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How big is the global drug economy?
July 20, 2010 7:16 PM   Subscribe

Is laundering Mexican drug cartel money too big too fail? Wachovia/Wells Fargo are discovered to be laundering many many billions of dollars. As in $380,000,000,000. Charles Bowden, in a recent interview with Amy Goodman, discusses the everyday reality of what life is like in the border town of Ciudad Juarez, and his most recent non-fiction account of the "Global Economy's New Killing Fields", in the just published book Murder City. Meanwhile, the drug violence now involves car bombs in Ciudad Juarez, the city across the border with El Paso. Guns go out of America, and drugs come in.

One more recent article on the Wells Fargo/Wachovia achievement at successfully getting away with it.
posted by tarantula (48 comments total) 25 users marked this as a favorite

 
How is this not an aspiring politician's goldmine?

War on Drugs + Evil 'Wall Street' Bankers: world's easiest political points to score
posted by leotrotsky at 7:32 PM on July 20, 2010 [2 favorites]


Am I crazy to believe there is a sensible middle ground between overlooking billions of dollars of money laundering to facilitate organized violent crime, and jailing every person who possesses a bag of weed?
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 7:35 PM on July 20, 2010 [15 favorites]


Has anyone else read Murder City yet? I like Bowden, but I couldn't help but feel like he's lost a little off of his fastball. Maybe it's because I'd read Bolano recently too, and Murder City's prose just seemed to suffer in in comparison to section 4 of 2666. Or, maybe, by then I already so overwhelmed that Bowden's prose couldn't perform that effect...
posted by .kobayashi. at 7:41 PM on July 20, 2010 [1 favorite]


C-SPAN broadcast an interview Bowden gave about this book, and it was absolutely riveting.
posted by rfs at 7:41 PM on July 20, 2010 [8 favorites]


Oh, and nice post!
posted by .kobayashi. at 7:42 PM on July 20, 2010


Am I crazy to believe there is a sensible middle ground

Not at all, but the fact remains that laundering billions of dollars makes you $$$. Busting everyone with a bag of weed gets you more $$$ for your police budgets and maybe a brand new prison *and* you get to say you're tough on crime when you're next up for election. This is a win-win. You know, unless you're not in politics or law enforcement or Wachovia.
posted by Kirk Grim at 7:44 PM on July 20, 2010 [4 favorites]


If too big to fail means banks can't get prosecuted for $380 billion in money laundering, I wonder what else they can get away with? Especially if it's someone at the top doing it - might cause the bank to fail if you prosecute them! Arson? Hired killing? Sky's the limit boys, let's have that asshole over at 1st LocalBank whacked!
posted by r_nebblesworthII at 7:47 PM on July 20, 2010 [2 favorites]


Entrenched interests will enrich themselves through circumventing artificial moral prohibitions you say? Too bad that we lack any models which would predict such a result.
posted by PareidoliaticBoy at 7:50 PM on July 20, 2010 [1 favorite]


Both Wells Fargo and Bank of America received giant bailouts through TARP. $25 billion and $15 billion respectively. Maybe the drug trade isn't as profitable as I would think it would be. Or these fricking banks are just evil.
posted by Jade5454 at 7:50 PM on July 20, 2010 [1 favorite]


So I can go to jail for a dime bag but the bank executives don't go to jail for laundering hundreds of billions of dollars? God bless America.
posted by nestor_makhno at 7:53 PM on July 20, 2010 [7 favorites]


When I was a church-going lad in the late nineties, I spent a week builing cinder-block homes in Juarez on a mission trip. Not much to say except that the city was one endless decreipt slum of poverty with a few massive mansions in the middle of it.

Perfect portrait of the cocaine trade, really.
posted by Navelgazer at 7:56 PM on July 20, 2010 [1 favorite]


r_nebblesworthII, what makes you think they're not doing it already? Some of the recent killings in Ciudad Juarez could've been ordered by the local Wells Fargo branch manager as overdraft penalties.

And "War on Drugs + Evil 'Wall Street' Bankers" is NOT good politics; the constituencies don't overlap as much as you may think and mixing a political stand you support with one you oppose usually equals one you OPPOSE.
posted by oneswellfoop at 7:58 PM on July 20, 2010 [1 favorite]


Man. You have no idea how sickened I was to find out that the murders in 2666 were based on real-life events.

No freakin' idea.
posted by Afroblanco at 8:01 PM on July 20, 2010


onefellswoop, honestly, find me an American voter who is cool with Wells Fargo's actions here and I'll find you, well, the next talking head on FOX News, probably, but wall street laundering hundreds of billions in drug money while suckling from the public teat makes everyone mad.

This is three weeks old. How is this not in the top five biggest stories in the news right now?
posted by Navelgazer at 8:02 PM on July 20, 2010 [8 favorites]


Whoa whoa whoa whoa.

Wachovia admitted it didn’t do enough to spot illicit funds

That's a little bit different than the bank president getting high with Tony Montana. What it sounds like they did is fail to obey strict rules about monitoring their clients activity- the kind of crazy "war on drugs" laws that the government seize the property of anyone with the proverbial "bag of weed." The same kind of laws that freeze the assets of people who might have talked to a terrorist once.

So no, I'm not really mad at the banks for this, and I'm not sure why other anti-war-on-drugs folks would be.
posted by drjimmy11 at 8:18 PM on July 20, 2010 [2 favorites]


So no, I'm not really mad at the banks for this, and I'm not sure why other anti-war-on-drugs folks would be.

I'm mad for two reasons. First, I'm mad because the banks will apparently get away with it for the most part. If we're going to have absurd drug laws, they should apply across the board; it can only help them get repealed sooner and it's a fundamental fairness issue as well. Second, I'm mad that it evidently took years for regulators to notice the problem, which makes one wonder what else they didn't notice.
posted by jedicus at 8:26 PM on July 20, 2010 [4 favorites]


Dr. Jimmy, for me, part of being anti-war-on-drugs is that the "war" targets exactly the wrong people. I'm totally for legalization, but while the banks (and "didn't do enough" is PR talk here for "knew about it and willfully ignored where the money was coming from") are raking it in from the actual violent, murderous aspects of the drug trade, and are able to blow it off, while Joe Dimebag gets sent to Attica, I'm going to take issue with this.

Tell me how big an organization has to be before $380 Billion isn't something worth at least checking into.
posted by Navelgazer at 8:27 PM on July 20, 2010 [7 favorites]


The bounties of free trade.
posted by Abiezer at 8:37 PM on July 20, 2010


The article contains this quote:
Wachovia admitted it didn’t do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007. That’s the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history -- a sum equal to one-third of Mexico’s current gross domestic product.
I'm mad at the banks
posted by chaff at 8:46 PM on July 20, 2010


Why's everybody harping on Citigroup, Wells-Fargo and Wachovia? They're only taking up the slack that Neil, Jonathan and other Bush-family members left behind.

If they don't launder that Mexican drug money, someone else will.
posted by vhsiv at 8:54 PM on July 20, 2010 [1 favorite]


When I was a church-going lad in the late nineties, I spent a week builing cinder-block homes in Juarez on a mission trip. Not much to say except that the city was one endless decreipt slum of poverty with a few massive mansions in the middle of it.

Huh. Well, that's funny, when I was spending 4 months living, studying, and working in Juarez, I was unaware of the fact that the large middle class neighborhoods that I lived in and hung out in didn't exist. Granted, this was 2006, not the late nineties, but I somehow doubt that they were all built in ten years. The issue of slumtowns is a big one in Juarez, and I was working with a lot of people who lived in some of them, but the city is also home to a sizeable middle class of people who own small businesses, work as middle managers in maquilas, and any number of other things--or at least, it was. Massive amounts of violence and instability tend to make for a pretty miserable economic environment. I left Juarez only a few months before things started to get way, way worse. When I think about what's happened to that city, it breaks my heart.
posted by Subcommandante Cheese at 8:55 PM on July 20, 2010 [1 favorite]


Charles Bowden. Juarez: The Laboratory of Our Future (1998)

prescient
posted by stbalbach at 8:56 PM on July 20, 2010 [1 favorite]


Subcommandante Cheese: I was a teenager prone to dramatic interpretations of what I saw. I'm certain your experiences are more truly representative.
posted by Navelgazer at 9:05 PM on July 20, 2010 [1 favorite]


What it sounds like they did is fail to obey strict rules about monitoring their clients activity

Oh, come on! You make it sound like they made a minor technical mistake - but, my God, the amounts in question! They were laundering almost 10% of Mexico's GDP every year. The total amount is almost enough to buy a house for every family in Mexico! (This assumes an average family size of five and that you can get a house in Mexico for less than $20K US.)
posted by lupus_yonderboy at 9:25 PM on July 20, 2010


I was a teenager prone to dramatic interpretations of what I saw.

Totally understandable. Sorry for brusqueness; those dramatic interpretations have a lot of validity in them--the poverty that you see in slumtowns is very real, and often very severe, as are the mansions you mentioned. It is, in every way totally screwed up, but there's more to the city than just those two extremes, is all that I wanted to point out.

But that's all off-topic. So let me bring it on-topic by stating that the jackasses at Wachovia/Wells who 'never really bothered to look' are pretty high on my least favorite people list as of now, and are, as far as I can figure, complicit in all of the horrifying things happening to people in Juarez.
posted by Subcommandante Cheese at 9:27 PM on July 20, 2010


Guns go out of America, and drugs come in.

On the face of it, it seems hippies would like that. Poor, poor hippies.
posted by codswallop at 9:35 PM on July 20, 2010 [1 favorite]


My old pal Timothy Leary once told me that marijuana is the largest cash crop in every place on earth that has an agricultural economy. I'm not sure what evidence he had to back up this assertion. I'm not sure it would really be possible to get evidence to back up this assertion.
posted by charlie don't surf at 9:42 PM on July 20, 2010


From the first linked article:
The Smurfs

The people making the small money exchanges are known as Smurfs, after the cartoon characters.

“They can use an army of people like Smurfs and go through $1 million before lunchtime,” says Jerry Robinette, who oversees U.S. Immigration and Customs Enforcement operations along the border in east Texas.


Clearly this calls for a wider police action to stop this activity. Let operation Gargamel commence.
posted by sien at 9:51 PM on July 20, 2010 [2 favorites]


380 billion bucks

this is why the war on drugs continues - because if they can't prop that commodity bubble up somehow, it'll burst and the economy will go to hell

really - the mexican economy and too big a piece of the american economy depend on drugs staying illegal

380 billion bucks
posted by pyramid termite at 10:25 PM on July 20, 2010 [3 favorites]


No. The American economy relies on drugs being illegal, didn't you read the post?
If the big banks (who launder the drug money) fail, then there would be a panic. Then we'd have to do without the big banks (who, criminally launder the money). Best to shut our eyes and hope for the best!

Bail 'em out, that's the way.
posted by an egg at 10:53 PM on July 20, 2010 [1 favorite]


Oops! sorry pyramid termite, I think we said the same thing.
posted by an egg at 10:55 PM on July 20, 2010


In read the article as saying that they did 380 billion in transactions some of which were in violation of banking secrecy. Many of those transactions were probably legitimate in that money moves back and forth between USMEX for all kinds of reasons not just drugs. Total profits from the non-compliant transactions were 160 million and the prosecutors took all of it. Of course since wachivia was basically crazed by regulators and sold off to Wells Fargo it isn't like there was much left to do to the corporation. I do wish there was some way to go after the execs, but that will require a better set of laws. Getting a criminal charge out of this against a person would be hard.
posted by humanfont at 11:20 PM on July 20, 2010


I urge anyone who feels strongly about the ills if the current drug control regime to sign the Vienna Declaration, calling for the replacement of drug prohibition with evidence-based policies that recognize problem drug use as a health rather than criminal matter.

(semi self-link; my org helped draft the declaration, although I was not involved.)
posted by docgonzo at 2:51 AM on July 21, 2010 [2 favorites]


This is not an exceptional event it seems as far as the entanglement of large parts of the international banking system with drug gangs is concerned. In 2009 the Guardian quoted Antonio Maria Costa, head of the UN Office on Drugs and Crime, saying that
...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...
...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."
And of course there was the BCCI business in the early 90s and Citibank's involvement in the Salinas affair, among many similar, if brief, revalatory incidents.
posted by talos at 3:16 AM on July 21, 2010


America, a shining city on a hill (of illegally laundered drug money).
posted by T.D. Strange at 5:19 AM on July 21, 2010


Nancy Reagan was right (unless it's home grown)
posted by gwint at 5:33 AM on July 21, 2010


o the irony never ends..............
posted by tarantula at 6:12 AM on July 21, 2010


Don't forget also that this wasn't just a failure to be vigilant, a guy in WellsWachovia brought this to the attention of higher ups and they ignored him - so he quit in disgust. It's in one of the links
posted by r_nebblesworthII at 6:16 AM on July 21, 2010


Name three banks recently convicted of money laundering? Too hard? Ok, name two.
posted by warbaby at 9:07 AM on July 21, 2010


Maybe we can legalize drugs and destroy bankers at the same time! (I think I just came.)

No city in the world arrests more of its citizens for using pot than New York ...

Nearly nine out of ten people charged with violating the law are black or Latino, although national surveys have shown that whites are the heaviest users of pot. Mr. Bloomberg himself acknowledged in 2001 that he had used it, and enjoyed it.

On the Upper East Side of Manhattan where the mayor lives, an average of 20 people for every 100,000 residents were arrested on the lowest-level misdemeanor pot charge in 2007, 2008 and 2009.

During those same years, the marijuana arrest rate in Brownsville, Brooklyn, was 3,109 for every 100,000 residents.



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posted by mrgrimm at 9:15 AM on July 21, 2010 [1 favorite]


$378.4 billion.

$378,400,000,000.00

Fuck. That's the kind of money you can use to topple empires.
posted by quin at 9:18 AM on July 21, 2010


Nice article but I am disappointed that Smith spent so much time on symptoms while failing to once point out the reason this drug cartel/US banks money laundering too-big-to-fail sweetheart business exists in the first place. It's simple enough. Unlimited, unchecked, unmonitored, unchallenged profits, in short because the drugs are illegal. Prohibition does not work. Never has. Never will. Legalize, regulate and tax these drugs and, though they won't go away, skyrocketing proliferation and too-big-to-fail profits will. You can't run a barge up a river that's turned to a trickle.
posted by chance at 1:51 PM on July 21, 2010


I agree with Chance... Prohibition doesn't work. I don't believe all drugs should be made legal, (though they're gettin there... I live in California...) but a little decriminalization and regulation goes a long way... and hey guess what... = $$$ for the government to boot.
posted by delilablu at 12:17 PM on July 22, 2010


U.S. charges top leaders of Tijuana-based drug cartel: Dozens are accused in racketeering conspiracy case, including a top official in the Baja California attorney general's office and other current or former Mexican law enforcement officers.
posted by homunculus at 11:27 AM on July 24, 2010


And check this out:

"MULTIPLE RANCHES IN LAREDO, TX TAKEN OVER BY LOS ZETAS"
posted by tarantula at 4:33 PM on July 24, 2010


Inmates were freed long enough to carry out revenge killings: Prison guards loaned their own weapons to the killers, who went on to slay 17 at a birthday party in Coahuila state, authorities say. Inmates from the same prison are suspected in other attacks.
posted by homunculus at 8:14 PM on July 26, 2010


"MULTIPLE RANCHES IN LAREDO, TX TAKEN OVER BY LOS ZETAS"

Check this out: Rinse, repeat: Right-wing media just can't stop pushing fake stories.
posted by peeedro at 9:24 AM on July 27, 2010


Also, I don't know how this escaped the MeFi nitpick squad, but the link says, "Wachovia admitted it didn’t do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007." If you read the DOJ report[pdf] you'll see there is only $110 million in identified drug money laundered through Wachovia (page six, paragraph 27). So I don't think very much of how the FPP has framed this issue by stating that $380 billion was laundered. Wachovia didn't live up to their legal requirements to look for drug money, but it's quite a leap to imply that every single dollar that they handled was dirty.
posted by peeedro at 10:17 AM on July 27, 2010


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