Courtesy of Pam Martens
Private Banks operated by the mega Wall Street banks have an unseemly reputation. So when we opened Atlanta Fed President Raphael Bostic’s financial disclosure forms and saw that he had a financial relationship with Morgan Stanley’s Private Bank, a red flag went up immediately.
Citibank’s Private Bank was previously the subject of an investigation by the U.S. Senate’s Permanent Subcommittee on Investigations. At a hearing on November 9, 1999, the Chair of the Subcommittee, the late Senator Carl Levin, explained how private banks work. Levin stated:
“Once a person becomes a client of a private bank, the bank’s primary goal generally has been to service that client, and servicing a private bank client almost always means using services that are also the tools of money laundering: secret trusts, offshore accounts, secret name accounts, and shell companies called private investment corporations. These private investment corporations, or PICs, are designed for the purpose of holding and hiding a person’s assets. The assets could be real property, money, stock, art, or other valuables. The nominal officers, trustees, and shareholders of these shell corporations are often themselves shell corporations controlled by the private bank. The PIC then becomes the holder of the various bank and investment accounts, and the ownership of the private bank’s client is buried in the records of so-called secrecy jurisdictions, such as the Cayman Islands.”
In 2019, the New York Times revealed how higher ups at JPMorgan Chase’s Private Bank continued to retain sexual predator Jeffrey Epstein as a client, even after he pled guilty to soliciting sex from a minor and was jailed.
McClatchy newspapers noted in 2016 that “the Panama Papers are full of examples of the wealth-management and ‘private banking’ divisions of U.S. and global banks working with customers to hide their assets elsewhere. Banks listed in the documents – including Citigroup, Morgan Stanley, Wells Fargo, Merrill Lynch and SunTrust – declined to comment.”
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