More Evidence that the Fed Sent Money to Iraq

George Washington's picture

Yesterday, I quoted
an economist with the U.S. House of Representatives Financial Services
Committee for eleven years who assisted with oversight of the Federal
Reserve to show that there might be some basis for Ron Paul's questions
to Ben Bernanke about the Federal Reserve's alleged shipment of money
to Iraq.

Here is some more information.

In July 2009, Congressman Henry Waxman stated:

In a 13 month period from May 2003 to June 2004, the Federal Reserve sent nearly $12 billion in cash, mainly in $100 bills from the United States to Iraq. To do that, the Federal Reserve Bank in New York
had to pack 281 million individual bills ... onto wooden pallets to be
shipped to Iraq. The cash weighed more than 363 tons and was loaded
onto C-130 cargo planes to be flown into Baghdad...

The Fed starting shipping the money a month after
Saddam went into hiding (but long before he was captured), so the money likely did not go to Saddam.  However, it shows how well the
Fed can move money around the world.

And an interesting New York Times op-ed
written in 2004 by Martin Mayer, a prolific financial journalist,
Brookings Institution scholar, and the author of more than 30 books on
financial market issues, argues:

[Saddam] Hussein's possessions when he was captured was three-quarters
of a million dollars in United States currency in crisp new bills.
Whence came the gentleman's stash?


Answering this question would
help our understanding of terrorist financial networks. And if the cash
is sequentially numbered, as is likely, then the question could be
easily answered.


All United States currency is printed
by the United States Mint, to the order of one of the 12 banks of the
Federal Reserve system. It comes into circulation through a bank that
has an account at the Fed for which it was printed. The Fed deducts the
face value of the bills from that account, and an armored car takes
them to their new owner.


That regional Federal Reserve
Bank keeps a record that identifies the purchasing bank. And the
purchaser knows how it disposed of the bills. When they are found all
together, it means that the bank that bought the bills did not feed
them out from the teller window or the cash machine, but delivered them
to a single customer.


And the bank knows who that
customer was. Between, say, Philadelphia and Iraq, there is no doubt a
chain, perhaps involving banks in the Cayman or Channel Islands, in Abu
Dhabi or Dubai. Still, each bank in the chain can give the name of the
customer to which it gave these bills.

Although Saddam
Hussein's government had many sanctions against it, it may well be that
no laws were broken in the passage of the Federal Reserve notes from
the mint to Tikrit. But it would be interesting to know which banks
were collaborators in getting that cash to the tyrant of Iraq.


Unfortunately, the search for these witting or unwitting collaborators
cannot even get started, because the Federal Reserve Board will not
permit regional banks to reveal the identity of the purchasers of large
blocks of United States currency. There is no law that prohibits such
disclosure; it's simply a Fed policy. Yet in this age of payroll
services and electronic payments, there are few legitimate uses outside
the banking system for very large orders of hundred-dollar bills.


The Fed has always resisted placing American banks under obligation to
reveal skulduggery, whether it involves drug smuggling, commercial
fraud, terrorism or other international conspiracy. Banks are not, the
Fed insists, law enforcement agencies. It may be that the F.B.I. has
access to the Fed's records -- a spokesman for the Fed, after checking
with the main office, would not say yea or nay -- but it is not clear
that the F.B.I. has authority to continue such searches beyond American


The Fed's manual on the Bank Secrecy Act still
says that ''know your customer''rules, while desirable, are ''not
presently required by regulation or statute'' -- though the Patriot Act
has spawned some rules on the identification of new customers. At any
rate, the manual says rather mysteriously, such rules ''should not
interfere with the relationship of the financial institution with its
good customers.''


Senators Charles E. Grassley and Max
Baucus, chairman and ranking member, respectively, of the Finance
Committee, complained to the Treasury Department last year that not
enough has been done to keep the financiers of terrorism from paying
their bills through the American financial system. Perhaps Congress
should tell the Fed to release its hold on information about which
banks supply the bundles of cash that facilitate international crime.

The head of the UN office on drugs and crime says
that drug money kept the global banking system afloat during the height
of the financial crisis.  Former Managing Director and board member of
Wall Street investment bank Dillon Read, Catherine Austin Fitts, has
long alleged that the American banking system launders huge amounts of drug money.  I have no idea whether or not she is right.

In fact, I
don't know anything about money laundering, drug trafficking or
terrorist networks. But I might be able to guess who could track that
kind of information: the Fed.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
isolinx's picture

I visited this page first time and found it Very Good Job of acknowledgment and a marvelous source of info.........Thanks Admin!

glenlloyd's picture

I remember seeing pictures of people standing by the pallets of $100 bills somewhere.

Also, it would appear that like most 'agencies' the Fed participates in those rules and policies that it want's to and not the ones that it doesn't necessarily like.

Instant Karma's picture

1. If true, and it's been reported that the US hands out lots of cash to pacify the locals when we're trying to effect change, that's a lot of money to be transacting as cash. Wish someone would offload a C-130 filled with cash at my house.

2. The world is slightly more f##ked up than I thought it was.

3. Do you think we're printing too much money?

4. Can we trust any of the "numbers" relating to the economy or the Fed or anything?

Anonymous's picture

I hear there has been a legitimate trade between Iraq and Turkey during that time (maybe still!?) where you could transport hundreds of millions a day from Iraq to Southeast Turkey, and into Turkish economy.

Remember, Turkish CB acknowledged that there has been $17 billion unaccounted for in the economy during that time. No wonder, how Turkish economy kept its cool!

Anonymous's picture

Looks like Project Mayhem was right about his controversial post:

Nato admits killing 10 afghan kids in botched raid:

I recall quite a few individuals that called him crazy.

Anonymous's picture

And while at it,here is another interesting war zone were a $1 bil leaves,and the claim is "we don't know what is going on".link

charles platt's picture

A transfer may be legally legitimate and properly authorized; that does not make it well publicized, well known, well managed, sane, or intelligent. Waxman has done a public service here, for once. 

Anonymous's picture

Drugs in Afganistan? This guy says something along those lines

Anonymous's picture





unemployed's picture

What might be more interesting is who packaged the money for Saddam before we invaded.

"8 million in U.S. currency secreted away in two fireproof bank boxes, much of it still in Chase Manhattan wrappers"

Psquared's picture

There should be a section on ZH specifically designated for "tin foil hats." This is getting a bit out of hand. I love reading here, and I love the irony and pithiness of the articles, but sometimes there is no goblin under the bed.

WaterWings's picture

Actually, it's a comment like this we see, usually in multiples, on GWs posts. Kind of a hit-and-run tactic since you don't have much to add.

The entire raison d'etre of ZH is the vampire squid under the bed.

E pluribus unum's picture

I believe that it was Ben Bernanke who called Ron Paul's assertion "bizarre" that money was sent to Iraq

caconhma's picture

Easy come (just printing and packaging) and easy gone (just stolen).

Is not Iraqi war wonderful? (well, who really counts 100s of thousands killed Iraqis, 10s of thousands killed and crippled americans, and ruined US military & economy...)

After all, neocons (aka zionists) are happy and ready for new wars.

mouser98's picture

i think your comment pretty much sums it up

Anonymous's picture

Too bad we did away w/ the $1000. It would save a lot of jet fuel and climate change.

rapier's picture

Check your calender. This money went to the Coalition Provisional Authority after the invasion and at the start of the occupation of Iraq.  Saddam was already gone and in hiding.

There was nothing secret about this. I forget the exact number but X billion was appropriated to 'rebuild' Iraq. Since there was no plan exactly they just sent cash. The final tranch was rushed out because of statutory stipulation, it had to go out in one year.

So sitting in the Green Zone was this pile of money, and almost no control over it.  Scrap paper was used to requisition tens of thousands of dollars, when requisitions were used at all. Yes some of the money was used for the initial rebuilding plans. For power distribution, sewers, schools etc.  Much of it went into the pockets of contractors and individuals who flocked to Iraq and the Green Zone to cash in, starting hours after our tanks arrived. 

None of this is secret. It is just nobody cared.  Oh, by the way, all those who walked off with 5, 6,7,8 or even 9, figures worth of cash were and are fierce partisans of the Iraq war.

It was the Treasuries money. The Fed happens to be the Treasuries bank, remember?  Nothing nefarious about this portion of the story at all. It was money duely appropriated by congress and distributed to the Coalition Provisional Authority. Not into their accounts but in cash.


Sheesh ZH, get a grip.  Your cred drops by the day.

Anonymous's picture

I'm a little confused. So, your saying that you condone this activity and ZH doesn't have the right to restate
the trillion dollar fraud known as Iraq?

delacroix's picture

I believe most if not all of that money, was iraqi funds, that had been frozen. we financed a large chunk of our operations, with their money. we decided who, and how much, and after it was gone, the new gov. in iraq, was dependent on the US, for financial support. all they have, is the oil, that they need to sell, to survive, as their account, was paid in full, with untraceable transactions, in cash

delacroix's picture

I believe most if not all of that money, was iraqui funds, that had been frozen. we financed a large chunk of our operations, with their money. we decided who, and how much, and after it was gone, the new gov. in iraq, was dependent on the US, for financial support. all they have, is the oil, that they need to sell, to survive.

WaterWings's picture

It is just nobody cared.


The Fed happens to be the Treasuries bank, remember?

Eh? Nobody cared? And you've got the relationship reversed on that last part. BTW, ZH is top 10 non-corporate blogs per WSJ:

SteveNYC's picture

Nothing from the Fed would surprise me. Financing terrorists to kill Americans, why not? Not saying it is true, but certainly would not rule it out.

Rusty Shorts's picture


"Just do the math. Right now, November 12, 2006, the official cost of Iraq is around $340 billion. Suppose we'd just bombed Iraq with dollars; we'd be the heroes of the world, and every family in Iraq would be - are you ready for this?-$70,000 richer. That would make Iraq one of the richest countries in the world. I guarantee you those greedy bastards would find better things to do with their time than drill holes in each others' heads with power drills. Everybody'd thank us. Not just the Iraqis but every gold chain manufacturer in Egypt, every brothel manager in Amsterdam, every Mercedes dealer in Baghdad....Along the way, Saddam would have been overthrown in a few seconds, like the first time he tried to tell a young Baghdad blood he couldn't drive his new convertible into the country. The Iraqis were never going to revolt for democracy - I mean, be honest, who would? But a new car? Boom, ol' Soddom is a hood emblem, and Uday and Qusay are seat covers."


 - War Nerd, Gary Brecher

Seer's picture

I guarantee you those greedy bastards would find better things to do with their time than drill holes in each others' heads with power drills

How were the Iraqi people greedy?  And, quite unlikely that, with the threat of military force, people would overthrow Saddam for western crap (it's not like it didn't exist before); USD would be outlawed.  Yes, I realize that this was spouted by someone else; I just hate cute little propaganda pieces.

mouser98's picture

only problem is Halliburton wouldn't make any money off of that strategy, so as completely and totally effective and efficient as it is, not to mention humane, its a non-starter

Ned Zeppelin's picture

Audit the Fed.  Rip up the floorboards, as the house is rotten. Clean it out, and start over.

Rainman's picture

This is no surprise.

Today the Taliban uses the very same weapons the USA provided to the Afghan insurgents to fight off the Russians. Now they are used  to kill the American " invaders ". The Russians sneak their own stuff in there too in an effort to facilitate our comeuppance.

Money and guns. Sloshing around everywhere destabilizing the lives of millions. Same old story.

Anonymous's picture

if i was on that c-130, my hands woulda been ALL OVER that shit, there'd be bulging duffel bags everywhere, it would be interesting to know how much of the original $12 billion actually made it to Iraq.

SteveNYC's picture

Heck, ditch the tracking device on the plane, go off radar, and fly it to some island in the south pacific. Then, just buy your way around.

Anonymous's picture

I believe that in the past, this information was indeed in the public domain, ignored by the MSM and general public and assumed to have been wholly legitimate govenrmental transfers of DOD/black op/budget funds/aid via BCCI or similar ilk.

E pluribus unum's picture

I worked across the street from the Philadelphia Fed during this time. The tractor trailers used to leave the Fed and go straight to Dover AFB. They brought home the bodies and flew over the cash on air force planes.

Anonymous's picture

Go for the lungs RP

spanish inquisition's picture

Brilliant actually, who better to counterfeit our own currency better than our own government? All you need to do is rerun a series of note numbers and ship them across the world. What are the odds that they will be found out? If anyone finds two bills with the same numbers, deem them excellent counterfeits!

edit- all it would take is a system where each shift turns in the serial numbers to one manager. He rolls back the numbers on one stack (percent) per shift and runs it. Keeping the stack segregated and moved out at night. Easy as pie...

ZerOhead's picture

Federal Reserve Bearer Bonds would also work this way in a pinch. (Of course you would require an ethically challenged Chairman).

One serial number on the books but multiple bonds in reality. You could loan them out to friends for collateral purposes. Just make sure you don't clip the coupons!