How Many Billions Of Drug-Laundered Money Does It Take To Shut Down A Bank?

Tyler Durden's picture

It's an odd question, we know - especially ahead of today's Stress Tests, but given today's testimony on assessing the bank secrecy act, apparent trouble-maker Elizabeth Warren pokes and prods (correctly we would add) at the surreality that exists between the Department of Justice, The Treasury, and the financial system. David Cohen, Tom Curry, and Jerome Powell dodged bullets and blame, "does that mean essentially we have a prosecution-free zone for large banks in America?" But Warren wasn't going to be fobbed off with useless banter as she pointed out, "if you're caught with an ounce of cocaine, the chances are good you're going to go to jail... for the rest of your life. But evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night - I think that's fundamentally wrong." Indeed Ms. Warren.


Here is the transcript - note the Treasury officials never actually answer anything...

WARREN: ... As Senator Reed just pointed out, the United States government takes money laundering very seriously for a very good reason. ...


Now in December, HSBC admitted to money laundering. To laundering $881 million that we know of for Mexican and Colombian drug cartels. And also admitted to violating our sanctions for Iran, Libya, Cuba, Burma, the Sudan. And they didn't do it just one time. It wasn't like a mistake. They did it over and over and over again across a period of years. And they were caught doing it. Warned not to do it. And kept right on doing it. And evidently making profits doing it.


Now HSBC paid a fine, but no one individual went to trial. No individual was banned from banking. And there was no hearing to consider shutting down HSBC's activities here in the United States. So what I'd like is, you're the experts on money laundering. I'd like your opinion. What does it take? How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this? Mr. Cohen, can we start with you?


COHEN: Certainly Senator. No question the activity that was the subject of the enforcement action against HSBC was egregious...


WARREN: But let me just move you along here on the point Mr. Cohen. My question is, given that this is what you did, what does it take to get you to move towards even a hearing? Even considering shutting down banking operations for money laundering?


COHEN: Senator, we at the Treasury Department under OFAC and (ph) authority, we don't have the authority to shut down a financial institution...


WARREN: I understand that. I'm asking, in your opinion, you are the ones who are supposed to be the experts on money laundering. You work with everyone else, including the Department of Justice. In your opinion, how many billions of dollars do you have to launder for drug lords, before somebody says, we're shutting you down?




WARREN: ... And I'm asking, what does it take, even to say, here's where the line is. We're going to draw a line here, and if you cross that line, you're at risk for having your bank closed?




COHEN: But I'm not going to get into some hypothetical line drawing exercise.


WARREN: Well it's somewhere beyond $881 million of drug money.


COHEN: Well Senator the actions, and I'm sure the regulators can address this issue. The actions that we took in the HSBC case, we thought were appropriate in that instance.




WARREN: So what you're saying to me is you are responsible for these banks, and again, I read your testimony and you talk about the importance of vigorous enforcement here. But you're telling me you have no view when it's appropriate to consider even a hearing to raise the question of whether or not these banks should have to close their operations when they engage in money laundering for drug cartels?




WARREN: I understand that I'm over my time. And I'll just say here, if you're caught with an ounce of cocaine, the chances are good you're going to go to jail. If it happens repeatedly you may go to jail for the rest of your life. But evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night. Every single individual associated with this. I just, I think that's fundamentally wrong.

(h/t Manal Mehta)

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newengland's picture

So sluts of body, broke brains and sleazy manners are ok?

By your way of thinking. Silly person. Unworthy of any position of  responsibility.

GMadScientist's picture

I love conservatives...they claim to believe in freedom...just not anyone elses.

bondman1's picture

Now all that drug money is filtering through residential mortgage loan originators. The RMLOs got a pass on the bank secrecy act (BSA) last Feb. Take a look at an exsting home sales chart and you'll see. That drug money had to go somehere so it appears regulators will look the other way as it absorbs our excess home supply. Who said two wrongs don't make make a right! And I bet you'd never se Liz Warren asking those tough questions to a group of Century 21 saleswomen!

GMadScientist's picture

"Honey I'm home

nevermind why

our bank account's

suddenly grown"

ak_khanna's picture

Can't people like Elizabeth be put in prison for being a risk to the society or something?? 

How dare such a high ranking person speak plain and honest truth..... 

The first thing that you are supposed to do when you join the government at any level is take out everything like honesty and integrity from within your and stuff yourself with contributions from powerful individuals and institutions so that you think, speak and act only what is told to you by them.

The U.S. government (this is applicable to governments almost everywhere) is a morally corrupt government willing to sell their own family for money. The arms and ammunition industry and the banking cartel own the politicians in power. They use their money power to get only those politicians elected who work solely for their profit motives. The rest of the world population be damned. The only activity they do is pacify the majority of the population using false statistics and promises of a better future so that they do not lynch them and their masters while they are robbing the taxpayers.

Michelle's picture

Vote with your feet and close your bank accounts. Find a neighborhood friendly credit union and leave the banking cartel behind.

Under every stone is a slimy slug and a thorough HSBC criminal investigation will lead to another bank, and another, and another as the tightly woven web called the financial system is more corrupt than anything we've ever seen in history. This makes the S&L crisis seem like a garden party and why these banks were bailed out, at our expense nonetheless, is beyond comprehension.

Exposing the banks by starting bank runs is a start. Just do it.

newengland's picture

Such banks exist in MA, and do better business for the community than the two faced scared liar fckrs in too big too jail banksters.

HSBC are hateful money laundering drug running zionists. Rootless cosmopolitans. Liars and thieves.

You write. You don't do.

Umh's picture

It would be nice; not perfect but, nice if the banks had to pay a penalty that was more than they profited by their crime. It seems to me like they always get a slap on the wrist that is less than than they made on the crime committed. As long as they have a net profit from each crime they are caught committing they will keep committing crimes; we don't even know how many crimes they commit without being found out.

Yen Cross's picture

 Tyler ! Knock Knock! The 'usd/jpy" just blew up! How did the BoJ pay for it? Non of the majors moved much. Oh wait , helicoptor Ben gave them an open swap line!  Fuck You ben bernanke.

   usd/jpy is at 2009 levels. look at the weekly chart. It's only eclipsed buy the fall in 2007-8 financial crisis.

MikeMcGspot's picture

How Many Billions Of Drug-Laundered Money Does It Take To Shut Down A Bank?

Warren statements

1. “In your opinion, how many billions of dollars do you have to launder for drug lords, before somebody says, we're shutting you down?”

2.” In your opinion, how many billions of dollars do you have to launder for drug lords, before somebody says, we're shutting you down?”

Divide and conquer.

There was a rather limited options set presented as alternative courses per legislation or prosecution to address these problems.

The biggest unspoken option is to move from drugs being illegal whereby we continue the existing system of chaos and insanity to one of regulation to enable the free flow of drugs to whoever wants them for the best market price. Now you’re talking real competition.

Have some sort of transaction and distribution tax such as with alcohol and watch the state and local budget deficits melt away...

Under this model the billions of dollars do not have to be laundered, government funds formerly directed to incarcerate people may be redirected towards treatment.

We would let a lot of people out of jail, there would be a crash in the market for sellers of drug tests.

We would have to expand government for some time, transforming our public works departments to distribute coke and heroin and such to those who need it at production plus basic transportation cost including pick up of the dead by self emmoulation, not because they are robbing to support their habit or killing to protect their life and limb.

We cut the overhead of all these police agencies and international spy agencies, the drug cartels will no longer have a profit motive.

Human resources redirected towards better purpose for individual and collective survival.

No way...

We must at all cost preserve the current order.

Why be accountable for the continuity of the root cause when you can simply change the window dressing?

I appreciate Warrens hard questions trying to change up the system, but the solution set offered seems to me more of the same.

Put on a good show, divide and conquer.

newengland's picture

You prefer confuse and conquer. Typical druggie, rootless cosmopolitan.

MikeMcGspot's picture

I prefer to improve my knowledge and understanding.

I will not accept a number or label from some creature replicating the input of MSM or other media brand programming.

You can come here anytime you like, but you can never leave?


GMadScientist's picture

That's'll finally understand when you're the one being demonized. The gun freaks are getting a taste of it right now. You'll get yours soon!

newengland's picture

The Commonwealth will not bow down to gangsta bankstas.

Good commerce is ok. All else is wrong.

HSBC, gangsta bankstas, drug runners, money launderers for such hateful crimes.

Jail 'em. Don 't bail 'em.

Yen Cross's picture

 The original [European Stability Fund? ] Am I missing the proper achronym]]]?

Beau Tox's picture

The Exchange Stabilization Fund is a uniquely American solution to, and cause of trillion dollar deficits.  It is the true source for Treasury-insider toilet paper in mass quantities, meant to wipe the cracks of every greedy pig in government.  The beltway ninth circle denizens stand on tippy-toes and shout above the din of sloshing liquidity there, "Don't make waves, don't make waves!"

newengland's picture

HSBC is an example of rootless cosmoplitans, money grubbing, drug running,money laundering whores. 

Jail 'em.. Don't bail 'em or fine 'em.

Radical Marijuana's picture

The major historical points on the importance of money laundering for the banks were already made in previous comments above ... and so, I will not repeat those. Rather, I will simply repeat my overall view, which is that the basic systems are:


Slavery segued into the "war on drugs" and then the "war on drugs" blended into the "war on terror." To understand the "war on terror," one needs to understand that the events on 9/11/2001 were an inside job, false flag attack. The drug wars were actually also "false flag attacks" in their own ways as well. The war on (some) drugs is more than 75% against "marijuana," which was presented as being "almost as bad as murder" as the "reefer madness" reasons for why all cannabis was criminalized. That is, it was BECAUSE hemp is the single best plant on the planet for people, for food, fiber, fun and medicine, that the law was based on a propaganda campaign that rebranded the hemp plant with the Mexican Spanish slang name "marijuana" and then enforced laws that asserted that "marijuana is almost as bad as murder."

Obviously, those assertions, referred to as "reefer madness," that marijuana was an addictive narcotic, which made people suddenly become criminally insane, while repeated use became fatal, were the assertions that originally created the marijuana laws, which have been enforced more and more, for decade after decade. Marijuana laws are merely the single simplest symbol, or the most extreme particular example, of the general pattern of social facts, which are that our entire civilization is based on huge legalized lies, backed by lots of legalized violence. In order to understand that, one has to follow the money, and ESPECIALLY FOLLOW THE MONEY TO ITS SOURCE. Following THAT leads us up back to the international bankers, who are the biggest gangsters, or the BANKSTERS.

The most important ways that those systems of money and politics were connected were through the funding of the political processes. It is vital to understand that more than 99% of the funding of politics has come from less than 1% of the people. That is the primary reason why it was possible for politicians to become puppets of the banksters, and therefore, we could end up with well-established systems of LEGALIZED LIES, BACKED BY LEGALIZED VIOLENCE.

The paradoxical answer to the superficial question asked in this article above is that the more money the bigger banks make from laundering money, the less likely they become to ever be prosecuted for that. In order to understand that paradox one has to appreciate the general pattern of social facts, which are that the best organized gangs of criminals ARE the biggest banks, and that they effectively control the government.

Therefore, the war on (some) drugs were always a set of deliberately huge lies, which were legalized, because that would benefit the biggest banks all the way around. Not only do the biggest banks make more money from skimming the cream off of the illegal drug businesses, but also, the drug wars then provided excuses to build the fascist police state, which is needed to advance the agenda and the interests of the fascist plutocracy, i.e., the social system which is based on the control of civilization by the "wealthy," where the supreme form of that wealth is the ability to make "money" out of nothing, as debts, and yet, have the government force everyone else to accept that fraud, and adapt their whole lives to live within that system of privatized fiat money.

The drug wars enabled a vast and prolonged subsidization of measures which would grow a fascist police state. The allegations that those drugs were were made illegal because those drugs were so bad as to require that were always grossly disproportional, and not supported by any sane science putting various drugs into proper perspective. Instead, the war against (some) drugs tended to operate in a Bizarro Mirror World, which was INVERSELY PROPORTIONAL. Therefore, while the facts are that THC in cannabis is one of the safest of all drugs, with no fatal overdose possible (the true facts being directly the opposite to the "reefer madness" lies, which were the basis of the laws), that situation merely provided an endless stream of excuses to drive more social polarization, which would drive an increasingly fascist police state, which would then be available to protect the fascist plutocracy.

Since the runaway financial frauds have a structure which necessarily, and automatically, drives debt slavery to develop numbers which become debt insanity, the fascist plutocracy, operated by the banksters that were able to corrupt the government to legalize them counterfeiting the money supply, needed to have even more and bigger excuses to develop their fascist police state, beyond even what the war on drugs had already enabled. Therefore, the ruling classes arranged for the inside job, false flag attacks on 9/11/2001, as something which would then be orders of magnitude worse that drugs, and so enable orders of magnitude more fascist police state powers, all to continue to be able to reinforce and maintain the power of the fascist plutocracy controlled by the banksters, and their buddies in the corporations that had grown up around those banks, which had gained the privatized power to make money out of nothing as debts, and thereby, become the most supremely wealthy people, who could use that wealth to buy up more and more control over every other facet of civilization.

Of course, a social system based on lies, backed by violence, does not care about evidence and logical arguments. Of course, pointing more radical truth regarding what is really going on is probably not going to change anything, other than perhaps get those pointing that out attacked for doing it, by the fascist police state, in order to protect the fascist plutocracy. However, this runaway social insanity situation, where our civilization has become almost inconceivably crazy and corrupt, has become so extremely bad that I feel that I no longer have much to lose ... and anyway, it very probably will make no significant difference to anything for me to bother to point out what is really going on ... which is that the banksters control our government, and therefore, the banksters were behind the drugs wars, and the war on terror, etc., so that the banksters could be able to build their fascist police state, to advance the agenda of their fascist plutocracy.

In the REAL world, more than 99% of the population will probably continue to act like political idiots, while especially a small fraction of 1% continue to benefit from that situation ... at least until the total madness of controlling civilization with triumphant runaway frauds finally drives the whole system so mad that it destroys itself. Therefore, I endeavour to point out what is really going on behind the scenes, regarding the illegal drug business having its profits laundered by the biggest banks with impunity. However, that is almost certainly a waste of time to bother to try to do, since one can most reasonably expect that more than 99% of the people will keep on acting like political idiots, while less than 1% will become ever more "wealthy" on the basis of their runaway systems of legalized lies, backed by legalized violence.

After working on these problems for several decades, I have practically been forced to give up, in the sense that I no longer can maintain any reasonable hope for the foreseeable future with respect to these issues. All of these systems of triumphant runaway force backed frauds are headed towards their own psychotic breakdowns ... Meanwhile, many mainstream morons will continue to say that we should end the war on drugs because it was manifestly an abject failure. Those political idiots do not understand that the war on drugs has been a fantastic success, the same as the false flag attacks on 9/11/2001 were a fantastic success, in terms of advancing a fascist police state, to protect the interests of the fascist plutocracy. Furthermore, the mainstream morons who do not understand any of these deeper realities, and do not want to understand, then continue to provide nothing with respect to the deeper issues, of the chronic political problems inherent in the nature of life, which the current ruling classes are providing a set of expedient ways to deal with, which benefit those ruling classes.

To understand the issue of why the biggest banks are more and more enjoying an impunity to launder dirty money, one has to go through an almost infinite tunnel of deceits ... and that includes going through the bullshit ideals that there should not be any combined money/murder system, or that there should not be any debt controls backed by death controls. To go through and through understanding these processes of the best organized gangs of criminals controlling the government, in order to benefit from that, all the way around, one should move on past false fundamental dichotomies, and the "solutions" for those problems based on impossible ideals.

The line of questions asked and answered in this article above was merely more of the standard political puppet shows, put on for the masses of muppets. The basic situation is ALWAYS that money is backed by murder. Civilizations operate according to the principles and methods of organized crime. The banksters are the best organized gangs of criminals, who control the government, and so, of course, they are allowed to launder money with impunity. Indeed, the whole system would collapse if they were stopped from doing that, because the whole system IS, and MUST BE, operated as organized crime on the largest possible scale. Furthermore, any genuine solutions to those problems require a profound paradigm shift in political science, whereby enough people understand that enough, because the only realistic ways forward are to continue to muddle through the madness that human society is ALWAYS some dynamic equilibria of organized systems of lies, operating organized robberies.

There is NO fundamental dichotomy between the biggest banks and organized crime. There is NO fundamental dichotomy between governments and organized crime. The only differences are ones of degree. Therefore, the only genuine solutions to these problems require that enough people should go through enough of the paradigm shifts in perception so that they more completely understand that!

Of course, I would not recommend holding one's breath until that series of political miracles happen. Rather, I am probably relative safe in saying these kinds of things because the ruling classes can count on more than 99% of the people continuing to be political idiots, that do not understand, and do not want to understand, anything that I have written above. Perhaps a tiny group of the readers of Zero Hedge might understand, but that barely matters in the bigger picture. The banksters are collectively a gang of trillionaire mass murderers, which profit from every evil thing they can do, especially including by controlling the government.

Making popular drugs illegal made them vastly more profitable, and the biggest banks were then able to skim the cream of those profits off the top, by laundering that dirty money. Meanwhile, the actual enforcement statistics show that the drug laws are mostly enforced against Blacks and Hispanics, which was what those drug laws were always intended to enable in the first place. From the point of view of the biggest banksters, all of their triumphant force backed frauds were great achievements!

Alcoholic Native American's picture

Yes those poor black and hispanic drug dealers. Give me a break you fucken pot head.

SheHunter's picture

Warren may be a little lefter than some like but she's got bigger balls than most all of the men in the senate and she isn't afraid to use 'em. 

CitizenPete's picture

I agree with that.  Grayson (remember him) was a stinking liberal socialist, but he went after the Fed with both hands, and should be given credit along with Kucinich for getting dems to vote for the ron Paul "Audit the Fed" bill which he co-sponsored, which was ultimately trimmed down to enable a one time peek at the Fed books.  So where is Grayson now?  Where will Warren be in another term? Back teaching probably.  The global financial system and their servants in Treasury don't stand for this sort of questioning shit ... If you fart at AIPAC or the banks or any ZOG department you'll be preyed on and shut down -- you wont get to a second term or you'll eat a bad prawn and get food poisoning somewhere. 

WTFUD's picture

It's a family affair.

AnAnonymous's picture

What is wrong? Just cool ole plain 'americanism'

'Americanism' is about extorting the weak, farming the poor.

Serving the 'american' middle class gives priviledges. That laundering bank serves the 'american' middle class.

Has always been the case since 1776, July, 4th.

TheFourthStooge-ing's picture

AnAnonymous said:

What is wrong? Just cool ole plain 'americanism'

'Americanism' is about extorting the weak, farming the poor.

Serving the 'american' middle class gives priviledges. That laundering bank serves the 'american' middle class.

Yes, that's it, keep deflecting the blame. A good farm hand like you knows how important it is to stick to the script.

monad's picture

You are an obsessed, jealous bigot. Suicide may be your best option.

monad's picture

It would help me if Warren would clarify whether she stands for liberty and justice, omnicient police state or just filling her hole like Clinton. All I see is Holder-escque rhetoric from a veteran socialist advocate who has not defined what she really really wants. And get the facts straight Liz: if you got life for a z, you obviously weren't connected and couldn't afford a decent liar. Like half the people in prison in the US, for victimless 'behavior'. We see the US equivalent of party members walking for far worse. Fuck you Holder!

MSimon's picture

The endocannabinoid system is a major regulator in the body implicated in almost all diseases including cancer.  Endocannabinoids The Science

Medical Marijuana prohibition is a crime against humanity and a violation of the religious precept - heal the sick.

Pass it on.