**Note: We are republishing each of the 22 challenges from Catherine’s fiscal cliff article – one a week. Helps to digest them bit by bit!**
By Catherine Austin Fitts
Federal enforcement is focused on centralizing political control and generating revenues for itself, increasingly placing it into profit-sharing arrangements with successful managers of money laundering, financial fraud and organized crime.
Here is one story from one of my personal experiences with this phenomenon:
We were warned that the HUD Inspector General’s office had a very negative response to the “neighborhood networks” model of community learning centers, with one of the enforcement team members referring to such efforts as “computers for niggers.” Essentially, the vision we were proposing was in competition with their enforcement business, which consisted of dropping 200 person “SWAT” teams into a neighborhood to round up and arrest lots of young people who were in the wrong place at the wrong time and could not afford an attorney. This required a fundamentally different approach and philosophy. One model proposed helping the people in a place improve. The target=other proposed rounding them up and pushing them out so that new people could be moved in.
The highly successful HUD loan sales had also run into a problem with the staff of the HUD Inspector General’s Office. According to HUD staff, the HUD OIG staff wanted the HUD loan sale staff to withdraw loans from sale portfolios so they could pursue civil money penalties against the building owners. If the loans were sold, it would be better for the FHA fund and for building residents and the surrounding communities. However, it would make less money for the “Sheriff of Nottingham” business in HUD OIG. The IG and General Counsel staff were apparently indifferent to overall best interests of the government on a government wide basis let alone taxpayers and communities.
Years later, when HUD Inspector General Susan Gaffney was asked during a deposition what the recovery rates were on HUD’s defaulted mortgage portfolio before, during and after the loan sale program that The Hamilton Securities Group pioneered, she said she had no idea. Her attitude suggested that this was not an important piece of information. Which suggests that she found something that had billions of dollars of impact on the FHA Funds each year to be of no interest. The focus in federal enforcement was on activities that made money and garnered funding support and headlines directly for the enforcement teams. This “for-profit” philosophy was surprisingly blatant. I was reminded of the Congressman who jumped up from dinner to cast his vote in appropriations committee and as he rushed off said to me, “Let’s face it, honey, I’m only here to protect my shit.”
Catherine Austin Fitts, Dillon Read & Co. Inc. & the Aristocracy of Stock Profits
The implosion of the latest housing bubble in recent years has focused many Americans on the complete absence of any prosecution of the extensive financial fraud involved. The most recent outrageous example is a $1.92 billion settlement with HSBC for money laundering, including sizeable laundering with Mexican drug cartels, in which not even one corporate officer was held legally responsible by the Department of Justice. Meanwhile, 1.5 million people were arrested in America for non-violent drug charges in 2011.
How does the U.S. government go about asking its citizens to pay more taxes to fund a financial operation that depends on being the global leader in money laundering and keeping American communities accessible for narcotics trafficking? Have we crossed the line between a sovereign government and a racketeering operation?
