Tom Burghardt: Wall Street Banks, Money Laundering and the Drug Trade!.

Once upon a time, Al Capone said: You can get much farther with a kind word and a gun, than you can with a kind word alone! In Reckless Endangerment, a lively expose of the frauds at the heart of the sub prime meltdown, journalists Gretchen Morgenson and Joshua Rosner wrote that if "mortgage originators like Nova Star or Countrywide were the Gretchen Morgenson, and Joshua Rosner wrote that if "mortgage originators like Nova Star or Countrywide were the equivalent of drug pushers, hanging around a schoolyard, and the ratings agencies were the narcotic cops looking the other way, brokerage firms providing capital to anything goes lenders were the overseers of the cartel." Their observations are the most relevant, given the outrageous behavior by major banks, which polluted an already terminally corrupt financial system, with blood spattered cash, siphoned off from the global drug trade. It wouldn't be much of a stretch to insist that drug money, laundered by financial giants like HSBC and Wachovia were in fact, little more than "hedges" designed to offset losses in residential mortgage backed securities (RMBS), sliced and diced into toxic collateralized debt obligations, as the 2007 to 2008 global economic crisis cratered the capitalist "free market." And like Wachovia's ill fated $25.5 billion buy out of Golden West Financial World Savings Bank at the top of the market in 2006, HSBC's 2002 purchase of Household International and its mortgage unit, Household Finance Corporation, for the then princely sum of $15.2 billion, also proved to be a proverbial deal too far. Evidence suggests that HSBC stepped up money laundering for their cartel clients, as the hyper inflated real estate bubble collapsed. Along with other self styled masters of the universe, who were bleeding cash faster than you can say credit default swaps, HSBC posted 2008 projected first quarter losses of "$17.2 billion, after the decline of the US housing market hid the value of its loans," according to BBC News. From there, RMBS deficits skyrocketed. By 2010, as Senate and Justice Department investigators were taking a hard look at bank shenanigans, Reuters reported that HSBC Holdings was "working off $20 billion worth of loans per year, in its US Household Finance Corp unit", where "liabilities stood at about $70 billion." However, if you slice today's epidemic of financial corruption, a trend already clear two decades ago, when economists George Akerlof and Paul Romer, published their seminal paper, Looting: The Economic Underworld of Bankruptcy for Profit. Incentives were huge, as senior bank executives inflated their balance sheets with "criminal proceeds likely to have amounted to some 3.6 per cent of GDP, or around US $2.1 trillion in 2009," according to 2011 estimate by the United Nations Office on Drugs and Crime (UNODC).