In Banks We Trust

Money making, lending, and laundering from boardrooms to back alleys

by Penny Lernoux

Penguin Books, 1984, paperback

Part I

p5
David Rockefeller, who tended to treat the bank as an instrument of his political ambitions. Unlike his brother, Nelson, David Rockefeller was interested not in public office but in the political power conferred by international finance. He saw himself as a white knight, charging about the world's capitals to slay socialist dragons. But, as one observer noted, when so engaged Rockefeller often seemed like a caricature of an international capitalist: He wag a man capable of describing himself as "the spider in the center of a web of international intrigue."

Actually, Rockefeller was no better at intrigue than at banking. His Trilateral Commission,* founded in 1973 with an all-star cast of businessmen and politicians from the First World (it included Jimmy Carter), was supposed to plan strategy for outsmarting the Third World. Instead it was soon overwhelmed by the political and economic differences that divided the triangle of Japan, Europe, and the United States. While the commission managed to provoke considerable wrath in the developing countries, its only evident contribution to the North-South dialogue was a book suggesting that democracy was bad for business.

Rockefeller's relations with Iran and Argentina proved notably shortsighted. As the "Shah's banker," Rockefeller was on warm terms with Mohammed Reza Pahiavi, and Chase made more loans to Iran than did any other U.S. bank. But when the Shah was deposed in 1979, Chase became an Iranian symbol for the hated "Yankee imperialism." Rockefeller hardly helped matters by persuading the Carter administration to admit the Shah to the United States, thereby precipitating the hostage crisis.

Nor were European bankers amused by Chase's decision to declare a $500 million syndicated loan to Iran in default. Ten days earlier the Iranian Government had instructed Chase to pay the interest on the loan out of Iran's London deposits, and the European banks in the syndicate protested that Chase had no right to call a default. They said that Chase was following its own narrow interests to the detriment of the syndicate and the whole global banking system, because Rockefeller, mixing his personal brand of politics with banking, was bent on punishing the revolutionary government in Iran. In retrospect the Europeans were right: Iran repaid all other bankers without such arm-twisting, and Chase was left with a black eye.

Rockefeller proved similarly indiscreet in Argentina, where he went out of his way to praise the policies of his good friend, Economy Minister José Martinez de Hoz, who was shortly to be sacked by Argentina's military government for bringing on the worst economic debacle since the Depression. Rockefeller is also remembered by thousands of victims of the military's repression as the American banker who told Argentina's generals not to worry about human rights.

p29
The bigger the bank, the less likely it is to be deterred by government overseers(mere gnats buzzing around an elephant. Small banks may be forced to pay dearly for their sins, but the big ones know that the most they need fear is a slap on the wrist, since the government will do nothing to jeopardize their solid reputations. "The Federal Reserve takes the position that it cannot make a judgment [on the big banks] because such a judgment might lead to a lack of confidence," explained a congressional source.

Of the giants, Citibank is the recognized champion at running rings around the regulators. "Citibank's role," said a congressional critic, "is to defy the law. As noted in a memorandum prepared by a Citibank vice president, the bank's management "feels it can defend all the tricks it is presently engaged in [and] receive no stronger than a sharp reprimand and a 'don't do it anymore' "- assuming, of course, that the regulators even discover the "tricks."

p38
Back in the 1970s, when Citibank was aiming to be first among U.S. banks, Chairman Wriston rashly set a goal of 15 percent a year in earnings growth. For most of the decade Citibank met that goal, but in the process it endangered longer-term profits and stability. Citibank representatives in foreign countries were not asked to estimate the likelihood of repayment when they pushed loans, as long as they could demonstrate a 15 percent annual growth rate. But in the 1980s, when countries all over the world were announcing their inability to pay the interest-never mind the principal-these loans pulled down Citibank's earnings. The bank's "aggressive management" also blanketed the United States with twenty-six million unsolicited credit cards in a bid to corner that market. "Naturally," said one observer, "people with credit problems accepted the offer." Such consumer operations cost the bank $225 million in 1980 and 1981. "The reality," said The New Republic's financial writer, William Quirk, "is that Citibank is bust. The true value of what it owns is less than what it owes. "

p39
a specialist in financial crimes

The public tolerates white-collar crime because it is presented to them as victimless.
They don't realize that someone always pays.

p39
U.S. sociologists say that there is a difference, in the popular moral judgment, between a businessman or banker who may "trifle" with the law and street criminals who "really" break it. The difference arises, of course, because of the fear of physical violence, but in a lifetime of crime, muggers will not steal what white-collar thieves take in a single year.

p59
Bankers spend a great deal of money on publicity to convince the local community that "you can trust in us," yet they themselves do not think of banking as a trust. Ethical considerations that formerly served as operational guidelines have become anachronistic, and naturally the changed atmosphere has attracted gamblers and con men. A bank's style is set by top management; and if a chairman or president tolerates corner cutting ... that is reflected in the ranks, in the employment of people with questionable backgrounds ... and the type of people with whom they do business... And behind the con men may will be organized crime.

Part II

p65
The huge sums of money criminal enterprises now generate amounts that can be handled only by a bank. Drug traffickers and other criminals still tote suitcases of money across borders, but it is a risky business and nowadays represents only a small fraction of the cash volume. Gold, jewelry, and other valuables also present transport problems. Banks, on the other hand, can instantly telex billions of dollars to any city in the world, and criminal investigators say that when a bank wants to hide the trail it is almost impossible to follow. Banks have the added advantage of being the least-regulated sector of international business because of bank reserve. Unlike the producer of manufactured goods or a commodities trader, a banker needs no license to export and is not required to provide detailed data on foreign dealings. Thus there are no physical barriers and almost no legal ones to recycling dirty money.

p66
The Nugan Hand Bank [1973] ... attracted depositors with offers of private-banking services, the highest interest rates in the region, tax-free deposits, and complete secrecy. Within six years it had twenty-two branches around the world. But Nugan Hand [bank's] biggest business came from laundering money for Asian and Australian heroin dealers; not coincidentally, the bank's officers read like a Who's Who of the CIA. Despite CIA denials of involvement, there is strong historical evidence to support the suspicion that the bank was founded to help finance the CIA's role in Southeast Asia's heroin traffic.

As noted by scholar Alfred W. McCoy in The Politics of Heroin in Southeast Asia, after World War II Washington believed that the United States was the rightful heir to Europe's Asian colonial empires. To legitimize their "foreign adventures," America's cold warriors embraced a militant ideology that regarded all Asian nationalist struggles as pawns of "international communism." The CIA became the vanguard of the anti-Communist crusade; any ally was welcome and any means justified. During the early 1950s, for example, the CIA backed the formation in Burma of a guerrilla army of Nationalist Chinese, who were responsible for almost a third of the world's illicit opium supply. In Laos the CIA created a Meo mercenary army whose commander manufactured heroin for sale to American GIs in South Vietnam. And in late 1969 new heroin laboratories sprang up in the Golden Triangle, where Burma, Thailand, and Laos converge. "The State Department," wrote McCoy, "provides unconditional support for corrupt governments openly engaged in the drug traffic."

In view of such activities, a drug bank set up by the CIA has a certain logic, particularly since a bank was obviously necessary to recycle the huge sums of money involved in the heroin traffic.

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The question is whether the people who ran the bank [Nugan Hand] were in it for the money or because they thought they were serving a political cause. McCoy, whose observations were made in the late 1960s, did not think the CIA was in the drug traffic to finance its clandestine operations or because of a few corrupt agents. Rather, its role was the "inadvertent [and] inevitable consequence of its Cold War tactics."' But by the mid-1970s the cold war hysteria had passed, and political reasons for dealing with drug traffickers seemed less compelling. So either the CIA was carrying on its own private cold war or Nugan Hand was an intelligence cover for crime. Frank Nugan's activities suggest the latter.

p70
The [Nugan Hand] bank was actively engaged in the drug trade. One of its principal branches was in Chiang Mai [Thailand], in the heart of Thailand's poppy-growing fields. Australia's biggest drug pushers operated out of this region; they also banked with Nugan Hand. Among the bank's clients was the $100 million "Mr. Asia" heroin syndicate, which also arranged for the contract murders of at least three persons in Australia. Neil Evans, former head of the Chiang Mai branch, testified that during six months at the bank he saw millions of drug dollars pass through the branch. He also said that Hand had told him that he had arranged for Nugan Hand to become the CIA's paymaster "for disbursement of funds anywhere in the world on behalf of the CIA and also for the taking of money on behalf of the CIA."

p72
A former executive of the [Nugan Hand] bank told Inquiry magazine that under William Colby the CIA laundered millions of dollars through Nugan Hand to support pro-U.S. political parties in Europe, allegedly including Italy's Christian Democrats. The bank was founded while Colby was director of the CIA, and he continued to play a part in its affairs after he left the agency.

... In addition to drugs, Nugan Hand was involved in various arms deals with Indonesia, Thailand, Malaysia, Brazil, and the white Rhodesian Government of Ian Smith.

p73
The [Nugan Hand] bank apparently was originally part of a deep-cover intelligence operation known as Task Force 157, which worked with the CIA but was controlled by the U.S. Office of Naval Intelligence and was directly responsible to strong-willed Secretary of State Henry Kissinger.

p75
Nugan Hand's part in the heroin and arms traffic underscores the increasing importance of the financial sector for criminal elements. Investigations by the Australian Royal Commission showed that the bank regularly transferred funds from Sydney to Southeast Asia for payment of heroin shipments to Australia, which were sent in containers to the West Coast of the United States. The bank also appears to have been a financial conduit for an Australian mobster in his business dealings with Santo Trafficante, Jr., the underworld's boss in Florida and the heir to Lucky Luciano's heroin network. In addition to drugs, both Nugan and Hand were personally involved in the illegal arms traffic. The CIA prefers such "bankers" because they have no qualms about financing the agency's political causes, and association with the CIA provides the bankers with a cover for criminal activities.

p76
As observed by [Alfred] McCoy in 'The Politics of Heroin in Southeast Asia', addiction in the United States was nearly eliminated during World War II because heroin supplies were cut off and the international criminal syndicates were in disarray. Within a few years of the war's end addiction was again on the rise due to reorganization of the drug syndicates and expansion of Asia's opium industry, in which the CIA played a major role for political reasons. As documented by McCoy, the CIA helped "inflict a heroin plague on ourselves," because it thought that any means justified the end, though in this case the end was as dubious as the means.

p79
Miami lawyer Paul E. Helliwell used banks to serve his CIA drug connections in Southeast Asia. But Helliwell was far more experienced in the politics of drugs... In a long career that embraced the opium trade in China, CIA covert work in Florida, and Mob-connected schemes in the Caribbean, Helliwell faltered only once, when one of his CIA banks ran afoul of the Internal Revenue Service. Until its demise in 1977, his Castle Bank in the Bahamas formed a Caribbean bridge between the poppy fields of Thailand and organized crime in the United States. A spook's spook, Helliwell also proved a master manipulator of Caribbean bank havens and Panamanian shell companies in his dual role as CIA paymaster and mobsters' counselor...

Helliwell's career in intelligence and drugs dated to World War II, when he served as chief of special intelligence in China for the Office of Strategic Services (OSS). When the latter was reorganized as the CIA, he was in on the ground floor... After the war he returned to his native Florida, where he helped set up and run Sea Supply Inc., a CIA front in Miami... Sea Supply sent huge amounts of weapons and equipment to opium-smuggling Nationalist Chinese troops in Burma and to Thailand's police, who were also involved in the opium trade.

In those years Helliwell was also the Thai consul in Miami. The consulate operated out of his offices; its registered foreign lobbyist was Washington lawyer James Rowe. And Rowe's partner Was the more powerful lobbyist Tommy "The Cork" Corcoran, who at United Fruit's behest had helped trigger the CIA's overthrow of the Arbenz government in Guatemala. Corcoran also represented Chiang Kai-shek's relatives and the Civil Air Transport, a CIA front that, like Sea Supply, was involved in the Asian opium trade. At the time Helliwell employed Rowe, he and Corcoran were two of the closest advisers to Lyndon Baines Johnson, the rapidly rising Senate majority leader.

Narcotics have often been used as a political weapon, one of the best known examples being General Chiang Kai-shek's regime in China before World War II. Thailand's government in the 1950s also depended on the opium trade to finance political and intelligence activities. It came to power through the arms provided by Helliwell's Sea Supply.' An "old China hand," Helliwell met many of the principals in the notorious "China lobby." Back in Florida, he arranged a secret account for Chiang Kaishek's relatives at one of his Caribbean shell banks, and rich Thais and other Asians invested in Florida land-development companies associated with Helliwell.

During World War II heroin addiction dropped dramatically not only because supplies were cut off but also because the crime syndicates were in disarray. Five years before the United States entered the war, organized crime was dealt a serious blow with the arrest and conviction of the legendary Salvatore Lucania, known to the world as Charles "Lucky" Luciano. Charming and strikingly handsome, Luciano ranks as one of the most brilliant criminal executives of the century: It was due to his efforts that the old Mafia was reorganized and modernized as twenty-four family cartels. Luciano also forged an alliance between the Mafia and the Jewish gangs of Meyer Lansky, who became Luciano's lieutenant and later the financial genius of organized crime. With the end of Prohibition in sight, Luciano turned to heroin, which offered an attractive substitute for liquor. His agents developed an efficient supply network in China, where Chiang Kai-shek had come to power with the help of the Shanghai heroin cartel.'

But in 1936 Thomas Dewey's organized-crime investigators put Luciano behind bars, removing the underworld's most influential mediator from active leadership. At the same time that Dewey was "racket-busting," Benito Mussolini was waging a vicious vendetta against the Mafia, which had insulted him during a state visit to western Sicily. The outraged dictator responded by unleashing a reign of terror that nearly destroyed the Mafia. But World War II gave American and Italian mobsters a new lease on life, thanks to a cynical alliance between the U.S. Government and organized crime that involved the intelligence community in the politics of drugs.

Apprehensive that Nazi saboteurs might be infiltrating the docks and shipyards of the East Coast, U.S. Naval Intelligence officials struck a bargain whereby Lansky, then Luciano's lieutenant, would provide Mafia henchmen to patrol the waterfront in exchange for the promise of Luciano's release from prison at the end of the war. Shortly after V-E Day, New York's Governor Dewey, who had made his reputation by putting Luciano behind bars, signed the parole papers. The Mafia had also made a deal, known as Operation Underworld, with the OSS to provide gangland assistance for the Allied armies when they landed in Sicily. Later, when he was deported to Sicily, leaving Lansky to look after the shop in the United States, Luciano expanded the syndicate's overseas connections, with more than a little help from his friends in the OSS, now called the CIA. When Communist waterfront strikers shut down Marseilles in 1947, thus closing a major French port to American shipping, the CIA called on Luciano. He furnished hit men; the CIA supplied money and weapons. After several murders the docks were reopened for American shippers-and the syndicate's heroin smugglers.' To prevent further strikes, the CIA provided support and money for former Nazi collaborators in the postwar unions of France.

When the syndicate later moved into Southeast Asia's Golden Triangle, the CIA was again accommodating. Ever zealous to fight communism, the agency shipped cash and munitions to Laotian, Nationalist Chinese, and Thai mercenaries, who were also opium growers employed in the syndicate's heroin trade. CIA planes provided safe passage for the first leg of the drug's journey to the ghettos of the United States.' In later years the CIA was to employ Cuban exiles in the South American cocaine and marijuana trade as informants and hit men for covert operations in Latin America. The end result of such activities was that the CIA became a crucial middleman for drug producers and organized crime.

p85
Relying on a strict code of banking secrecy that makes the Swiss look like blabbermouths, hundreds of banks have set up operations in the Caribbean. Some are legitimate, but most are what is known as "brass plate" operations: They consist of a name on the door, a telex number, and a part-time secretary. About 15,000 companies are chartered in the Bahamas [1984], and there is one bank for every 600 residents-twenty \ I' times the U.S. ratio. In the Caymans, once known mainly to skin divers and stamp collectors, companies have set up more than 14,000 telex numbers (there are only about 13,500 people in the area) to serve as "domiciliary companies."

The Caribbean banks are used by organized crime and Latin-American drug merchants to launder money; they are also ideal instruments to evade taxes. Often the money is used to buy stateside real estate; in one twelve-month period, for example, offshore firms bought more than $130 million worth of Florida real estate, almost all of it in Dade County. Gangsters win both ways: Not only is their dirty money now invested in clean enterprises but their offshore firms can claim nonresident tax benefits. IRS findings show that at least $150 billion are involved in tax haven operations, and the amount is steadily growing.

p103
After Castro's revolution in 1959, Miami took on a new texture with the arrival of several hundred thousand Cuban refugees. Recently they have been joined by impoverished blacks fleeing the tyranny of the Duvalier family in Haiti, wealthy refugees from the political turmoil of Central America, and middle-class Colombians in search of economic opportunities. (Altogether about seven hundred thousand Latins, or 40 percent of the population, live in Dade County.) They give the city its special flavor, making it more lively and cosmopolitan, providing a cultural mix that has helped to make Miami the United States' principal bridge to Latin America.

p103
While most of the Cuban exile community is honest hardworking, some have continued careers in crime begun in prerevolutionary Cuba; others have resorted to violence for political motives or because it seemed an easy way to make money. Whatever their trade, all have been marked by a single event - the 1961 Bay of Pigs invasion, which brought the CIA to Miami in force. Some two thousand Cuban exiles were hired by the agency, which trained them in the arts of bomb construction, demolition, and efficient murder. But, as one historian has observed, "With the failure of the Bay of Pigs, Cuba became to America what Algeria had been to France." Like the right-wing Organisation de l'Armée Secrete (OAS), which rebelled against Charles de Gaulle's accommodation with Algeria, the CIA's Cuban agents were left in political limbo when the invasion failed.

Some continued to work with the CIA in its secret war against Cuba, while others served as CIA mercenaries abroad" "Monkey" Morales did in the Congo.' But patriotism soon degenerated into thuggery, with anticommunism as a cover for blackmail and drug running. "These people came out knowing how you do it," said a former commando leader who trained Cubans for the invasion. "They found it absolute child's play when they started in [with drug smuggling] over here, because we [i.e., U.S. law enforcement] didn't have that type of defense. They didn't even need most of their expertise."

Washington's first inkling of a "Cuban Connection" came in 1970, when the Bureau of Narcotics and Dangerous Drugs, the Drug Enforcement Administration's predecessor, cracked a major heroin and cocaine ring run by Cuban exiles. By the mid-1970s law enforcement agencies were inundated by an exile-directed drug flood. Other criminal activities flourished, again with political cover. Miami police said that many instances of crime in the Cuban exile community alleged to have been politically motivated, such as the kidnapping and fleecing of supposed Castroite sympathizers, were actually straightforward shakedowns. "Ninety percent of the people in exile terrorist organizations like Alpha 66 and Omega 7 are extortionists," said a former member of the Dade County Organized Crime Bureau. "They have no intention of going back to Cuba-that's just a cover for the same old Mob rackets. But people are afraid to challenge them because they're killers."

The record of these Cubans is impressive: It far surpasses the terrorist acts of Italy's Red Brigades or Libya's assassin squads. Many of those responsible for such terrorism (e.g.Morales) are also in the narcotics big time. As noted by crime historian Hank Messick, the original excuse for expanding the Miami cocaine market was to fight communism. Just as [Meyer] Lansky excused some of his crimes in the name of protecting Jews and then Israel, so did some Cubans hide their appetite for quick money behind the flag."

It was an amazingly successful ruse. Because of their alleged hatred of Castro, these Cubans [anti-Castro Cubans exiles in Miami] were literally allowed to get away with murder. Today they are "comfortably into their third decade as America's first and only home-grown international terrorist group," Despite their bloody careers, they move about freely, hold press conferences, and rarely go to jail; when they do, they stay but briefly.

p106
Under the corrupt dictator Fulgencio Batista, Cuba became the principal U.S. entry point for heroin shipments from Lucky Luciano's China network.* Meyer Lansky, Luciano's lieutenant, controlled the Cuban traffic as well as most of Havana's gambling casinos. But Lansky's main base was Florida, where he met a Sicilian-born Tampa gangster called Santo Trafficante. The latter had earned his reputation as an effective organizer in the Tampa gambling rackets, and in 1940 he assumed responsibility for Lansky's interests in Havana. By the early 1950s Trafficante had become such an important figure that he delegated his Havana concessions to Santo Trafficante, Jr., the most talented of his six sons. When his father died in 1954, Trafficante Junior succeeded him as Mafia boss of Florida and fell heir to his relationship with Lansky. Unostentatious and self-effacing, he proved one of the most effective organized-crime leaders in the United States.

After Luciano's death in 1962, the logical successors to his leadership in the narcotics trade were his two,, subordinates, Lansky and Vito Genovese. But Genovese was serving a fifteen-year sentence on a heroin-trafficking charge; and Lansky, then in his sixties, was too old and too carefully watched to become actively involved. Thus, by death and default the responsibility fell to Trafficante.

Castro's revolution not only upset policymakers in Washington but also cost Trafficante and Lansky their lucrative Cuban base. The loss was partially offset by Trafficante's control of the Florida bolita lottery, a Cuban numbers game that became enormously profitable when the refugees started pouring into Florida. Trafficante's organization recruited Cuban gangsters to run the lottery and serve as narcotics couriers and distributors; and when the CIA called for volunteers for the Bay of Pigs invasion, Trafficante supplied his quota.

p107
The foundations for Miami's emergence as an international crime center were laid in the 1930s and 1940s, when gangsters like [Meyer] Lansky and [Santo] Trafficante settled there, but it was not until after the CIA organized hundreds of trained killers in the early 1960s that Miami began to fulfill its promise of notoriety. Protected by their CIA ties and frustrated in their political ambitions, these agents turned to the drug trade for a living. When America's drug boom took off in the mid-1970s, they became the pioneers of a criminal-industrial complex in southern Florida that now ranks as the state's biggest business.

The irony is that while the U. S. Government allowed [drug traffickers] to operate freely for reasons of "national security," it ignores the genuine weakness they expose in the nation's physical safety. Cuban and Colombian drug traffickers have proved that the country's air defenses are a joke. Dozens of drug planes penetrate U.S. air space daily, undetected by radar. If they can fly in and out with impunity, a hostile plane or some mercenary terrorist could do the same.

p109
[Marijuana is] now believed to be the United States' third most valuable cash crop.

p109
the chairman of a Florida bank

We bankers are always saying how Miami has become an international banking center like London or New York. But that's a lot of hogwash. The reason so many banks opened offices here is because of the hot money, particularly drug money.

p109
Legitimate trade between Latin America and Florida amounts to more than $18 billion a year, but that is less than a quarter of the earnings generated by the narcotics traffic, 80 percent of which flows through southern Florida.

p109
Charles Kimball, a real estate economist who keeps close watch on foreign purchases of southern Florida property, estimates that nearly half the $1.5 billion invested yearly by foreign companies in Miami real estate comes from illegal sources - drug dealers, organized-crime syndicates, foreign criminals, and international swindlers.

p110
a spokesman for U.S. Customs (one of five federal agencies trying to stop the drug traffic in Florida)

You know what would happen if we really did our job here? If we were 100 percent effective, we would so drastically affect the economy that we would become the villains.

p110
[There is a] nationwide hypocrisy that blames Latin Americans for the drug traffic but refuses to recognize that there would be none without a U.S. market of fifty-two million consumers.

p111
In 1981 Dade County recorded 1.6 homicides a day, putting Miami at the top the FBI's list of the most dangerous cities in the United States. Six other cities among the FBI's top eleven were also in Florida.

p111
The Miami police force has been enlarged by the addition of new recruits, and there are more judges on the criminal circuit, but even so the city cannot cope. "In an average month we file 2,705 felony cases after screening," said Lieutenant George Ray Havens, head of Miami's Criminal Investigative Division. "If every individual charged was granted a jury trial, we wouldn't be able to file another case for at least three years. The U.S. attorney's office has sixty-three full-time lawyers, but even if they didn't take any more cases it would take nine years to finish the ones already filed." The Criminal Investigative Division has twenty-seven agents and receives 476 requests for investigations every month. "If the case is complicated-say, a financial racket -we just can't handle it," said the lieutenant.

The Miami police refuse to accept drug cases because they have no more room to store the seized drugs, even after burning tons of marijuana in the Florida Power and Light Company's furnaces. At any given moment the sheriff's office in Key West is sitting on a $4 million stash of evidence-a target so inviting that the sheriff's men do little except guard it. Paroles jumped 50 percent between 1978 and 1980--convicted drug dealers have so crammed Florida prisons that burglars, armed robbers, and the like are being turned loose to make room. Even so, most drug traffickers, and especially the biggest of them, serve only a short time; the average sentence is less than two years, with parole in a year. About all the hard-pressed authorities can do is keep a body count, and even that is a challenge: So many bodies have piled up at the Miami morgue that the Dade County medical examiner has rented a refrigerated hamburger van to house the overflow. "If you stay here, you arm yourself to the teeth, put bars on the windows, and stay at home at all times," said Arthur Patten, a . Miami insurance executive. "I've been through two wars and no combat zone is as dangerous as Dade County."

Of all the ethnic mafias, the Colombians are most like the Sicilians, with tightly knit organizations based on blood ties. The penalty for family betrayal is death; it is usually carried out by a shuttle assassin, who takes the morning flight from Bogota to Miami and returns that night. Long the world's leaders in counterfeiting dollars, the Colombians have become more sophisticated in recent years, combining drugs, stolen securities, and counterfeit money in giant money-cycling operations that span three continents. Since the mid-1970s, when their role was primarily that of supplier, they have taken over most of the U.S. distribution of cocaine. The Cubans still dominate marijuana distribution. Police say that the traffic's rationalization closely resembles the organizational changes brought about by Prohibition, when a network of cooperative syndicates developed throughout the United States. The older syndicates continue to deal in drugs, but they function mostly as wholesalers dependent on the Colombian and Cuban networks for their supplies. The Latin mafias operate like any multinational corporation, with separate divisions for imports, transport, distribution, and finance. Each smuggling operation has one hundred to two hundred employees in Miami, usually illegal aliens on false passports. The Florida organizations are supported by larger ones in the producing countries, where complacent politicians are often paid to look the other way. Some two hundred thousand peasant families in four countries depend on the traffic for their livelihood.

p115
If caught, the most a trafficker need expect is a year in jail, and that deterrent is trivial in view of the enormous profits. As for the State Department's idea that the traffic can be halted by dumping the herbicide paraquat all over the Third World, it is about as realistic as the DEA's infatuation with statistics. As in Turkey, the peasants just move their crops elsewhere. Moreover, there is no known herbicide for the coca leaf bush, which is the source of cocaine and the biggest item in the South American drug trade. If any deterrent is to be found, it has to be at the money end. The law of supply and demand has already been at work in the marijuana market. Marijuana is a declining crop in such producer nations as Colombia and Jamaica because it can no longer compete with U.S. production. The DEA didn't stop Colombia's L marijuana shipments; economics did.

p116
According to GAO, the Justice Department's poor record in seizing financial assets can be attributed to the failure of DEA and department prosecutors to press such cases in court. As revealed by the Miami Herald study, such cases have not been pursued, primarily, because they are more time-consuming and complex than the quick buy-busts. According to Lieutenant Havens, "The attitude of the average bureaucrat is: big cases, big problems; little cases, little problems; no cases, no problems. People don't want problems."

It is also unhappily true that most people have a price, and with so many "narcobucks" floating around Miami, the corruption of some police agents, judges, and others is inevitable. Half of an entire division of the Dade County police force has been indicted for payoffs and drug trafficking. Two individuals were charged with working with a known drug racketeer. John Scharlatt, a former group supervisor of the DEA's Miami offices who was assigned to Vice President Bush's task force, skipped town in the summer of 1982 after being indicted by a federal grand jury on smuggling and corruption charges.° Admitted Florida's Attorney General Jim Smith, "Frankly, I lie in bed sometimes at night and it ... just scares me, the level of corruption we may have in Florida.

Outspoken Miamians like insurance executive Arthur Patten have been vilified by their fellows for speaking their minds about the city's "combat zone." Municipal leaders called Patten a coward and told him to shut up. He also lost business from hotel clients who were angered by the bad publicity. But playing ostrich won't solve the problem. As the Miami Herald has repeatedly said, "Reality, not image, is South Florida's problem.

A Florida grand jury that studied Miami's crime problems agreed with the Miami Herald: "We recommend that the hard issues begin to be addressed. We find that we have not fully committed ourselves as a society to eradicate narcotics, and probably we never will. Our local economy apparently has benefited enormously and our culture has become tolerant of marijuana and even of cocaine. Yet we ask the small numbers of law enforcement personnel assigned to narcotics interdiction to stop a supply for which we create a demand. That is clearly a costly hypocrisy."

p120
Miami, the Wall Street of the $79 billion narcotics traffic, has attracted more than one hundred banks from two dozen countries. T

... If a bank attracts even a small fraction of the $4 billion deposited by foreigners each year, the profits can be enormous. Much of the money is "hot" and therefore accepted only in non-interest-bearing accounts, or changed into cashier's checks, which can take several months to return to the bank for collection, giving it another source of interest-free funds. If the bank is willing to

launder drug money on a regular basis, it can collect 2 percent commission, in addition to having interest-free money to lend out at daily rates as high as 20 percent. And if a bank should prove unprofitable, its owners can sell it to a foreigner for two or three ( times its real value just because it has a Florida charter.

p121
Aristides Sastre, president of Republic National Bank, Miami

I don't know anywhere else in the United States where people just walk off the street and offer to buy the bank.

p121
The out-of-state and foreign buyers claim that their institutions have been attracted to southern Florida by the area's explosive growth, its Latin-American trade, or the need to service customers, like the, multinational corporations in Coral Gables. But according to the Treasury Department there is an additional attraction for at least one third of the banks in Miami: the huge profits to be made from laundering drug money.

p122
Since the drug boom began, the Florida banking system has consistently registered staggering surpluses of cash each year-$8 billion in 1982-or more than twice the surplus cash in all the rest of the country. Financial experts calculate that more than half the surplus is hot money.

p125
The regulatory agencies cannot, or will not, stop bank [money] laundering. The Bank Secrecy Act of 1970 gave regulators a powerful tool for uncovering illegal bank transactions, but according to GAO they have not used it. The act requires banks to identify the depositor and source of money for cash transactions of $10,000 or more, except in the case of customers, like big retail operations, that have large cash flows. The information is supposed to be filed with the Treasury within fifteen days of the money's receipt. Transfers of $10,000 or more to foreign banks must also be reported. However, GAO found that a significant number of banks ignore the requirements.

... According to one Florida state regulator, most of the bank reports that are filed gather dust in Treasury offices since "nobody knows what to do with them".

p126
Paul Homan, deputy controller of the Office of the Comptroller of the Currency, explaining why the regulators are not keen to prevent bank laundering

So long as the bank invests those [drug] deposits in overnight money and is able to cover when the deposits are withdrawn, there is no financial threat to the bank other than the peripheral one of perhaps affecting the confidence that people have in it because of known associations with criminals... the fact that a bank does business with criminals, or is even owned by them, is of minor importance to the overseers of the nation's banks.

p127
Senator William Proxmire

Many banks are addicted to drug money, just as millions of Americans are addicted to drugs.

p128
Since it is the source of three quarters of the cocaine and marijuana entering the United States, Colombia plays a key role in laundering. The principal exchange houses for drug laundering are located in Barranquilla on the Caribbean coast (marijuana) and Medellin (cocaine). The more sophisticated operations include a network of offshore bank havens in Panama, the Bahamas, and the Cayman Islands, as well as shell companies incorporated in Panama and the Netherlands Antilles. The idea is to create so many zigs and zags of intermediary money stops that it becomes virtually impossible to trace the paper trail out of, and often back into, the United States.

p131
Probably the most common method of laundering money is through cashier's checks, which are safer and more portable than cash and less easy to trace than ordinary checks because they do not have to bear the recipient's name and address. The checks usually change hands eight or nine times before returning to the bank, and they are common currency in the black markets of the drug-producing countries. According to bankers, any bank that has more than 3 percent of its deposits checks is likely to be engaged in a laundering operation... Additional profits are made in money-cycling operations, of which several of the most sophisticated are located in Medellin and Panama. As dirty money is moved through a series of currency transactions in Europe, the Middle East, and Latin America, sizable profits can be made by taking advantage of exchange differences. The money can then go through the black market, to be loaned out at interest rates of up to 55 percent, and returned to the United States with tax advantages through an offshore haven. By that time it is completely clean.

p174
Cruz de la Sierra, in the eastern part of Bolivia... is the capital of Bolivia's $1.6 billion annual cocaine traffic and the most pro-Nazi city in South America.

... Klaus Barbie earned the title of "Butcher of Lyons" as Gestapo chief of the French city during World War II. In his two-year reign, according to French authorities, he was responsible for 4,342 murders and 7,591 deportations to death camps.' Notwithstanding this fact, after the war U.S. intelligence installed him in a safe house in Augsburg and gave him a sanitized identity and $1,700 a month in return for information on the Soviets. Erhard Dabnnghaus, a former U.S. counterintelligence agent who was one of Barbie's interrogators, admitted that the Americans kept his hiding place secret from the French, who were urging the U.S. authorities in Munich to surrender him. According to French Nazi hunter Serge Klarsfeld, the French made twenty different requests for Barbie's surrender, none of which was answered. In 1983, thirty-eight years after the war, the Justice Department belatedly recognized that U.S. intelligence officers had arranged for Barbie's escape to Bolivia and that they had lied when denying that he was under their protection. According to the Justice Department's 218-page report on Barbie, he left Europe with Red Cross papers supplied by a Croatian priest. (Some fifty thousand Nazi war criminals were aided by the International Red Cross, which sent them to South America on Bishop Alois Hudal's "underground railroad," some with fake Vatican passports and clerical robes).

Using the assumed name of Klaus Altmann, Barbie lived quietly with his family in Santa Cruz [Bolivia], where he opened a sawmill. Among his acquaintances was former SS Colonel Frederick Schwend, a leader in the Nazi escape organization Odessa. Barbie also worked with Hugo Banzer, who was implicated in Bolivia's cocaine traffic; and when the colonel seized the government in 1971 in a right-wing, U.S.-backed coup, Barbie became his security adviser, with instructions to reorganize the secret police. During the period leading up to the coup, Barbie made several trips to Miami, allegedly to buy arms for Bolivian paramilitary groups. Miami was-and still is-the principal U.S. port of entry for Bolivian cocaine, and there is evidence that Barbie and Schwend were part of a guns-for-drugs trade financed by Florida drug importers.

Although Barbie's cover was blown in 1971 after a German executive in Peru recognized a picture of him circulated by Klarsfeld, his military connections in Bolivia protected him from the French and West German governments, which fruitlessly sought his extradition. After the cocaine coup in 1980, Barbie reached new pinnacles of power. He was feted as an official guest in the presidential palace and apparently was given official support for his recruitment of the German and Italian neo-Nazis, who used the Santa Cruz ranch to train paramilitary squads for the Bolivian military's drug syndicates. Known as "The Colonel's Syndicate" (for Colonel Arce Gomez) or "The Black Eagles," they sowed terror in Santa Cruz...

U.S. and European authorities were powerless to do anything about the Santa Cruz killers and dope dealers as long as the coke-smuggling generals remained in control of the government. But in the fall of 1982, when the military could no longer keep its hold on Bolivia in the face of bankruptcy and severe general unrest, an honest civilian was recalled to take over the mess. Hernán Siles Zuazo, a left-of-center politician whose election as president in 1980 had sparked the cocaine coup, wanted to rid Bolivia of the Nazis and drug traffickers.

Believing that his military connections would protect him, Barbie carried on as usual, but when he appeared at a government office in early 1983 to pay a fine, he was seized by the Bolivian authorities. A few days later he was on a plane bound for Lyons, where the French Government charged the sixty-nine-year-old Nazi with "crimes against humanity." But Barbie remained unrepentant. "What is there to regret?" he told an interviewer, "I am a convinced Nazi... and if I had to be born a thousand times, I would be a thousand times what I have been."

p178
[The Vatican Bank's] two principal financial advisers and partners, Michele Sindona and Roberto Calvi, were members of P-2, a neofascist Masonic lodge in Milan headed by the Italian fascist financier Licio Gelli ... P-2 was "a state within the state," its aim being to restore fascism in Italy and buttress its hold on Latin America.

[Michele Sidona - a Sicilian banker who established an international banking network; principal financial adviser to the Vatican Bank until 1974; the financial brains behind the P-2; alleged conduit for CIA funds to right-wing groups in Italy.]

... Sindona's contacts with the Vatican began in 1969, when he became financial adviser to Pope Paul VI, who had known him in Milan. The son of a bankrupt farmer, Sindona had early learned to manipulate church patronage when, as a young man in Sicily, he had used the influence of the bishop of Messina to acquire a truck to transport suspect goods. After graduating from the University of Messina, he wrangled an introduction to the powerful Monsignor Giovanni Montini in Milan, who would later become Pope Paul VI. Montini introduced the smooth-talking Sicilian to his friend Giulio Andreotti, a pillar of the Christian Democratic Party and frequent cabinet minister in Italy's revolving-door governments. With such contacts Sindona soon prospered, buying one bank after another, until he had assembled a multinational empire worth hundreds of millions of dollars. As he had done in his youth in Sicily, he
assiduously courted those with power; and when Andreotti's Christian Democrats faced electoral
peril from the Communists, he was an unstinting contributor as well as a funnel for
supporting funds from the CIA.

... The Vatican
Bank had been established in 1942 by ... Pope Pius XII, to secure certain
Vatican monies from the effects of World War II. Most of its holdings came from a 1929
agreement with Benito Mussolini, who paid the Holy See $83 million as compensation for papal
territory seized by the Italian republic in the previous century. But Pius had no idea how to
run a bank, and most of its advisers were relatives, princes, and counts without financial
experience. The majority of the bank's money was invested in poorly run Italian companies... When[ Michele] Sidona appeared on the scene in 1969, he was given a free hand to divest and diversify, primarily into banks outside
Italy and into U.S. stocks and securities.

... [Michele] Sidona knew that the Vatican Bank, owned by the Vatican State, was not subject to any controls by the Italian central bank, or
beholden to stockholders, and therefore could do many, things forbidden to other banks, such as
the export of capital.

p187
In the years after World War II the CIA pumped some $65 million into Italy to support centrist and right-wing political parties, as revealed by the House of Representatives' Pike Report on CIA activities.

p190
After the war against fascism in Europe [WWII], the CIA proceeded to finance the fascists' cause in Italy.

p201
In eighteenth-century Europe, Freemasonary was the semisecret party of republican revolution. In Latin America, the Masons played a similar anticlerical role, although they tended to remain a conservative force, often allied with the military, as in Chile. In nineteenth-century Italy the liberal revolution was led by secret societies called Carboneria, which were similar to Freemasons (Garibaldi, Italy's national hero, was a Mason). To curry favor with the Vatican Mussolini banned the Italian Masonic orders, but the ban was not seriously enforced. Thus the Americans were able to build on an existing network after World War II.

The Americans wanted to fill key positions with people who were neither fascists nor leftists, and a solution was to rely on the Italian-American international organizations. For Sicily this meant mainly the Mafia, but the Masonic lodges were probably more helpful in the rest of Italy. At that time, Italian-American Masons tended to be Democrats, like New York Mayor Fiorello La Guardia. Some were immigrants, such as unionist Guiseppe "Joe" Lupis, who channeled American union money into Italy to splinter the labor movement and create anti-Communist unions during the cold war. According to one former prominent Italian Mason, the split in the Italian Socialist Party (PSI) that created the Italian Social Democratic Party (PSDI) was "entirely provoked by Freemasons in the United States and Italy." Thus the anti-Communist imperative pulled Italian Freemasonry to the right, and in the 1950s the lodges provided ex-fascists with democratic cover and contacts with American brothers ready to raise funds to stop communism. The lodges in general, and the P-2 in particular, began to recruit heavily among military men eager for promotion. Membership in a lodge was reliable evidence of the anticommunism required for a successful career in a NATO military force.

p208
Paraguay has traditionally been the last refuge in Latin America for right-wing villains on the run, a haven for German Nazis as well as for former Nicaraguan dictator Anastasio Somoza. General Alfredo Stroessner, the region's longest-ruling dictator, has also given sanctuary to drug traffickers and neofascist terrorists.

Part III

p229
In the 1970s, when the world was awash in petro dollars from the newly rich oil-producing nations, many bankers were convinced that they had a unique opportunity to make enormous profits, while providing a service by recycling oil money through loans to the developing countries. The stampede to lend money began in 1973, when oil prices skyrocketed and private banks, stuffed with Arab cash, sought new customers in the Third World. Until then most developing countries had borrowed primarily from governments or multilateral institutions, such as the World Bank; but in less than a decade that situation had reversed, with commercial banks funding up to two thirds of the loans. When the boom started, most large U.S. and European banks already had branches in the Third World to serve the needs of the multinational corporations, but it was only when small and medium-sized banks joined the majors that Third World lending was raked with the fever of a gold rush.

As bankers readily admit, lending tends to be a sheep-like exercise. If one or more well-known banks are lending to a certain country, all the other banks want part of the action. But the "loan-pushing" bankers did not pause to consider the likelihood of interest default, let alone the loss of principal. So billions upon billions of dollars were thrown at the Latin Americans-and sometimes even shoved down their throats. Of course, many of the governments were corrupt and only too glad to take the handouts, which were diverted to private Swiss accounts or spent on flashy palaces and costly armaments.

p235
The Federal Reserve deliberately disguised the origin and size of OPEC deposits in U.S. banks because Arab rulers did not want their people to know that so much oil money was in the hands of the Americans.

p241
David Rockefeller's Trilateral Commission aimed for a world order ... controlled by multinational corporations and banks.

p244
The IMF was running out of money and was forced to borrow from commercial banks, thus setting yet another debt trap. The IMF's 1982 reserves were just sufficient to cover the needs of Mexico, Argentina, and Brazil, with nothing left over for the rest of the world. In a panicked about-face from its earlier position of "no free lunches for the Third World," the Reagan administration agreed with central bankers from France, West Germany, Great Britain, and Japan to seek a 50 percent boost in IMF quotas to increase its lending reserves. But even if the increase were approved by the IMF's members--a complicated process that also involves changing the ratio of quotas and hence the voting influence-the earliest that new funds could be available would be the end of 1984, which would perhaps be too late for some emergency cases.

Finding the money is just the start of the problem, because IMF programs are designed to brake an economy's growth, and it is therefore an open question whether the medicine administered in return for IMF loans will not kill the patient. Most Latin-American nations were experiencing zero growth rates when they went to the IMF, and its tough austerity measures could only worsen their economic condition. Quite apart from the suffering they impose on the people, such programs usually don't work. By the IMF's own reckoning, fewer than one third of the twenty-one countries that followed its dictates between 1973 and 1975 achieved their monetary goals, and then only "with some qualifications." Seventeen countries suffered worse inflation. Specific fund recommendations suggest why. In its report on Haiti, the poorest nation in the Western Hemisphere, the IMF "staff welcome[d] the decision to eliminate promptly restrictions on luxury model [automobiles}" because that move somehow conformed to the IMF's ideas on free trade.

Money was only part of the IMF's problems. As has been pointed out by many economists, the IMF lacks the breadth of vision necessary to deal with a global problem. While its economic formulas are always the same, be the country in Latin America, Asia, or Africa, the IMF treats each sick client separately, thus hastening contagion. For example, its insistence that Argentina reduce its imports contributed to Bolivia's failure to pay foreign bankers, since Bolivia depends on Argentina to buy its natural gas exports. Similarly, Mexico's austerity program caused a $6 billion cutback in U.S. imports in 1982, costing an estimated 150,000 jobs in the United States, according to Wharton Econometric Forecasting Associates, Inc. Moreover, many insolvent countries are themselves creditors of debt-ridden nations, as in the case of Brazil, which is owed money by bankrupt Poland."

Not only is the IMF's economic vision flawed, but it also fails to consider the political consequences of its acts. In Mexico agricultural development programs established to prevent recurrent land takeovers by peasants were cut back under pressure of IMF-imposed budget-cutting. In Chile the IMF was pressing its demands for a 50 percent cut in public spending even though that country's unemployment rate had shot up from 4 to 26 percent. And in Argentina the IMF was forcing the government to reduce its deficit spending by almost two thirds in the face of an unemployment rate that had tripled between 1981 and 1983. There were riots in Argentina, Bolivia, Chile, and Brazil, all of which were suffering from a double squeeze of growing unemployment and declining wages. Political and economic observers predicted more turmoil, because none of these nations has unemployment insurance or welfare benefits to cushion the effects of austerity. "The IMF has destroyed more governments than communism by imposing measures which are technically perfect but politically impossible," said a Chilean business leader.

p246
In December 1982 Ronald Reagan flew down to Brazil with a $1.2 billion Christmas present from U.S. taxpayers. Actually the present wasn't for the Brazilians but for Citibank, Chase Manhattan, and the like, since they could collect from the Brazilians only if the U.S. Treasury gave them the money. The handout came on top of a $3.8 billion rescue of U.S. banks in Mexico, and there was talk of another $2 billion for Mexico's Christmas stocking. The Treasury Department was also pressing Congress to increase the U.S. contribution to the IMF by $8.4 billion to enable it to expand its lending to these countries so that they could pay back the banks. Unlike European and Japanese central bankers, who were telling their banks to tighten lending procedures because there was no lender of last resort to bail them out, the "New Right" administration of Ronald Reagan was putting taxpayers in hock for the follies of U.S. banks. (This was the administration that came to power on a promise "to get the government off the backs of the American people.")

It was all perfectly legal. Unbeknownst to most of its members, in March 1980 Congress voted a bank bailout into law when it approved the Depository Institutions Deregulation and Monetary Control Act. The main purpose of the eighty-five-page act had been to require banks to belong to the Federal Reserve system and to allow commercial banks to accept Negotiated Order of Withdrawal (NOW) accounts. However, just before the bill was approved by a joint House-Senate committee six lines were added at the request of the Federal Reserve Board. It is estimated that no more than ten congressmen were even aware of the insert. that gave the Federal Reserve the right to buy securities of foreign governments just as it buys securities issued by the U.S. Treasury, thereby allowing the Fed to prop up U.S. banks by covering the deficits of foreign governments.

... U.S. taxpayers learned that they had been sucked into the debt trap only after President Reagan visited Brazil to confirm the swap arrangement between the U.S. and Brazilian treasuries, whereby dollars were exchanged for bad Brazilian paper held by U.S. banks. The deal had been worked out secretly two months earlier but was not made public until the details were leaked in Brazil.

The bank bailout made a mockery of Reaganomics since it undercut the administration's fight against inflation. By buying up defaulted loans with dollars, the Federal Reserve was increasing the money supply around the world while simultaneously undermining the drive to control the federal budget. One argument for pushing toward a balanced budget is that if the federal government stopped running deficits the Fed wouldn't have to increase the money supply to cover them. But with the Fed in the business of monetarizing foreign as well as domestic debt, there is no point in balancing just the U.S. budget. "It is bad enough when the U. S. Treasury repays its own obligations by issuing new ones," complained William E. Simon, former Secretary of the Treasury, "but to do this for the likes of Tanzania, Rumania and oil-rich Mexico indicates that we have taken leave of our senses."

The bank rescue also made nonsense of the Fed's tight monetary policies and Volcker's unyielding stand on high interest rates. While such rates had proved profitable for the banks, they were one of the primary causes of the developing countries' inability to service their loans. Since most of the Third World's debt is in dollars, the cost of repayment in depreciated local currencies added greatly to the burden. Indeed, every time U.S. interest rates increased by one point, it cost a country like Brazil or Mexico $750 million more a year in debt service. As the Brazilians and Mexicans were quick to point out, a sizable portion of their debt was unreal-money they never received, in the form of unconscionable interest that had piled up because of an experiment with the free-market theories of economist Milton Friedman. Volcker's tight-money policies also contributed to a prolongation of the recession in the United States, which, in turn, deepened the world recession. "The Reagan administration may have [made] the gravest policy mistake of this century," wrote Princeton economist Peter B. Kenen. "Beguiled by the doctrines of economists whose contempt for evidence was exceeded only by their craving for publicity, it brewed a mix of fiscal and monetary policies that poisoned the world economy."

... While U.S. bankers frankly admitted that the taxpayer was providing a bailout for their Latin-American ventures, they claimed that there was no alternative. After all, they said, Washington could not set off a worldwide depression by allowing the banks to fail, nor could it risk triggering a revolution in Mexico or Brazil by letting their economies collapse. The arguments had some validity, but, as pointed out by U.S. critics, the problem was that American taxpayers were footing the bill for the mess, not the bankers who were responsible for it."

p249
W. Herbert and Nelson Bunker Hunt had succeeded in cornering two third of the world's silver market, but when silver prices suddenly dived from $50 to $10 per ounce in March 1980, the Hunts faced the prospect of losing their fortune. Although the brothers guessed wrong on a dangerous, high-stakes gamble, they did not have to liquidate their assets because Volcker came to their rescue. Congressman Fernand St. Germain, chairman of the House Banking Committee, said that his action showed that when big speculators lose money they turn to Voicker for "a quick fix" (Time [May 12, 1980]; Business Week [May 19, 1980]).

p254
The banking reforms of the 1930s were designed to guard the public interest by separating commercial banking (taking deposits and making loans) from investment banking (underwriting and dealing in securities). Until the law was changed, bankers had participated in nearly two thirds of all new stock and bond issues-sometimes for dubious reasons. Congressional hearings showed that Chase had absorbed $10 million in securities of doubtful quality to aid its securities affiliate, and Citibank (then known as National City) apparently sold its subsidiary about $25 million in speculative loans that were paid out of new stock issues. So great was the public outcry following such revelations that even before Congress passed the Glass-Steagall reforms in 1933, many banks had already spun off their investment subsidiaries...

The effects of Roosevelt's New Deal legislation were long-lasting, and it was only in the late 1950s, after World War II and a decade of prosperity, that bankers began to emerge from their somnolence to reassert their financial power.

p266
Banks are crucial to [drugs and right-wing terrorism] because they launder illegal gains and provide financing for criminal projects. In places where such activities are widely accepted, such as southern Florida, even honest bankers have difficulty resisting the enormous profits...

p266
When one third of the banks in a large metropolitan area [Miami] are suspected of laundering drug money, they reflect the mores of the community as well as those of the banking profession. As observed by a Florida grand jury that studied Miami's crime problems, it is "clearly a costly hypocrisy" to pretend that a commitment exists to eradicate narcotics when "our local economy apparently has benefited enormously and our culture has become tolerant of marijuana and even of cocaine.

Banks watch

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