The Banks, Banking and The Internationalists Part 1
MONEY LAUNDERING - THE BANKS DO IT ALL THE TIME
AND NO ONE CALLS THEM ON IT UNTIL IT?S TOO LATE
- I WONDER WHY?
Given the cascade of regulations issued by the Treasury Department and the constant call from the
Anglo-side of the G-8 countries for more restrictive laws, "the people" might believe that vigorous
enforcement action against the biggest money launderers is swiftly launched. It can be proved however
that most prosecutions don?t involve the big boys but a bank customer depositing or withdrawing slightly
more than the reportable limit into or from a bank account. As was demonstrated in Congressional
hearings in 1992, the biggest money launderers have been almost totally unaffected!
Example: The best known one is that of the BCCI (Bank of Credit and Commerce International), an $11
billion bank failure still being pursued thorough world courts by the liquidators. U.S. regulators had
known for years that the bank had engaged in massive fraud and money laundering.
As far back as 1978, documents submitted to a federal court described a scheme by BCCI to illegally
take control of a Washington DC bank. Nothing was done to investigate these charges which were linked
to a former CIA director; nor was BCCI required to sell its illegally acquired interest in the bank.
In 1984 the IRS identified BCCI to the Federal Reserve as a world-scale money laundering venture and
informed the Fed the bank was not completing CTR?s (Currency Transaction Reports). In 1987 more
currency transaction violations were brought forcibly to the attention of the Fed and this time the Justice
Department - again nothing was done. However in 1988 following a small-scale sting operation in
Florida, several of the bank?s officials were convicted for laundering.
When a unit of the Justice Department pressed ahead with an investigation in 1989 though, senior
officials quashed it. When Customs Commissioner W. Von Raab insisted on a full nationwide
investigation of BCCI, the Treasury Secretary Nicholas Brady fired him.
It was only when the Bank of England (that country?s Central Bank) in May 1991 announced its own
investigation, as its world-wide operations were run from a Crown Dependent Territory, that the cover-up
What now? To start with "government officials" used BCCI?s illegal activities as a justification to call for
even stricter anti-laundering regulations. They desisted from this example only when Col. Oliver North?s
activities became common knowledge. As far back as 1984 the CIA knew the bank as the "Bank of
Cocaine and Criminals" but it appears that this bank was used as one of the Agency?s many conduits for
supporting and receiving income from its operations throughout the world. The Banking Money Power?s
control over America is always subverting banks; banks are useful, indeed essential to cultivating
contacts with the "right" people in Washington DC and elsewhere - they are often allowed to operate
above the law.
Example(1): Intensively secretive operations are carried out by the Federal Reserve, America?s
privately-controlled central bank; these are operations that could be construed as money laundering but
cannot be verified as such because of the Fed?s legislatively-mandated secrecy in carrying out open
market operations. For instance in November, 1989 the quasi-control Bank of Panama wire transferred
$2.7 billion to the Federal Reserve Bank in Miami. Where did the money come from? Why wasn?t any one
interrogated or arrested - or at least investigated for money laundering?
Example(2): An insignificant article in March, 1999 appeared in an American newspaper describing the
1990 operation of the Fed to salvage and recapitalise a "failed" Citibank, now known as
Citicorp/Travellers; also described were individuals who benefited by the stock?s subsequent 1150%
increase in price. In recent months (as of 7/99) there have been insightful articles on the "open/covert"
market operations employed by the Fed to manipulate the New York stock market in the wake of the
October 1998 devastation!
Example(3): Who owns The Depository Trust Corporation, a.k.a. the D.T.C., which is the clearing house
for most of the nation?s traded securities and who are its shareholders? It is thought that all securities
passing through the D.T.C. never belonged to the titled buyers and sellers, but in effect to this private
corporation which appears to be privately owned by the Federal Reserve Bank of New York! A word of
explanation on ownership...
WHO OWNS THE FED (SYSTEM)?
This is the time to deal with the troubling question of ownership (see Examples (1) and (3) above). The
federal government does not own any stock in the Federal Reserve System. In that sense, the Fed is
privately owned. That however is misleading because it implies a typical private-ownership relationship
in which the stock holders own and control. In the case of the System, the stock carries no proprietary
interest, cannot be sold or pledged as collateral, and does not carry ordinary voting rights.
To digress for a moment, the function of the twelve regional Reserve Banks is to hold cash reserves of
the system, supply currency to member banks, clear checks, and act as a fiscal agent for the
government. These 12 are corporations with stock held by the commercial banks which are members of
The national Board of Governors, together with the Open Market Committee, with the New York regional
Bank being more powerful than the other eleven, meet frequently. Decisions are made at secret
meetings. A brief report of some of the proceedings is issued 6 weeks later, but transcripts of the
deliberations are destroyed. [This has been policy since 1970 when the Freedom of Information Act was
passed. Not even the CIA enjoys such secrecy].
So each bank in the system is entitled to one vote, regardless of the stock held. Stock Certificates are not
evidence of "ownership" but of how much operating capital each shareholder bank has contributed to the
The Fed is not a government agency and it is not a private corporation in the normal sense of the words.
It is subject to political control yet, because of its enormous power over politicians and the elective
process, it has managed to remain independent from political oversight. Simply put, it is a cartel, and its
organisational structure is uniquely structured to serve that end.
A RARE GLIMPSE INTO THE BAILOUT - THE BANKS? GAME
Let us return, now, to the game called bailout as it is actually played today on the international scene.
Begin with a glimpse into the inner workings of the Presidential Cabinet. James Watt was the Secretary
of the Interior in the Reagan Administration. In his memoirs, he described an incident at a cabinet
meeting in the spring of 1982. The first items on the agenda were reports by Treasury Secretary Donald
Reagan and Budget Director David Stockman concerning problems the less-developed countries were
having with their bank loans. Watt said:
"Secretary Reagan was explaining the inability of those destitute countries to pay even the interest on the
loans that individual banks such as Bank of America, Chase Manhattan and Citibank had made. The
President was being told what actions the United States "must" take to salvage the situation.
After the Reagan and Stockman briefings, there were several minutes of discussion before I asked,
"Does anyone believe that these less developed countries will ever be able to pay back the principal on
these loans?" When no one spoke up, I asked, "If the loans are never going to be repaid, why should we
bail out the countries and arrange payment for their interest?"
The answer came from several voices at once, "If we don?t arrange for their interest payments, the loans
will go into default, and it could put our American banks in jeopardy." Would the customers lose their
money? No, came the answer, but the stockholders might lose their dividends.
In amazement, I leaned back in my large, leather chair, only two seats from the President of the United
States. I realized that nothing in the world could keep these high government officials from scrambling to
protect and bail out a few very large and sorely troubled American banks."
THE CARTER ADMINISTRATION?S TREATMENT OF PANAMA
The first major score in the game had been made under the Carter Administration when Panama fell in
arrears on the payment of its loans. A consortium of banks including Chase Manhattan, First National of
Chicago, and Citibank brought pressures to bear on Washington to give the Canal to the Panamanian
government so it could use the revenue to pay the interest on its loans. Although there was massive
opposition to this move among the American people, the Senate yielded to insider pressure and passed
the give-away treaty. The Panamanian government inherited $120 million in annual revenue, and the
interest payments to the bank were restored. As Congressman Philip Crane observed:
At the time of the Torrijos-backed coup in 1968, Panama?s total official overseas debt stood at a
manageable and, by world standards, modest $167 million. Under Torrijos, indebtedness has
skyrocketed nearly one thousand percent to a massive $1.5 billion. Debt-service now consumes an
estimated 39 percent of the entire Panamanian budget... What it appears we really have here is not just
aid to a tinhorn dictator in the form of new subsidies and canal revenues the treaties would give to the
Torrijos regime, but a bailout of a number of banks which should have known better than to end in
Panama and, in any event, should not escape the responsibility of having done so.
The Panama bailout was a unique play. In no other country did we have an income-producing property to
give away, so from that point forward, the bailout would have to be done with mere money. To pave the
way for that, Congress passed the Monetary Control Act of 1980 which authorized the Federal Reserve to
"monetize foreign debt." That is banker language meaning that the Fed was now authorized to create
money out of nothing for the purpose of lending to foreign governments. It classifies those loans as
"assets" and then uses them as collateral for the creation of even more money here in the United States.
That was truly a revolutionary expansion of the Fed?s power to inflate. Until then, it was permitted to make
money only for the American government. Now, it was able to do it for any government. Since then, it has
been functioning as a central bank for the entire world.
POPULISTS SWEEP INTERNATIONALISTS ASIDE
Several Third World countries are attempting to break free of shackles imposed on them by bosses of
the International Money System.
Largely ignored amid the front page frenzy over NATO?s air assault of Yugoslavia, populist movements
have stormed to sweeping electoral victories around the world this spring, thrashing Establishment
politicians sponsored by the global financial elites from Austria to Venezuela.
In Malaysia, Dr. Mahathir Mohamed, the nation?s long-serving president, has survived a series of coup
attempts believed to have been launched against him by the same coalition of international bankers and
the CIA that ousted Philippine President Ferdinand Marcos in 1986.
Mahathir became a target when he denounced the "criminal raids of currency speculators and Zionist
financiers" who wrecked the currencies of several Southeast Asian nations in 1996-97.
The doughty Asian statesman raised a transcontinental furor when he pointed an accusing finger at the
notorious New York currency manipulator George Soros as the "mastermind of the international
conspiracy to ruin in a moment the currencies built up over decades with the agonizing labor and strain
of our people."
As the national currencies of Thailand, South Korea, Malaysia and Indonesia came under speculative
pressure by Wall Street hot-money syndicates and their worldwide allies, the economies of these rapidly
developing nations collapsed, leaving mass unemployment, bloody riots, widespread upheaval and
depression in their wake.
Some shaken regional leaders, among them President Suharto, Indonesia?s aging strongman, thought
the way out of the crisis lay in a submissive deal accepting the domination of the International Monetary
Fund (IMF) and its masters, the global mega-banks.
"They were wrong," said Dr. Paul Alder, an economic consultant. "Indonesia, with the world?s
fourth-largest population, was swept by violent riots. The economy disintegrated. Suharto was
overthrown and now faces investigation and possible prosecution on corruption charges."
Mahathir, however, did the opposite, explained
Adler. "Instead of kowtowing to the IMF and its financiers, he imposed strict controls on hot-money
speculators, currency manipulators like Soros and his ?herd,? and foreign debt."
The result: Mahathir and his administration are still firmly in charge. The joint ?covert-action? attempts of
the CIA and Wall Street to overthrow them by staging street riots, economic sabotage and promoting an
opponent have been resisted and thwarted.
Best of all, Malaysia?s currency, once undermined by speculators, has now stabilized again. Interest
rates are down, production is rising, and the Malaysian economy is staging a vigorous comeback.
Malaysia?s populist leadership is important because "it has shown the world that governments with the
courage to say ?no? to the IMF don?t have to take orders from it," concluded Dr. Mark Weisbrot, director of a
Washington, DC think-tank last month.
Impressed by Mahathir?s success, Hong Kong, Chile and Colombia have recreated populist capitalist
controls and restrictions on hot-money speculation and currency trading, similar to the measures
adopted by Malaysia last year.
PANAMA CANAL WATCH
In Panama?s presidential elections last month (May 1999), the CIA and the bankers? federation both
expected - and supported - an easy win for their shopworn front man. The landslide vote went to the
dark-horse candidate with a name hated on Wall Street: The wife of the late Panamanian President
Panama?s president-elect is Mireya Moscoso Arias, the attractive, dynamic, widow of the late president.
She is an unbending populist, whose name still rings alarm bells among one-world financiers and
The people of Panama elected Arias their president by overwhelming majority three times between the
mid-1940s and the late ?70s. Each time, he was overthrown by an armed coup. Many believe the coups
were organized jointly by Wall Street, corrupt local military chieftains and eventually the CIA. (Panama
now has disbanded its armed forces).
In Turkey, where the balloting took place in April, the populist National Action Party of former economics
professor Devlet Bahceli scored a smashing victory.
In the last parliament the Nationalists, peevishly described by the Establishment media as "far-right
extremists," had no seats at all. In the current one they have 130, making them the second-largest party
in Turkey?s national legislature.
THE WORLD?S OLDEST BANK GOES PUBLIC.
The Banca Monte dei Paschi di Siena is living history as well as central to the prosperity of its region of
Italy - says David Brierley.
In 1472, just 16 years after Gutenberg published his first Bible and two decades before Columbus
reached America, the world?s first bank was created in Siena. A new era had dawned.
Last Friday, some 500 years after its establishment, the banca Monte dei Paschi di Siena came
successfully to market. Today, June 18, 1999, the very first bank is Italy?s sixth largest and its survival
through half a millennium is little short of astonishing. The Rothschild banking empire, which is two
centuries old, is a mere stripling by comparison.
"The common thread through time is that this bank has always been very prudent, very careful," said Divo
Gronchi, chief executive of Monte dei Paschi. In the original statutes of 1472, the bank was named Monte
di Pieta after the "monti di pieta", the mounds (of money) for pity or charitable funds created by Tuscan
The city state of Siena provided the initial capital for its bank from local taxes, assigned control to a
charitable foundation and sited the bank in the Salimbeni Palace, in a remarkable three-sided square
close to the Piazza del Campo and the towering Palazzo Pubblico.
In 15th century Tuscany, financial innovation was in the air and demand for credit was rising rapidly. The
Medici had introduced paper currency, reducing the need of merchants to transport bullion. But credit
was not widely available and its suppliers, money-changers and merchants, often demanded usurious
The new Siennese bank made cheap credit available to small traders and businessmen for the first time
in history. A host of similar institutions sprang up around Italy around the same time. It became possible
to fund industrialisation.
In 1624, after Siena fell to the Grand Duch of Tuscany, the bank was renamed Monte dei Paschi di Siena.
It issued paper to the Grand Duke backed by the income of pastures (Paschi) adjacent to the city. This
increased the bank?s liquidity and gave it a recognisably modern structure. And careful management
ensured the land pledged by the good burghers of Siena was never subject to an enforced sale.
From its very beginning, the bank has been at the centre of Siennese life, financing communal projects
and supporting local artisans and farmers. Health, education, scientific research and the arts all
continue to benefit from its philanthropy. Such was the bank?s local power and standing that its deputies
(board members) were given the right to pronounce death sentences.
The bank?s role as the leading patron of Siennese arts is reflected in its magnificent buildings and
remarkable art collection.
In 1481, to celebrate the creation of the bank a fresco entitled Madonna della Misericordia was
commissioned from Giovanni del Guasta for the Palazzo Salimbeni. Thereafter, works were regularly
commissioned from local artists such as Arcangelo Salimbeni, Vincenzo Rustici, Francesco Vanni to
mark significant stages in the bank?s history.
The bank?s collection of painting and sculpture ranges from the 14th to the 20th century, tracing the
artistic development in this remarkable town. It includes works by Pietro Lorenzetti, Andrea di Bartolo and
Sassetta and has regularly been enhanced by significant local donations, including the Chigi Saracini
collection, housed in a palazzo close to the Piazza del Campo.
Many of the 13,000 works of art belonging to the bank hang in Siena?s world-famous public museums.
They have been insured for a very nominal $20 million. A spokesman admitted "Their real value is
actually only hinted at."
Every aspect of the cultural life of Siena has benefited from the bank which remains the largest taxpayer
in the city. It sponsors national and international exhibitions of Siennese art, supports music festivals in
Tuscany and funds the restoration of historic Siennese buildings, including the medieval hospital, the
Santa Maria della Scala, the Palazzo Publico and the Torre del Mangia. It also sponsors the dare-devil
race on horseback, the medieval Palio.
The nature of the bank?s business, which has remained much the same over the centuries, has also
sustained its local reputation. Most of its deposits are still drawn from the local community and most of
its loans are still granted to individuals and small businessmen in Sienna.
This innate conservatism has enabled Monte dei Paschi to survive crises and crashes that devastated
others. The bankruptcy of the French government in 1789, the Argentine default in 1890 and the Wall
Street crash of 1929 left it unscathed. The Monte dei Paschi has not indulged in heavy exposure to the
equities market or overseas trade; it has not been hit by the recent economic crisis in the Far East. It has
been content to fund the local economy of one of the most remarkable town in Europe.
The affection in which the bank is held locally is reflected in the enthusiasm for the offering, which was
10 times oversubscribed.
"Monte dei Paschi is a central part of Siennese life and touches everything to do with the city. It is held in
particular affection by the Siennese and the inhabitants of Tuscany. We had over 2.1m applications,
making it the most popular offering ever in Italy, surpassig even Telecom Italia," said Charles
Kirwan-Taylor, managing director of Credit Suisse First Boston, who jointly led the deal. The shares were
trading at a significant premium to their flotation price on Friday.
It is a deal of some size. Monte dei Paschi still ranks among the world?s top 100 banks and Friday?s
share sale raised $2.1 million for its charitable foundation, making it the biggest public offering in Italy
The Monte dei Paschi Foundation, which holds over 70% of the bank, is faced with an embarrassment of
riches. Filippo de Nicolais of Schroders, who advised the Foundation and jointly led the offering, said:
"They will invest the money in the region of Siena which is not large".
The 60,000 people living in the area will benefit from the Foundation?s enlarged munificence. Some $43
million is being spent this year and more is certain to be disbursed. Delighted, a local newspaper
proclaimed: "The warm rain of billions [of lire] is coming!"
The flotation of the bank was brought about by the so-called Dini Directive. This is forcing the charitable
foundations that traditionally control many of Italy?s local and regional banks to sever their ties, freeing the
banks to act on a purely commercial basis! Consolidation of a fragmented sector is inevitable as banks
seek to cut costs and improve returns.
Monte dei Paschi is an eager participant in this process. It has already bought other regional banks,
including the Banca Toscana. A merger with Banca di Roma was rumoured but flatly denied by both
Whether Monte dei Paschi will be the buyer or the bought in the coming shakeout remains to be seen.
The Monte dei Paschi foundation has no urgent need to sell. But it is also true that every era draws to a
Continued in part two of ten