Thursday, March 18, 2010

Drug Money and Banks

So Wachovia got stuck with a $50 million dollar fine and has to forfeit another $110 million, just for laundering some Mexican drug money. This really isn’t surprising, I mean drug cartels and banks are tight and the banking industry may remind a lot of people of a cartel. But really we should actually be thanking the cartels, since drug money saved the world from the brink. All the banks were in dire need of liquidity, and where was the help coming from? Drug cartels, that’s where. Just listen to the UN:

Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result. 

Just to be clear, Costa adds:

"Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities... There were signs that some banks were rescued that way." 

Actually, Wachovia was processing money transfers from exchange houses on the US-Mexico border and it probably had a whole lot more to do with making a buck then saving the bank. Never the less, it’s a good opportunity to point out that the global banking system is flush with drug money, and if anyone wants to get serious about cracking down, they are going to make some serious enemies….I mean drug cartels are bad, but banks? The worst.

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