Tuesday, February 19, 2008

Voluntary guidelines don't "ensure" Ex-Im Bank won't give more loans to drug cartels

According to the Sarbanes-Oxley Compliance Journal, the Ex-Im Bank's new "Know Your Customer" initiative - which Grits readers will recall was created after WFAA-TV reporter Byron Harris in Dallas revealed the agency had given loans to figures associated with drug cartels - will be "ensuring that Ex-Im Bank supports creditworthy and legitimate transactions."

The problem is, the Know Your Customer background checks that would notify authorities of drug-related loans aren't mandatory under the guidelines.

So how does that "ensure" anything? It's one thing to identify "best practices"; it's quite another to require them to be implemented before your loanmakers give taxpayers' money to criminal smuggling gangs.

I'd like to see the Government Accounting Office or some independent auditor follow up on WFAA's revelations about Ex-Im Bank loans to drug cartels. Their self policing obviously is insufficient, and my guess is that Mr. Harris has only uncovered the tip of the iceberg.


Anonymous said...

This story generates little outrage for me.

We give drug cartels a monopoly on the US controlled substance market. That monopoly is worth billions.

These banks are recapturing some drug cartel profits, which are then subject to federal taxation. A roundabout benefit to the taxpayer. Not as good as legalization.

When drugs are legal, these loans will be made to Pfizer, Phillip Morris etc.

The last thing we need is more government regulation of the financial industry. Government caused this problem, more government will not solve it.

Anonymous said...

There's another, less obvious reason why the government is loathe to intervene.

Given the sordid history of the drug cartel/banking institution's symbiotic relationship (one that goes all the way back to the mid-19th century's Opium Wars) and how much of that newly-washed dirty money is being loaned out as credit to sustain the economy, I doubt that many government agencies will be particularly diligent in 'regulating' that pool of cash. Plenty of opportunities to do so existed before, and were not taken advantage of.

Now, with this country enduring increasing economic stress, the likelihood of that happening is receding further.

When you're floating in a leaky lifeboat in shark-infested waters, the last thing you want is somebody demanding that everyone do jumping-jacks exercises. The person making that demand is more likely to become shark-food courtesy of being thrown overboard by the other occupants...which is why any really forceful attempt to investigate this matter will be met with the same degree of stonewalling and obfuscation that allowed the BCCI scandal to continue long after it was obvious something was seriously wrong.

Anonymous said...

Oh DEAR! Banks shouldn't be loaning money to drug cartels! What if the cartels' customers (Americans) quit buying drugs? The cartels wouldn't be able to pay their bank loans! AH! But Americans are NOT going to stop buying drugs, are they? From a purely business point of view... sad to say - but banks loaning money to drug cartels is an absolutely safe investment as long as God keeps on making Americans.

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