Wall Street Is Laundering Drug Money and Getting Away with It
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Think about what would happen if you or I were accused of laundering $380 billion in drug money. We could not simply settle the allegations out of court in exchange for an apology and a fine. We'd spend the rest of our lives in jail for financing a ruthless, bloody and illegal business. About 22,000 people have been killed in the Mexican drug trade since 2006, and the drug trade itself can't happen without extensive money laundering operations. Moving the money is one of the most difficult and critical elements of any criminal enterprise—without ways to convert crooked cash into seemingly innocuous funds, crooks simply can't operate. Wachovia was doing top-level dirty work for drug dealers.
On the streets of American cities, the mere possession of these drugs can land you with a multi-year prison sentence. But financing multi-billion-dollar drug empires? Don't do it again, pretty please.
Too-big-to-fail isn't just a matter of systemic risk and mathematical models gone haywire, It's about the basic functioning of our democracy. You cannot have a functional democracy in which an entire privileged class of bankers can get away with anything—and if you can get away with laundering hundreds of billions of dollars in drug money, there's not much you can't get away with.
Yesterday, Congress passed a decent Wall Street reform bill, but that legislation will not end this criminal imbalance. If the bill will really end too-big-to-fail, the Justice Department could immediately end its special immunity policies for large financial institutions. That isn't going to happen. The public deserves tougher prosecutors, but we also need further legislation to break up the megabanks so that they can't use their economic clout to bully everyone in Washington.
Zach Carter is an economics editor at AlterNet. He writes a weekly blog on the economy for the Media Consortium and his work has appeared in the Nation, Mother Jones, the American Prospect and Salon.