Follow the Money Laundering
by Harold Meyerson
Public safety and national
security may be the fashion of the moment, but when measured against such
cosmic absolutes as the right of banks to avoid oversight, they're really not
all that serious, are they?
That seems to be the position
of Republican Senator Phil Gramm of Texas, who last year blocked a Clinton-administration
proposal to ban access to American financial markets for those nations and
banks that didn't cooperate with money-laundering investigations. Our inability
to compel foreign banks to open their books, law-enforcement officials say, is
one reason that the Osama bin Laden network has been so hard to trace.
That argument didn't cut it
with Gramm, who, as chair of the Senate Banking Committee from 1999 until Jim
Jeffords's defection from the GOP this spring, effectively killed all efforts
to enable the treasury secretary to keep noncompliant banks and nations out of U.S. money markets. Those efforts ground to a halt this
spring, when the Bush administration made clear that it had little interest in
closing such global loopholes. Now, of course, Congress is expected to revisit the
issue, this time with bipartisan support for tightening the regs. The
administration may be rethinking its position, too, but Gramm is made of
sterner stuff. "I was right then and I am right now," he recently
told The New York Times.
Gramm has long been the go-to
guy for the banking lobby--which has found itself lousy with go-to guys since
the Bush administration came to town. In the bad old days of the Clinton presidency, then-Treasury Secretary Lawrence Summers spent much of the final year campaigning for
increased law-enforcement oversight of the banks. The Bush arrivistes, however,
proclaimed to all who would listen that they viewed Summers's alarms as just so
much big-government meddling. In an interview with The Wall Street Journal,
Treasury Secretary Paul O'Neill defended the right of banks to slam the door in
the inspector's kisser. "The government has not been respectful of the cost
it imposes on society," he announced. The New York Times reported that Bush
economy guru Lawrence Lindsey was equally disinclined to have the government
pursue investigations past the safe-deposit door.
Indeed, the administration
has been on the receiving end of a concerted campaign by banks and right-wing
think tanks to scuttle even the limited money-laundering policing programs that
currently exist. In June the Journal reported that Heritage Foundation President
Edwin Feulner had met for more than an hour with O'Neill, with the goal of
getting the United
States
to cease its pressure on nations like the Cayman Islands and Liechtenstein, whose bank-secrecy laws stand athwart
law-enforcement attempts to monitor illicit endeavors. The Journal further
reported that scholars at Heritage and other right-wing groups were "forming
a special task force to advise Treasury officials on their objections to
current money-laundering and tax-haven regulations."
Presumably, such
laissez-faire crusading has abated a bit since September 11--in some circles.
As yet, no one in the administration has said in so many words that Summers was
right. And if you ask Gramm, the specter of a terrorist dive-bombing a massive
office complex may be frightening, but it holds none of the primal terror of the
sight of a green-eyeshade government auditor tapping on the banking lobby's
door.
Harold Meyerson
Copyright © 2001 by The
American Prospect, Inc. Preferred Citation: Harold Meyerson, "Follow the
Money Laundering," The American Prospect vol. 12 no. 18, October 22, 2001 . This article may not be resold, reprinted, or
redistributed for compensation of any kind without prior written permission
from the author. Direct questions about permissions to permissions@prospect.org.
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