Have the Banks Escaped Criminal Prosecution because They’re Spying Surrogates?

I’m preparing to do a series of posts on CISA, the bill passed out of SSCI this week that, unlike most of the previous attempts to use cybersecurity to justify domestic spying, may well succeed (I’ve been using OTI’s redline version which shows how SSCI simply renamed things to be able to claim they’re addressing privacy concerns).

But — particularly given Richard Burr’s office’s assurances this bill is great because “business groups like the Financial Services Roundtable and the National Cable & Telecommunications Association have already expressed their support for the bill” — I wanted to raise a question I’ve been pondering.

To what extent have banks won themselves immunity by serving as intelligence partners for the federal government?

I ask for two reasons.

First, when asked why she, along with Main Justice’s Lanny Breuer, authorized the sweetheart deal for recidivist transnational crime organization HSBC, Attorney General nominee Loretta Lynch implied that there was insufficient admissible evidence to try any individuals associated with this recidivism.

I and the dedicated career prosecutors handling the investigation carefully considered whether there was sufficient admissible evidence to prosecute an individual and whether such a prosecution otherwise would have been consistent with the principles of federal prosecution contained in the United States Attorney’s Manual.

That’s surprising given that Carl Levin managed to come up with 300-some pages of evidence. Obviously, there are several explanations for this response: she’s lying, the evidence is inadmissible because HSBC provided it willingly thereby making it unusable for prosecution, or the evidence was collected in ways that makes it inadmissible.

It’s the last one I’ve been thinking about: is it remotely conceivable that all the abundant evidence against banksters their regulators have used to obtain serial handslaps is for some reason inadmissible in a criminal proceeding?

I started thinking about that as a real possibility when PCLOB revealed that Treasury’s Office of Intelligence and Analysis has never once — not in the 30-plus years since Ronnie Reagan told them they had to — come up with minimization procedures to protect US person privacy with data collected under EO 12333. Maybe that didn’t matter so much in 1981, but since 2004, Treasury has had an ever-increasing role in using intelligence (collected from where?) to impose judgments against people with almost no due process. And those judgements are, in turn, used to impose other judgments on Americans with almost no due process.

The thing is, you’d think banks might care that Treasury wasn’t complying with Executive Branch requirements on privacy protection. Not only because they care (ha!) about their customers, whether American or not, but because many of them are, themselves, US persons. US bank US person status should limit how much Treasury diddles with bank-related intelligence, but Treasury doesn’t appear bound by that.

Which leads me to suspect, at least, that there’s something in it for the banks, something that more than makes up for the serial handslaps for sanctions violations.

And one possibility is that because of the way this data is collected and shared, it can’t be used in a trial. Voila! Bank immunity.

All that’s just a wildarsed guess.

But one made all the more pressing given that Treasury is among the Appropriate Federal Entities that will be default intelligence recipients for cyber information under CISA.


The term ‘‘appropriate Federal entities’’ means the following:

(A) The Department of Commerce.

(B) The Department of Defense.

(C) The Department of Energy.

(D) The Department of Homeland Security.

(E) The Department of Justice.

(F) The Department of the Treasury.

(G) The Office of the Director of National Intelligence.

To some degree, this is not in the least bit surprising. After all, financial regulators have increasingly made cybersecurity a key regulatory concern of late, so it makes sense for Treasury to be in the loop.

But banksters rarely — never! — add regulatory exposure for themselves without a fight and, as Burr’s office has made clear, the banks love this bill.

One more datapoint, back to HSBC. As I noted when Lanny Breuer and Loretta Lynch announced that handslap, Breuer neglected to mention that HSBC was getting a handslap not just for helping cartels profit off drugs, but also helping terrorists fund their activities (at the time Pete Seda was being held without bail on charges the government insisted amounted to material support for terrorists for handing a check to Chechens using cash that had come indirectly from HSBC). The actual settlement, however, made mention of it by explaining that HSBC had “assisted the Government in investigations of certain individuals suspected of money laundering and terrorist financing.” By dint of that cooperation, in other words, HSBC went from being a material supporter of terrorism to being a deputy financial cop. And Breuer expanded that notion of banks serving as deputized financial cops thereafter.

Are the methods and terms by which we’re collecting all this financial intelligence to use against some bad guys precisely what prevents us from holding the even bigger bad guys — the ones affecting far more of us directly, in the form of the houses we own, the towns we live in, the opportunity costs paid to financial crime — accountable?

And will this system now be replicated under CISA (or has it, already) as banks turn into cyber crime deputized cops?

11 replies
  1. orionATL says:

    So now the banks become like the telephone companies and the central intelligence – part private entity, part government entity, and substantially free to engage in at worst criminal, or at least grossly self-serving corporate activity.

    All this under the aegis of national security protections.

    but there are no serious national security protections being competently addressed.

    There is something deeply rotten going on here between corporations and u.s. congressional politicians, staff, and high-level government secretariat political managers.

    Senator burr is just wearing the kilt of national security.

  2. allan says:

    “because of the way this data is collected and shared, it can’t be used in a trial.”

    But, as US persons, couldn’t cases against the banks, just like the rest of us US persons, be prosecuted using parallel construction? The fact that the newspaper of record feels that it needs to have an entire section titled Revolving Door tells us a lot about the dynamics of prosecutorial discretion.


  3. bobswern says:

    This entire matter–the financial sector’s participation on both “sides” of the issue: acting as enabler for both the criminals and the crimefighters–is a much greater subject than far too many in both the MSM and the blogosphere have acknowledged/glossed over, to date.

    That being said, it’s also been used as an excuse for the House Financial Services Subcommittee on Oversight and Investigations’ myopic focus upon terrorism and criminal funding at the expense of (deliberately?) looking the other way, and ignoring the run-up to September 2008, when everything went to hell in our economy. (I closely followed this when my congresscritter, at the time, Sue Kelly [R-NY] ran that subcommittee through 2006, at which point Democrat John Hall wrested the seat from her.)

    Working in the financial services technology sector, where I was privy to some inside info–and lots of unsubstantiated rumors–circa 2007-2009, where it was rumored that if it was not for all of that dark money circulating throughout system, at certain points during that period, some banks would have been beyond just “insolvent” (in retrospect, Citi and BofA, among others, were noted as being insolvent in 2008-2009, as many publicly stated it at the time and according to recent government testimony, too) at key junctures in the past seven or eight years.

    One of the many travesties here is that our government has been–and is, even moreso, today–closely monitoring virtually all/most transactions worldwide, all along. For it to claim that it wasn’t aware of a myriad of misdealings, other than money laundering, that have since been uncovered in the financial sector, in general, is nothing short of an Orwellian farce.

    When one adds up all of those financial services firms (HSBC, Wachovia/Wells Fargo, Standard Chartered, JPMorgan Chase…the list goes on) that aided and abetted drug cartels, terrorists, and run-of-the-mill criminals through the years, we’re talking about totals north of $2 trillion, in the past decade, alone. One would think that after the first $100 to $200 billion, or so, of tracked, criminal-related transactions, a government would have all of the information it’d need to commence prosecution of just about…everything!

    But, not only via many public/news reports, has it been documented that the financial services sector is joined-at-the-hip with the intelligence community, it’s both baked-in to court rulings (FISA and otherwise) and general intelligence practice guidelines, too.

    Take the case of Bank of Baltimore/1st Mariner CEO Ed Hale, who has since acknowledged that he was a CIA Operative:
    [http://finance.yahoo.com/news/former-maryland-banker-reveals-used-023400548.html Former Maryland banker reveals he used to work for CIA].

    And, how it’s widely-documented that the financial sector plays a critical role in virtually all national security initiatives, and has been for a very long time: [http://www.treasury.gov/connect/blog/Pages/TFI-10-Wrap-Up.aspx Treasury’s Role In Advance U.S. National Security].

    Even Edward Snowden was involved in this financial services intelligence tradecraft in Geneva, according to his own occupational recollections: [http://www.businessinsider.com/edward-snowden-describes-cia-tricks-2013-6 Edward Snowden Describes When The CIA Got A Swiss Banker Drunk And Put Him Behind The Wheel].

    And, perhaps much moreso, RIGHT NOW (and like everything else in our inverted totalitarian society), it’s getting far, far worse by the day (from Zero Hedge, since the WSJ source article is behind a paywall): “[http://www.zerohedge.com/news/2015-03-20/justice-department-rolls-out-early-form-capital-controls-america Justice Department Rolls Out An Early Form Of Capital Controls In America],” Zero Hedge, 3/20/15, where we learn that the U.S. banking industry submitted a whopping 1.6 million Suspicious Activity Reports (SARs) in 2013, alone.

    Marcy, as you (and many others) have documented it, once you’re the subject of a SAR, anything can (and does) happen.

    So, while much of the U.S. financial sector’s misdeeds have been tracked for a very long time, like just about everything else in our society these days, the fact remains that the status quo–for the most part–gets a free pass, while those of us in the unwashed masses remain on the business-end of the surveillance state’s behavior.

    And, all of that propaganda about those “heavy penalties” imposed upon Wall Street in recent years is little more than bullshit, too, once one bothers to look at the behind-the-scenes travesties related to how little of that money is actually collected by the SEC, the DoJ, and the CFTC: [http://online.wsj.com/articles/prosecutors-are-still-chasing-97-billion-in-uncollected-debts-1410984264 Prosecutors Are Still Chasing Billions in Uncollected Debts].

  4. William A. Hamilton says:

    In early 1982, the Reagan NSC gave a new SIGINT mission to NSA known as “Follow the Money” in which NSA arranged for major wire transfer clearinghouses in the United States and Europe, including CHIPS in New York City, CHAPS in London, and SCI in Switzerland, and international financial institutions such as the Bank of International Settlements and the World Bank, to install stolen copies of the PROMIS tracking software on their computers to enable NSA’s real-time electronic surveillance of wire transfers of money and letters of credit.

    In April 1986, President Reagan ordered the U.S. Air Force to bomb targets in Libya because intelligence information produced by NSA’s Follow the Money project left no doubt that Libya had used part of the $600 million it raised in London through the First Chicago Bank to finance a terrorist attack in Germany that resulted in the death of an American soldier.

    In the wake of that NSA success, the Reagan NSC staff met on June 5, 1986 with the Meese Justice Department’s Office of Legal Counsel to procure a highly classified legal opinion, binding on the Executive Branch, purporting to establish the legal propriety for a major expansion of this NSA Follow the Money bank surveillance to encompass approximately 400 commercial banks as evidenced by an email message to Colonel Oliver North from his NSC staff colleague, David Wigg. The National Security Archives published a partially redacted copy of the email message after Iran/Contra investigators had recovered it from an NSC computer. The text, which is extremely revealing, reads as follows:

    ” 06/05/86 12:35 ***


    NOTE FROM: David Wigg
    SUBJECT: Memo for Ollie North

    Scott Sullivan and I met this A.M. with Alan Gerson and Chuck Cooper of DOJ. We presented a proposal to work closely with NSC on a very quiet basis to research ways and means to squeeze off the flow of funds to terrorist organizations in the international financial system (same approach I used for the Nic. Trade embargo strategy). They were in enthusiastic agreement and are going to begin preliminary research immediately. We see a plan going something as follows:
    • Justice looks at existing laws both here and abroad (particularly Europe) to determine legal vehicle(s) needed to monitor/freeze/seize funds flowing to known terrorists. They will have preliminary info.in about 10 days.
    • NSC/Justice then calls in …[redacted]
    • We then put together a comprehensive gameplan to maximally track financial flows from Syria, Libya, Iran, etc. through the 400 or so principal banks that make up the interbank market; to notify and work with European Govs. to fill gaps in our coverage and to cooperate with us in freezing/seizing assets as appropriate (all on confidential basis).
    • We also would undertake an overt campaign to selectively expose particular conduits without compromising sources/methods.
    • The foundation will all be laid without Treas./State/Comm./STR knowledge and we will go to John with a complete package and plan probably to be presented by him over breakfast to Schultz with Casey/Meese/Weinberger to back him up as appropriate. They can then roll the others after going to the Pres.

    “If it is done right and the legal work is tight, it should work like the embargo.”

    • wallace says:

      quote” The foundation will all be laid without Treas./State/Comm./STR knowledge and we will go to John with a complete package and plan probably to be presented by him over breakfast to Schultz with Casey/Meese/Weinberger to back him up as appropriate. They can then roll the others after going to the Pres.”unquote

      Thanks Bill. Col. Prouty would be proud of you.

  5. Rich says:

    Where the author positions him/herself. “because of the way this data is collected and shared, it can’t be used in a trial.”
    Sure, it can’t be used.
    I suppose declarative statements simply make it true.
    It’s like the difference between hearing a Mormon declare “I take responsibility” and being “held” responsible by competent authority empowered to administer punishment.
    All the while their fellow travelers declare, “you see! There, he took responsibility”.

  6. Rich says:

    “Have the Banks Escaped Criminal Prosecution because They’re Spying Surrogates?”
    Can the answer be both “Yes” and it’s another distinction without merit?
    The banking system, the Gov’t, criminal enterprise are all interchangeable terms. There are no geniuses to be found here, not one single great leader either, just an assortment of Cons, sycophants, ass-kissers, and willing Tools to carry out and cover up the deed. Judiciary was co-opted decades ago. But their weakness, cowardice and depravity can found in the desperate need to find cover for their war of aggression and it’s signature torture program in the previously respected institution of US Medicine and it’s preening, fawning, physicians and psychologists. How else were they gonna pay Mitchell and Jessen that cool $180million to fully implement re-engineered SERE torture?

  7. Pitchfork says:

    It’s been a long time since I followed this stuff round the clock every single day, but while I think you’re onto something in regard to HSBC, maybe, national security issues don’t explain the failure to prosecute many or most of the crimes committed by the banks. Much of the relevant information on some crimes is actually in the public domain (e.g. Goldman’s Timberwolf CDO deal). And remember, too, that Breuer’s excuse (and Holder’s) has repeatedly been that they feared prosecutions would cause a great deal of financial/economic collateral damage. Not true, but that has been their go-to excuse. With Lynch, for instance, I think she’s simply lying. At most, she’s using national security as an excuse, but not as an actual reason.

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