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Double Dipping at SWIFT

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Spiegel today reveals more details about NSA’s “Follow the Money” program, in which it collects credit card information from select geographical regions. In addition, as TV Globo also revealed last week, they are conducting Tailored Access Operations against SWIFT, the international financial transfer messaging system.

The NSA’s Tracfin data bank also contained data from the Brussels-based Society for Worldwide Interbank Financial Telecommunication (SWIFT), a network used by thousands of banks to send transaction information securely. SWIFT was named as a “target,” according to the documents, which also show that the NSA spied on the organization on several levels, involving, among others, the agency’s “tailored access operations” division. One of the ways the agency accessed the data included reading “SWIFT printer traffic from numerous banks,” the documents show.

Now, some caution about this claim is in order. Spiegel reports that NSA’s financial records database has 180 million records, of which 84% are credit card transactions.

The collected information then flows into the NSA’s own financial databank, called “Tracfin,” which in 2011 contained 180 million records. Some 84 percent of the data is from credit card transactions.

Even assuming the balance of the records in the database come from SWIFT, that’s less than 29 million records (in 2011, so assume the number is larger now). In 2011, SWIFT was sending 17.5 million records a day. So whatever makes it into the actual database is just a small fraction of international traffic.

But that almost certainly doesn’t account for the bulk of the SWIFT information collected by the US government. Remember: in addition to stealing the data, Treasury also gets it via a now-public agreement. The former CEO of SWIFT Leonard Schrank and former Homeland Security Czar, Juan Zarate actually boasted in July, in response to the earliest Edward Snowden revelations, about how laudable Treasury’s consensual access to the data was.

The use of the data was legal, limited, targeted, overseen and audited. The program set a gold standard for how to protect the confidential data provided to the government. Treasury legally gained access to large amounts of Swift’s financial-messaging data (which is the banking equivalent of telephone metadata) and eventually explained it to the public at home and abroad.

It could remain a model for how to limit the government’s use of mass amounts of data in a world where access to information is necessary to ensure our security while also protecting privacy and civil liberties.

Never mind that by the time they wrote this, an EU audit had showed the protections were illusory, in part because the details of actual queries were oral (and therefore the queries weren’t auditable), in part because Treasury was getting bulk data. But there was a legitimate way to get data pertaining to the claimed primary threat at hand, terrorism. And now we know NSA also stole data.

Note, too, the timing. While Spiegel doesn’t provide enough details about the exploitation of SWIFT for us to date it, the dates it does provide about this financial spying are 2010 and 2011. That was the period when the EU was trying to put sensible limits to Treasury’s access of SWIFT.

Back when the intelligence community first decided to go after SWIFT data, their first plan was to just steal it.

Intelligence officials were so eager to use the Swift data that they discussed having the C.I.A. covertly gain access to the system, several officials involved in the talks said. But Treasury officials resisted, the officials said, and favored going to Swift directly.

12 years later, they apparently are stealing at least some of it. That probably means they wanted data for transactions that have nothing to do with the counterterrorism application first SWIFT and then the EU bought off on. So there’s the legal access to counterterrorism data via Treasury, and the illegal access to (presumably) some other kind of data via NSA.

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Jamie Dimon Owns Obama’s Testicles

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Jamie Dimon owns Barack Obama’s testicles. That’s the only explanation I can think of for why, rather than firing his JP Morgan Exec Chief of Staff for being incompetent, Obama simply shifted him over to serve as the public face of his Administration.

Ten months into his tenure as chief of staff, [Bill] Daley’s core responsibilities are shifting, following White House missteps in the debt-ceiling fight and in its relations with Republicans and Democrats in Congress.

On Monday, Mr. Daley turned over day-to-day management of the West Wing to Pete Rouse, a veteran aide to President Obama, according to several people familiar with the matter. It is unusual for a White House chief of staff to relinquish part of the job.

[snip]

The new set-up effectively makes Mr. Rouse the president’s inside manager and Mr. Daley his ambassador, roles that appear to better suit both men’s talents.

As you recall, Daley was hired as a sop to the banks, who thought endless bailouts weren’t enough bounty from this and the prior Administration and successfully demanded having one of their own in the White House gatekeeper position. And so, after fucking up the debt ceiling, and fucking up the introduction of Obama’s jobs push (and overseeing the passage of three trade agreements that will send jobs overseas), Daley has been moved into a figurehead role.

Here’s a snapshot of the kind of people whom Daley is sucking up to as “Ambassador”: the architect of the housing bubble-and-crash, the embodiment of corruption in the GSEs, and a guy who helped pass a law that will help his wife’s insurance company, only to leave to work for the Chamber of Commerce and a private equity firm.

Lately, Mr. Daley has been trying out his new role, deploying his back-slapping persona in Washington social circles. He recently held a private reception at his Ritz Carlton residence for a small group of D.C. elites, including former Fed Chairman Alan Greenspan, former Fanne Mae Chief Executive Jim Johnson and Yousef Al Otaiba, the United Arab Emirates ambassador to the U.S.

Former Sen. Evan Bayh (D., Ind.) said an invitation to lunch with Mr. Daley in his West Wing office was the first time he had heard from him.

So at a time when Obama’s campaign wants to pretend he’s taking a tough line with the 1%, he’s refusing to fire 1%er Bill Daley when he proves to be incompetent. Does this mean the banksters will effectively retain their own personal gate-keeper?

And FWIW, I believe Pete Rouse was and will be the best of the three Chiefs of Staff Obama has had, so I approve of that move. Though I question the wisdom of making the move just in time for another government shutdown, which is due up in the next few weeks.

SWIFT and the Asymmetric Control of Data

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I’ve been thinking a lot about SWIFT lately. Partly that’s because of the renewed discussion on how some big banks relied on cash from drug cartels to survive as the housing bubble began to pop. Partly that’s because of advance publicity for Nicholas Shaxson’s Treasure Islands and coverage of corporate tax dodging. And partly it’s because of this piece, declaring privacy dead without realizing that privacy is only dead for the little people.

You see, I’m increasingly convinced SWIFT will one day be the ultimate battleground over whether the US government can just suck up and analyze all the data it wants.

As a reminder, SWIFT (or Society for Worldwide Interbank Financial Telecommunicatiom) is the online messaging system the world’s finance industry uses to transfer funds internationally. It records the flows of trillions of dollars each day.

It first got big news coverage when Eric Lichtblau and James Risen reported on how our government uses it to track terrorist financing. But of course, the database tracks all sorts of financial flows, not just terrorist financing. Thus, it could be used to track drug finance, tax cheats (both corporate and individual), and the looting of various nations’ riches by their elites.

Swift, a former government official said, was “the mother lode, the Rosetta stone” for financial data.

Indeed, according to Lichtblau’s Bush’s Law, the database appears to track even more information than tax havens would ever collect.

[T]he routing instructions that the company used to move money around the globe often included much more detailed data than any other system: passport information, phone numbers and local addresses, critical identifying information about the senders and the recipients, the purpose of the transaction, and more. (243)

In a world where–as described in Shaxson’s book–our financial system largely runs on the strategic shifting of money behind the cloak of corporate anonymity or secret back accounts, SWIFT appears to be the one place where there is full transparency.

The US and UK in particular, according to Shaxson, have used the secrecy that corporate laws and associated tax havens can offer to sustain their hegemonic position in the world. As we saw, giving a bunch of drug cartels means to launder their money allowed Wachovia to survive for years after the time when it should have collapsed; the US and UK are just larger versions of the same gimmick.

Which is why, I’ve become convinced, the response to NYT’s reporting on SWIFT was (and remains) so much more intense than even their exposure of the illegal wiretap program. The shell game of international finance only works so long as we sustain the myth that money moves in secret; but of course there has to be one place, like SWIFT, where those secrets are revealed. And so, in revealing that the US was using SWIFT to track terror financing, the NYT was also making it clear that there is such a window of transparency on a purportedly secret system.

And the CIA has, alone among the world’s intelligence services, access to it.

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Top Journalist’s Husband Argues People Are Too Stupid for Debate

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Hopefully, you’ve already seem Ryan Grim’s explosive report on how, in 2004, Alan Greenspan argued the Fed should keep worries about a growing housing bubble secret because the chumps buying the houses were too stupid to engage in a debate about whether there was a bubble or not.

As top Federal Reserve officials debated whether there was a housing bubble and what to do about it, then-Chairman Alan Greenspan argued that the dissent should be kept secret so that the Fed wouldn’t lose control of the debate to people less well-informed than themselves.

“We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand,” Greenspan said, according to the transcripts of a March 2004 meeting.

As you read the entire story, note carefully Grim’s description of what appears in the transcript, but not the minutes.

Aside from outrage about Greenspan’s arrogant view and the missed opportunity to pop the bubble before it decimated our economy and millions of lives, I’m particularly interested in whether or not Greenspan ever shared this with his wife, Andrea Mitchell (who has been defending Wall Street pretty aggressively even as the rest of the press begins to sour on the Banksters). That is, did Alan Greenspan share the news that Atlanta Fed then-President Jack Guynn worried about overbuilding and speculation with Mitchell? In which case, Mitchell would be complicit in hiding this information from NBC’s viewers.

Or did he keep this secret from even his wife, on the grounds that he considers her too stupid to understand it all, and telling her would induce her and her viewers to join in the debate about the housing bubble?

Greenspan’s position is unforgivable coming from anyone playing with our economy and people’s lives, as he was. But it’s all the more curious coming from a guy married to one of the smarter DC reporters who presumably has a firm belief in the importance of the news and an ability to present a balanced report on concerns about speculation in the housing market.

Worst Since World War II

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Remember how just a few weeks days ago, BushCo was trying to argue we weren’t yet in a recession? Well, all of a sudden, this the worst recession since World War II. There’s Marty Feldstein:

The United States has already slipped into a deep recession that could be the most serious since World War II, said Martin Feldstein, president of the Cambridge group that is considered the official word on economic cycles.

"The situation is bad, it’s getting worse, and the risks are that the situation could be very bad," Feldstein said in a speech yesterday at a financial industry conference in Boca Raton, Fla.

And then there’s Mr. Andrea Mitchell:

 The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the second world war. It will end eventually when home prices stabilise and with them the value of equity in homes supporting troubled mortgage securities.

This "worst since World War II" seems to be a favored euphemism, among economists, for Depression.

Competence versus Populism

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A number of people are pointing to David Frum’s seeming come-to-Jeebus realization that Conservatives should beware of picking incompetent hacks in the guise of political loyalty.

Here’s the lesson to learn: It’s always important to respect the values and principles of the voters. But politicians who want to deliver effective government and positive results have to care about more than values — and have to do more than check their guts. They need to study the problem, master the evidence, and face criticism.

It’s not only conservatives who succumb to gimmicks of course. The left still feels a lingering attachment to socialism, the most disastrous gimmick of them all. Tough-minded conservatives slashed that illusion to pieces decades ago. But since then, we have begun to go a little easy on ourselves. And over the past half dozen years, the consequences of our militant anti-elitism has come home to roost.

If elitism means snobbishness, then of course it is a vicious thing. If it means being impressed by credentials instead of evidence, then again: good riddance. But if it is elitist to expect politicians to be able to see through glaringly false and stupid ideas — well in that case, call me elitist.

But few note where Frum’s criticism is directed: to those who support Mike Huckabee or Ron Paul. Read more →