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The Banks Have Blood On Their Hands by smonebkyn


We invited Bill Black to return to explain whether the level of systemic risk due to fraud in our financial markets has improved or worsened since the dire situation he painted for us in early 2012. Sadly, it looks like abuse by the big players has only flourished since then.

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									     The Banks Have Blood On Their Hands
Adam Taggart
July 15, 2013

We invited Bill Black to return to explain whether the level of systemic risk due to fraud in our
financial markets has improved or worsened since the dire situation he painted for us in early
2012. Sadly, it looks like abuse by the big players has only flourished since then.
In the U.S., our regulators have publicly embraced a "too big to prosecute" doctrine. We are restraining,
underfunding, and dismantling regulatory oversight in the interest of short-term stability for the status
quo. Which, as a criminologist, Black knows with certainty creates an environment where bad actors
will act in their self-interest with assumed (and likely real, at this point) impunity.
If you can steal with impunity, as soon as you devastate regulation, you devastate the ability
to prosecute. And as soon as that happens, in our jargon, in criminology, you make it a
criminogenic environment. It just means an environment where the incentives are so
perverse that they are going to produce widespread crime. In this context, it is going to be
widespread accounting control fraud. And we see how few ethical restraints remain in the
most elite banks. You are looking
at an underlying economic
dynamic where fraud is a sure
thing that will make people
fabulously wealthy and where you
select by your hiring, by your
promotion, and by your firing for
the ethically worst people at these
firms that are committing the
frauds. And so you have one of
the largest banks in the world,
HSBC, being the key ally to the
most violent Mexican drug cartel,
where they actually did so much
business together that the drug
cartel designed special boxes to
put the cash in that they were
laundering that fit exactly into the
teller windows so that there would
be no delay. This is the efficiency
principle of drug laundering.

      So these banks figuratively have the blood of over a thousand people on their hands.
      They are willing to fund people that murder and torture and behead folks. And they are
      willing to do that year after year, despite warnings from the regulators that they are doing
      this. And the regulators are not willing to actually take serious action until there has been
      “true devastation.”

And as time passes, our ability to bring effective justice – should we want to – atrophies:
      I will tell you one of the things from being a former enforcement specialist: If you do not
      bring cases for year after year after year, it would be like a tennis player who stopped
      playing tournaments for ten years and never practices, and then he or she goes onto the
      court. What is going to happen?

      They will get crushed by the opposition. So once you have given up enforcing the laws, I
      can tell you this with my lawyer hat on and former enforcement hat: You fear bringing
      these cases because you have allowed your skills to deteriorate so badly.

Given the sorry statements from officials like Lanny Breuer, who stepped down as the DOJ Criminal
Division Chief earlier this year (he headed up the investigation of the banks and mortgage companies),
we may already be at this stage.
Black sees a natural end to this systemic rot: a day where the bad actors no longer trust one another,
and the system implodes upon itself:
I can tell you as a criminologist and as a former financial regulator, this is what you need to know
about fraud: Fraud involves me, the fraudster, getting you to trust me. And then I betray your trust
for my financial gain. And so there is no more destructive asset against trust than elite fraud.
So yes, we have been running a system under which the fraudsters
get incredibly wealthy. And now they get incredibly wealthy and
they do not even get prosecuted. And if there is a civil case –
actually, they get the worst of all worlds. It sounds large for
propaganda purposes, but all of us in finance know it is trivial. It is
often literally a week of income, where their income is massively
increased by the frauds. The statistics show that there has been a
general withdrawal of less sophisticated investors, in particular,
from the marketplaces -- and it's because people do not trust the
markets anymore.
Here is what people forget: After Lehman Brothers goes, the run
that occurred was not Ma and Pa. The run that occurred that, for
example, broke the buck in the money market mutual funds: that
was a massive run of the most sophisticated financial players,
where they were taking out hundreds of millions – or even tens of
billions, in some cases – of money, in some cases, literally, in
microseconds. In other words, bankers no longer trusted other
bankers. And when that happens, markets do not simply
become inefficient; they actually lock up. And that is what
happened thousands of times after Lehman collapsed, because
bankers would no longer trust other bankers’ evaluation of the

And we have not even discussed derivatives to this point. Which is the not-800-pound gorilla, but
the $8-trillion-ton-gorilla that is out there. So we already have the insanity of derivative trades in
which both of us book a gain because we have different evaluations for the asset. So we have
phenomenal paper gains that cannot be true. When the markets no longer trust each other, then
those kinds of transactions do not work anymore, and there is no liquidity, and you are in the
equivalent of trying to sell minority shareholder interest in a privately held corporation. How is
that going to work out for you? Ever tried to do that?

So all across the globe, all across history, minority shareholders get completely screwed in that
circumstance, when liquidity dries up. Well, the same thing can happen to much broader markets,
including in particular the derivatives markets.

And if it does, when trust is interrupted, much less eroded, in the ways I have talked about it
in the derivatives market, liquidity completely dries up. Anything that functions like a market-
maker collapses, and you get whole financial systems that grind to a halt. And they do not happen
just a few times. It can happen in thousands of markets roughly simultaneously.

You asked me earlier about Dodd Frank, and I said it had no coherent strategic vision. And a
couple of the areas in which it had no coherent strategic vision we have talked about. It did not
deal with the international competition-in-laxity. It did not deal with “too big to fail.” And it did
not deal with derivatives. So I would say that was strike one, strike two, strike three.

The Banks Have Blood on Their Hands VIDEO BELOW
CIA Will Now Openly Propagandize Americans
Kurt Nimmo
July 15, 2013

Smith-Mundt Act “reformed” this month allowing CIA to disseminate propaganda
Operation Mockingbird, the CIA’s long term effort to control the news, has shifted into overdrive.
On July 2, a little noticed “reform” passed in January went into effect. The Smith-Mundt
Modernization Act of 2012, passed as part of the 2013 National Defense Authorization Act, will allow
the CIA to flood America with more government propaganda.
The Smith-Mundt Act, passed as the national security state was taking shape in 1948, authorized the
State Department to unleash a tidal wave of propaganda outside the United States while supposedly
forbidding its dissemination inside the country. The law set the stage for Frank Wisner, who headed up
the CIA’s covert action division in the early 1950s, to build his “mighty Wurlitzer,” described by none
other than the New York Times as “the means for orchestrating, in almost any language anywhere in
the world, whatever tune the CIA was in the mood to hear.”
In the years since, the establishment media has worked hand in glove with the CIA. This cozy
relationship was revealed by Frank Church and the Select Committee to Study Governmental
Operations with Respect to Intelligence Activities in 1975 and, a few years later, by reporter Carl
“Among the chief executives who helped the CIA were William Paley of CBS, Henry Luce of Time,
Arthur Sulzberger of the New York Times, Barry Bingham Sr. of the Louisville Courier-Journal, and
James Copley of the Copley News Service,” write Amy Goodman and David Goodman in Unreality
TV, The Mighty Wurlitzer, Hijacking Public Media, a chapter from the book Static: Government Liars,
Media Cheerleaders, and the People Who Fight Back. “The leading TV networks, including ABC and
NBC, and the wire services-AP, UPI, Reuters, along with Hearst Newspapers, Scripps Howard,
Newsweek, the Miami Herald, and the Saturday Evening Post all had dealings with the spy agency. The
CIA’s most valuable associations were with the New York Times, CBS, and Time Inc.”
This media penetration by
the CIA is not merely a
baseless conspiracy theory as
some might argue, but is
backed up by CIA office
memos released under FOIA
revealing the placement of
“important assets” inside
every major news
organization in the country.
“It was not until 1982 that
the Agency openly admitted
that reporters on the CIA
payroll have acted as case
officers to agents in the
field,” writes Alex
“Most consumers of the
corporate media were – and
are – unaware of the effect
that the salting of public
opinion has on their own
beliefs,” Constantine
continues. “A network
anchorman in time of
national crisis is an instrument of psychological warfare in the MOCKINGBIRD media. He is a
creature from the national security sector’s chamber of horrors. For this reason consumers of the
corporate press have reason to examine their basic beliefs about government and life in the parallel
universe of these United States.”
Despite the promise of the Smith-Mundt Act – that a firewall stands between foreign and domestic
propaganda – the CIA, the bastard child of Wall Street lawyers, has never honored its charter
(prohibiting domestic operation) and has consistently utilized the corporate media as a propaganda
Enactment of the Smith-Mundt Modernization Act underscores the fact the CIA no longer pretends to
honor its charter and refrains from flooding the media with government propaganda. “The evaporation
of Smith-Mundt and other provisions to safeguard U.S. citizens against government propaganda
campaigns is part of a larger trend within the diplomatic and military establishment,” ace reporter
Michael Hastings wrote in May, 2012, more than a year before his assassination.
In fact, this “larger trend” has been in effect since the imposition of the National Security Act in 1947
and the establishment of the National Security Council, the principal forum used by the financial elite
and their intelligence apparatus to dictate policy to the president of the United States and the State


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