Fontainbleu Hotel, Miami Beach, Florida
Author: Catherine Austin Fitts
Bio: http://solari.com/about/caf_shortbio.htm
Date: Friday, April 07, 2000 4:39 PM
Thanks to a most generous benefactor, I am in Miami Beach at the
Fountainbleu Hotel at Money Laundering Alert’s Conference on Money
Laundering. The following is a summary report on what I have learned.
LESSON #1: RICH IS FUN
Sitting on the beach and having a tuna croissant sandwich overlooking the
ocean surrounded by handsome waiters and security guards, I am reminded of
how much I enjoyed being rich and intend to be again.
LESSON #2: THERE IS TREMENDOUS OPPORTUNITY TO MAKE MONEY IN MONEY LAUNDERING YET
The second lesson is that if I want to get rich again so that I can do this
regularly, I should go into money laundering. If the figure of $500 billion
a year in the US from DOJ that I read in the last year (and who knows what is true, but given the giant sucking sound of IMF and other money into BONY and folks like it, this is plausible), and the fees range from 2-10% depending on size and risk, then the total market is worth about $20 billion a year.
If half of that can be moved through publicly traded stocks we are
talking about $400 billion of potential capital gains.
So if I can buy a company that is making no money but is publicly traded,
and move about $10MM of net income through it, I can make capital gains in a year of $100-200MM. No wonder companies doing HUD portfolios are so richly competed for. No wonder the loan sales were cutting into something so wonderful. Just think. With a year of planning and another year of execution, one could earn back all the money that I lost. Maybe some of us should go see Mr. Tennant at the CIA and Mr. Radek at the DOJ and cut a deal to do some of their money laundering for a year or two, get some financing from Harvard Endowment and get my money back through the stock market.
After all, if you can make hundreds of millions laundering profits for the
Department of Justice, where is the risk? No doubt they may be ready for
someone how can use their HUD companies to make the kind of money you can make when you know how to do a good job at the fundamental business along with all the criminal activities.
LESSON #3: NEVER LAND ON NORMANDY BEACH WITH A WATER PISTOL
Arrayed to prevent this sweet honey pot of $20 billion in profits and $400
billion of capital gains, is an enforcement effort designed to make the
least possible investment in the appearance of financial integrity, while
ensuring that the US can become the premier money laundering country in the world, as well as the premiere reinvestment market for successfully
laundered funds.
Money laundering is the engine that makes sure the WTO corporate friendly facism works. It provides a low cost source of capital to build corporations in a manner that destroys the ability of the customers to maintain their cultural or political organization. They are too busy selling their homes and farmland for 10 cents on the dollar to pay taxes and for the legal expenses of getting their kids out of jail or educated, since the fiber optics only goes to the law firms and corporate HQ and is not available for education for children.
Bottom line, the US enforcement effort to prevent money laundering is the
financial equivalent of landing on Normandy beach with a water pistol. A few intelligent hard working people with no incentives and few resources,
probably drawing salaries of $50-125,000 a year at a government agency or bank, a bunch of consultants and attorneys making about double that and a few software companies thinking they can do even better.
I had expected at least sufficient enforcement to ensure that Mr. Tennant and Mr. Radek’s market franchise is protected. I did not see it. It is hard to go up against $400 billion of market value when you are worried about losing your kids health care insurance and no one who knows how money really works would be caught dead talking with you. I can only assume the boys protect the franchise with covert operations. The
real War on Money Laundering turns out to be Mr. Radek “just saying no” as US attorneys propose that the rare someone who pops up to be prosecuted when there are no incentives.
LESSON #4: MONEY TALKS
One panelist gave a presentation on the Bank of New York regulatory deal.
Bank of New York gets to keeps 100% of their money laundering profits and the senior management gets to keep their %. The bottom line is that Chairman Thomas Renyi made millions, and gets to keep his job and money and expense account while putting the blame on a few expendable women. The question why went unanswered, even after I asked. It appears that everyone knows.
Money talks. Crime pays.
LESSON #5: DESIGNED TO FAIL
The Money Laundering Enforcement and Compliance Industry is designed to fail. It uses the standard model of industries designed to fail. Here is
what they are:
1. Performance is measured by process
Regulation and enforcement is determined by process, not performance. Plans for reporting (like the special activity report) are created. If you follow the process, you are not liable for the results.
2. The Process is a 26 Step Process
The key to good compliance process that produces appearance but no results is that it is broken down into lots of steps and procedures that are very complex and that soak up lots of time as everyone wanders back and forth in the 26 step process. The 26 step process is also broken out through different departments that report to different people in a manner that will slow down communication and coordination.
3. Process is the only conversation allowed
It is essential that everyone is intensely interested in the process and no
one bothers to learn or understand who is who in the fundamental business, how they make money and how the real business works. This explains a culture where no one involved in the 26 step process is allowed to share knowledge
4. Incentives for process/No incentives for performance
Can you imagine going to a conference on stopping something that has $400 billion in potential profit and never one talking about how we can make money for ourselves or our institution?
I should note that no one was present from the Asset Forfeiture Fund at DOJ. The only money I saw mentioned was penalties that in the scheme of these profits were not meaningful except to smaller financing organizations who service the poor. I am reminded again of Napoleon saying “give me enough medals and I can win
any war”. Imagine trying to win a war with no medals and no money.
Only the enemy would come up with such a plan.
5. No portfolio strategy and analytics capacity
Having no maps and navigation tools helps avoid moral problems that arise when you can see what you are not doing and how the real money works. No macro, lots of micro.
LESSON #6: NOW WE CAN EXPLAIN THE EXPLOSION OF THE FEDERAL CREDIT
Eileen Mayer, an Associate Deputy Attorney General, who is detailed as the
Assistant to the head of FinCen, Jim Sloan, spoke at one of the panels to
describe the regulations just now being issued to cover non-bank financial
institutions as well as regs on Special Activity Reports (See Fincen
website). She discussed their thinking on a 2000 initiative developing
regulations to cover the securities industry and perhaps look at other
industries like insurance.
I asked her what interest Treasury or Fincen have
in mortgage banking in the 2000 initiative, including programs supported by Federal credit such as GNMAE, FHA, HUD, VA? In addition, if an FHA
correspondent mortgage banker wanted to file a SAR is there an enforcement location where they can file where the agents are knowledgeable about homebuilding and mortgage banking transactions?
Her answer was telling. Remember, her presentation was quite good and she struck me as an intelligent, hardworking, capable person.
Answer: I know nothing about mortgage banking and do not know how to answer your question, so if you give me your card and come see me, I will try to help you figure it out.
I got a chance to speak with her briefly when we exchanged cards. Based on what she said as well as speaking with all the software and information
services vendors in the marketing area, there appears to be no money
laundering regulatory or enforcement effort for mortgage banking and
homebuilding, and no awareness of the role of federal credit or efforts to
protect the federal credit.
LESSON #7: FEDERAL CREDIT HOUSE OF CARDS
I have a sinking feeling that federal credit, particularly mortgages, are
perfect for transferring money and value. They can be aggregated into
securities, and support derivatives because of the federal credit makes that
much easier and attractive in a global market.
The fact that HUD has gone to such lengths to make sure that its financial
statements and systems are not working and that our data tying aggregates of HUD credit and subsidy to places is not accessible and destroyed, combined with a complete absence of any real enforcement or systemic regulation to prevent financial fraud and money laundering, basically says that what we have is a $500 billion portfolio that is completely out of control.
God help us when we finally have to face what the taxpayers ultimate
liability is.
LESSON #8: THE MOST FUN PEOPLE AT A MONEY LAUNDERING CONFERENCE
This is the most uptight uncomfortable group I have ever been with. I got
into the elevator with a relaxed and fun black guy yesterday. I commented
about how uptight this crowd was. He laughed and said “Oh, that is because
there are so many spooks around.”
There are two British software companies with women making presentations (including one just hired to completely ensure that Bank of New York can never have problems again—imagine the schizophrenia they will face) and one young man showing the information providers products that make all laws and regulations available on line.
These are the most fun folks. One reason is that they are the only folks paid to make knowledge accessible. The other is that they are not yet clear about the fact that clarity and success are not desired.
LESSON #9: NOTE THIS FOR THE SCENARIOS IN YOUR BUSINESS PLAN
There is not one shred of evidence to indicate that my theory that folks are
ready to flip the model has any merit at all. I am going to build into my
planning for Solari, that organized crime is a growth business for the rest
of my lifetime.
LESSON #10: GENES
The paper reports this morning that we are ready to finalize a complete
mapping of all human genes. I guess that is the information we need to take the global population down by 20-95%
At lunch, the guy from Citigroup was
talking with someone who like genetically just like him was talking about
who was “agency” or not. He looked just like an OSS guy placed at Citigroup to make sure the machinery worked.
A video during lunch of organized crime in Miami explained that Capone had bought a house owned by members of the Bush family in the 1920’s. I
realized that the price was probably way over market value.
So the lesson does not change. Money follows genes. And the Bush genes have been in dope for many generations.
About the only question remaining is whether their pedophilia is genetic. In
closing it is interesting to note how the enforcement that they face in both
their drug businesses and use, their money laundering and their pedophilia
is remarkably the same across the board.
THE LAST LESSON
I had a great time. I love the ocean air. I feel very grateful to have much
better maps of my world. I understand now in concept on how to design the scenarios for our business plan. The only way I see to transform to
something healthy is with Solari. Only a model
that offers more wealth and more incentives in a context that promotes faith and family can compete with the Dope Inc. model.
At the same time, the popularity of facism that I see here is real and seems like it is growing. I have to find a way to have fun and build a new life without losing energy or sleep over it.
It is what it is. Our government, banks and corporations work for Dope, Inc. It is not a generalized concept any more for me. For the last four years, my bank, the government agency I served, and companies that I have done businesses with destroyed my company and wealth on behalf of Dope, Inc. I have lived the concrete specifics at the micro level and saw this translate to near everyone in my life executing the wishes and well being of Dope, Inc.
This conference underscores how easy it was for them to make money doing this, and how I and the folks who tried to stop it were sailing into the
headwinds of financial incentives.
Ervin got 15-30% to steal. I got nothing to build and create. The people
who helped me lost or got a rough ride. Until I reverse that one trade, and
I and the people who helped me get the 15-30%, the last lesson is clear.
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