Courtesy of Pam Martens
Deutsche Bank Headquarters in Frankfurt, Germany
There’s a troubling story out this morning at Bloomberg News indicating that the Federal Reserve “is examining how Deutsche Bank AG handled billions of dollars in suspicious transactions from Denmark’s leading lender [Danske Bank], according to people familiar with the matter, further intensifying what could be one of the biggest money-laundering scandals ever.”
The story is troubling because (a) probing potentially criminal money laundering is the job of the Justice Department which can impose criminal charges, not the job of the Fed which cannot; and (b) the Fed is notorious for slapping knuckles and imposing small fines. The Fed’s New York regional bank, which plays an outsized role in the Federal Reserve system, is a deeply conflicted regulator. And, let’s not forget that it was the Fed that secretly funneled $16.1 trillion of almost zero interest loans to the global banks from 2007 through the middle of 2010 and then fought in court for years to try to keep these loans a secret from the American people.
Danske Bank is already under a criminal investigation by the U.S. Justice Department over the potential laundering of upwards of $230 billion out of Russia from its tiny Estonian branch. A November news report at Bloomberg indicated that Deutsche Bank, JPMorgan Chase and Bank of America had also been drawn into the Justice Department’s probe.
An earlier report in September of last year by the Wall Street Journal identified Citigroup as involved in transactions going in and out of the Danske Estonian branch, according to a whistleblower complaint filed with the SEC over two years ago.
The public needs no further proof of the Fed’s inability to supervise the global banks than the fact that, at a time when it had dozens of its own inspectors sitting inside the banks, the banks were able to create toxic waste dumps of subprime debt and derivatives that blew up the U.S. financial system, the housing market, and the U.S. economy in 2008 while also taking down 100-year old Wall Street institutions. If that’s not incompetence, we don’t know what is.
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