With Treasury Secretary Tim Geithner arriving in Germany for meetings today, including with European Central Bank (ECB) President Mario Draghi, it is now the time to pose the same questions to Draghi that Geithner is facing:
1) What did the ECB know, or should have known, about the narcotics money laundering activities of the HSBC? Until 2010, the ECB had a contractual relationship with HSBC to manage the ECB's euro banknote "Extended Custodial Inventory" (ECI) in Hong Kong. This was basically a bank vault run by HSBC, for the ECB, storing euros from wholesale banknote purchases and sales. HSBC's own wholesale banknote business ("bulk cash") in Hong Kong was run by HSBC U.S., and it was this capability that the ECB used. Under Geithner's 2004-2009 running of the Federal Reserve Board of New York (FRBNY), massive amounts of narcotics money were absorbed by banks as ready liquidity, parallel to the criminal LIBOR rate fixing, both to the benefit of central bank orchestrated bailouts. According to the Senate Permanent Subcommittee on Investigations Report, HSBC U.S. ran a $300 billion a year wholesale banknote business without any effective anti-money-laundering controls, such that billions of banknotes from cocaine trafficking and other criminal proceeds worldwide were deposited by HSBC U.S. at the FRBNY.
2) HSBC U.S. administered for Geithner's FRBNY, ECI bank vaults in London and Singapore, as well as in Frankfurt until 2010. The Frankfurt HSBC dollar cash vault was used by Geithner's NY Fed to manage the massive amounts of dollars in use in Russia and eastern Europe. Did the ECB and its Bundesbank member conduct investigations on potential criminal origins of the dollar banknotes in any transactions they had with the NY Fed/HSBC Frankfurt banknote vault?
3) The 500 euro banknote is a notorious favorite of criminal syndicates and drug traffickers around the world. There are now more physical euro notes in circulation around the world than physical U.S. dollars. By value, more then 1/3 of Euro notes in circulation are either the 200 euro or 500 euro notes. It is estimated that over 25% of the 500 euro notes in circulation are in Spain, the main entry point of cocaine into Europe. Spanish authorities link money laundering using the 500 euro note to the real estate bubble and its bankruptcy, where the banks involved are now to be bailed out by European taxpayers paying into the EFSF and ESM. Like the U.S. Federal Reserve, the ECB also manages a currency highly linked to crime and money laundering. According to a January 2011 Reuters article, U.S. law enforcement officers conducting field investigations into narcotics money laundering are denied access to the intelligence the New York Fed has on potentially criminal wholesale banknote transactions. The intelligence is considered "proprietary information" of the private banks controlling the New York Fed. As we saw with Wachovia and HSBC, such private banks laundered massive amounts of narcotics money. Does the ECB, and its member bank, the Bundesbank, make available to law enforcement, information from its own wholesale banknote programs, of potential investigatory leads on money laundering? In the period of 2007-2009 the ECB expanded its production and sale of newly minted euro notes, with the 500 euro note being prominent. The ECB "earned" billions for its balance sheet (known as seignorage) precisely at the time it began taking in the toxic assets of banks throughout the Eurozone. Does the ECB conduct "know your customer" investigations when selling it's 500 euro notes?
4) In December of 2007, the U.S. Federal Reserve transacted the first of numerous currency swaps with the ECB, in reaction to the July 2007 freeze-up of the London-centered Interbank Market, in an effort to influence the LIBOR. As we now know, Geithner at the FRBNY had knowledge of, and didn't act on, the criminal manipulation of LIBOR. At the same time, the FRBNY was taking in the narcotics money laundered by HSBC U.S. ECB head Draghi stated at a Frankfurt press conference on the Libor scandal, "I don't know what the ECB would have done, but I hope we would have done better." Given the intensive consultations with the Bank of England and the U.S. Federal Reserve to bail out banks hit by the collapse the Interbank Market, will Draghi make public communications of his predecessor Trichet and ECB regarding LIBOR and the Interbank Market?