Tag Archives: banks

The Real Reason Drugs Are Illegal

As was doing research for the fifth book in my mystery series featuring Homicide Detective John Santana, I came across some interesting facts, which reinforced my believe that drugs have as much chance of being legalized as I do of becoming president. But my skepticism is based on something quite different than you might think.

Whenever those opposed to legalizing drugs are asked to defend their position, they often cite health concerns and moral, spiritual, and political reasons for their opposition. In some instances they’ll cite economic concerns, arguing that when compared to the social costs of drug abuse and addiction, government spending on drug control is minimal.

But there’s one economic argument for keeping drugs illegal that is rarely mentioned, and it has to do with the billions of dollars that are laundered through the global banking system every year.

The United Nations Office on Drugs and Crime estimates the amount of money laundered globally in one year to be 2 – 5% of global GDP, or $800 billion – $2 trillion US dollars. Senator Carl Levin estimates that “$500 billion to $1 trillion of international criminal proceeds are moved internationally and deposited into bank accounts annually.” Estimates place the dirty money flowing into U.S. coffers during the 1990s amounted at $3-$5.5 trillion.

According to a report prepared by James Petras, Professor of Sociology at Binghamton University, the dirty money flowing through the major U.S. banks far exceeds the net revenues of all the IT companies in the U.S. The yearly inflows also surpass all the net transfers by the major U.S. oil producers, military industries and airplane manufacturers.

The bottom line is that “without dirty money the U.S. economy would be totally unsustainable, living standards would plummet, the dollar would weaken, the available investment and loan capital would shrink and Washington would not be able to sustain its global empire.”

And here’s the bad news. Petras believes the amount and importance of laundered money is increasing.

Conservative economist Milton Friedman once said that, “if you look at the drug war from a purely economic point of view, the role of the government is to protect the drug cartel,”––and, I would add, by extension the banks that illegally launder their drug money.

So the next time someone asks you why we can’t legalize drugs forget the traditional arguments and tell them the truth. The world and U.S. economy and banking systems are dependent on keeping drugs illegal.

Bankster Justice

In the mid-1990s, the top mortgage insurers and service providers, along with Fannie Mae and Freddie Mac, the government entities that hold many of the country’s mortgages, created a database for tracking mortgage ownership called the Mortgage Electronic Registration System, or MERS. Since that time, more than 70 million mortgage loans, including millions of sub-prime loans, have been registered in the MERS system, rather than in local county clerks’ office.

Last Friday, Eric Schneiderman, New York Attorney General and co-chair of President Obama’s new crisis unit, sued Bank of America, Wells Fargo and JP Morgan, accusing them of deceptive and illegal practices in their use of the database, including falsifying documents in foreclosure proceedings.

Schneiderman contends that the database is inaccurate and that the mortgage industry created MERS so that financial institutions could avoid county recording fees and publicly recorded mortgage transfers, saving the banks two billion dollars in recording fees. The lawsuit seeks to stop the banks from filing foreclosure actions through MERS.

Too bad it’s taken the Obama administration, and Eric Holder in particular, so long to go after the banksters responsible for the country’s financial collapse. (How one wishes that Robert Kennedy were heading the Justice Department.) Instead, Holder tried to cut an incredibly bad deal that would have the banks pay $20-25 billion in fines and mortgage relief in exchange for protection from further liability.

But thanks to Schneiderman, California’s Kamala Harris, Martha Coakley of Massachusetts and Beau Biden of Delaware––and a series of court rulings that have blocked foreclosures because banks presented fraudulent robo-signed documents––the administration has been forced to seek much stiffer fines and prison sentences.

But beyond stiff fines and long prison sentences for the worst of the banksters, the economy and the real estate market will not fully recover until the millions of homeowners with upside down mortgages get some relief. It appears that the Obama administration has finally come to the conclusion that creating a crisis unit and appointing a bulldog like Schneiderman is in their––and the country’s best interest.

It was illegal behavior by the banks, and not the homebuyer, that caused the greatest financial collapse since the Great Depression. Now, finally, we may get a reckoning. It’s the banksters’ worst nightmare come true.

Robo Cop

Robo-signing is back in the news, thanks in large part to the efforts of New York Attorney General Eric Schneiderman. Last August, Schneiderman was removed from a committee of state attorneys general investigating mortgage abuses. Schneiderman had the courage and integrity to state that he opposed any deal that gave participating banks a release from other litigation surrounding their mortgage activities, and that investigations should not be stopped until those responsible were held accountable.

Last month, Minnesota Attorney General Lori Swanson released a letter in which she supported Schneiderman and opposed the idea of giving a broad release to banks on foreclosure fraud in exchange for a quick settlement. She joins Delaware Attorney General Beau Biden, Massachusetts Attorney General Martha Coakly, and Nevada Attorney General Catherine Cortez Masto in voicing their concerns.

Robo-signing involves people signing documents and swearing to their accuracy without verifying any of the information. It’s a federal crime to sign someone else’s name to a legal document. It’s also illegal to sign your name to an affidavit if you have not verified the information you’re swearing to. Both are punishable by prison.

Last fall, the nation’s largest banks and mortgage lenders suspended foreclosures while they investigated the alleged robo-signing that was done to keep pace with the crush of foreclosure paperwork. The banks supposedly reviewed thousands of foreclosure filings, and where they found problems, they submitted new paperwork to courts handling the cases, with signatures they said were valid. The 14 biggest U.S. banks reached a settlement with federal regulators last April in which they promised to clean up their mistakes and pay restitution to homeowners who had been wrongly foreclosed upon. Then they resumed foreclosures.

However, there is new evidence that the practice continued and that banks and mortgage processors haven’t put an end to widespread document fraud in the industry. This can negatively impact sales in an industry that is still struggling to rebound after the recession. If robo-signed documents turn up in the property’s history, buying a home and trying to obtain title insurance becomes even more problematic because forged signatures call into question who actually owns the mortgage and the property.

Despite White House pressure in support of a settlement, Eric Schneiderman’s office has said it is conducting a banking probe that could lead to criminal charges against financial executives. I applaud him for his efforts.

So far, no individuals, lenders or paperwork processors have been charged with a crime over the robo-signed signatures found on documents.