonymous on

    he wasn’t laundering it, that technically requires that he hides the source and whatnot. he just gave it away to pro-cannabis causes. the us “justice” system just added that as another charge to lock him away longer.

  4. Anonymous on

    If you purchase publicly traded shares, with value of $10,000 or more, no question is ask of where the money came from. All you have to do is pay your taxes on the money you make or your tax deduction from your losses, which ever percentage is more favorable. If you add the fact that the only thing that is keeping marijuana illegal are the politicians. It is an obvious conection! Here in Canada the real polls show a majority of us agree that legalization is the overall best for all those concerned. Why, is beyond argument, all facts discredit those who use lies and half truths to hide there flawed politics!

  5. Jthebody on

    You’re absolutely correct on that…Big banks and the government do not want legalization, Especially the CIA, the biggest drug dealers in the world. Why do you think they invaded Afghanistan…for the poppies. I’ve read that heroin in the USA has really shot upwards since the Afghanistan invasion. This planet makes me sick, what a corrupt society we live in. And these bastards will keep getting away with it, and no one will stop them.

  6. Anonymous on

    This is not new news….. Do some research and you will find that Drug Money has been invested into Wall Street for years. In fact you might find that the amount of money is so hugh that no one wants to stop it and that by itself is a big reason the government and big bank do not want the legalization of drugs.

  7. furryfreak on

    I accidentally laundered a $5 bill i left in my back pocket once.

  8. Anonymous on

    ya really– Emery still owes tax money, and he was laundering the proceeds of vending contraband internationally. If you are laundering drug money and this is all news to you, talk to a lawyer

  9. Anonymous on

    really? That’s news to me. I thought when you pay your taxes and disclose where the money came from, you are not considered to have laundered money.

  10. MOTFA on

    As i read through this article one thing kept popping into my mind. George Carlin. I remember him doing a stand up bit on banks who launder drug money and how to stop the drug war. Just pick someone at Wachovia Bank and hang them from the tallest tree. That will slow down the drug cartels pretty damn quick if they have no where to launder their money.

    Any citizen who cares about their country at all would be lined up around the block to see the banker twitch. In the process we can have Ticketmaster charge for the best seats in the house/street.

  11. Anonymous on

    Marc Emery was charged with laundering the money he made
    from selling the seeds of drug plants, and later admitted to it.

    so is Emery “wrong” now along with these bank people
    or is everybody who launders drug money A-OK ?