Tag Archives: banking

Circling

Yesterday, April 30, marked a unique anniversary for me.  It’s been 30 years since I started working for a major banking corporation in Dallas.  I remained there – laboring over hot computer keyboards and angrier customers – for 11 years before I got laid off in April 2001.  But, I just realized: 30 years since that first day!  Wow!  The year 1990 still sounds relatively recent; attributed mainly to the 1990s being the best decade of my life.  A lifetime ago.

And, it’s amazing how much has changed since then.  Both society and me.  I’m more confident and self-assured now than I was in 1990.  I came of age in that final decade of the 20th century and I’ve improved myself in the many years since.  I’m not holding onto the past – not anymore.  I’m just reflecting.  I’m at the age where I find myself comparing life between then and now more often.  I’ve packed enough years into my life to do that.

It makes me recall how my parents often did the same.  ‘It’s been how long?!’  I heard that so many times; from when I was in grade school to the weeks before my father died in 2016.  Now, I find myself doing the same.

I’m certainly not upset about it.  I’ve experienced all of the good and bad life has to offer in various shapes, sizes and colors.  That happens, of course, as one navigates the rivers of our individual worlds.  It’s inevitable and unavoidable.  Making it to the half-century point of my life was a major milestone.  The alternative is not as attractive.

After the funeral of my Aunt Margo in 1989, we gathered at her house in suburban Dallas where she’d lived for over 20 years.  Sipping on beverages and eating food Margo’s neighbors had prepared, my mother and her two surviving siblings began regaling the group with tales of long ago.  My mother recounted one quaint moment at a church with her niece, Yvonne, one of Margo’s daughters.  After the priest had led the congregation in recitation of the ‘Hail Mary’, Yvonne – about 2 years of age – loudly asked my mother, “Aunt Lupe, what’s a womb?”

Startled, my mother mumbled, “Uh…I don’t know.”

“Oh, come on Aunt Lupe, yes you do!”

Behind them, she said, much of the fellow worshippers chuckled.  Even the priest laughed, she told us.

My father, sitting on a couch beside me, smiled broadly and uttered, “See, she remembers those little things.”

For me, those “little things” have added up.

A few years ago, at a gym I patronized, I got into a discussion with some young men about work.  They weren’t just friends; they were colleagues at a major financial institution.  I mentioned I’d labored at the bank for over a decade and found myself regaling them with tales of answering phones and mailing out scores of paper documents to clients and colleagues.  One of them told me that they all used their cell phones to stay in touch with people – clients and colleagues – and were connected all the time.  Little paper, he noted, almost 100% digital or electronic.  I laughed.  It didn’t make me feel old.  I realized immediately it was just progress.  But they enjoyed my description of such oddities at the time as telecommuting and video conference calls – along with reels of digital tape for recording phone calls and people trying to figure out how to refill the copier with toner.  I recall vividly a number of people with hands coated in the small-grain black powder and seeing toner EVERYWHERE.  I finally figured out how to insert the powder – using latex gloves I brought from home, with a bundle of dampened paper towels from the men’s room.  Curious gazes sprouted onto the faces of those young men at the gym; perhaps uncertain whether to laugh or express wonder.  I couldn’t help but laugh and say, “That’s how life was like in corporate America many moons ago.”  And, in turn, they collectively burst out laughing.

In my 20s, my father advised me to work as hard as possible during that period of my life; making small sacrifices along the way to ensure a solid future for myself.

“Work as much as you can while you’re young and save as much as you can,” he pointedly said, almost as if warning me.  “You’ll be damn glad you did when you get to be our age,” referring to him and my mother.

Last autumn one of my cousins, Laura, held a Thanksgiving gathering at her house, with her two daughters and the young son of one of them.  Her mother (my mother’s younger sister) lives with her.  Both women sat at the dining room table talking after the meal, while Laura and I stood in the den conversing.  Also present was one of her nephews, Andy (on her ex-husband’s side of the family).  My parents had first met Andy around the turn of the century, before he even entered kindergarten.  He grew to like them, especially my father.  I didn’t meet him until the summer of 2005, after a lengthy stint working in Oklahoma for the engineering company.  On that particular Saturday, my cousin had come to visit my parents with her daughters and Andy who was visiting for the weekend.

I had my dog, Wolfgang, corralled in a back bedroom and finally brought him into the den to meet everyone – whereupon the little monster I identified as a miniature wolf vocally unleashed his suspicion of the newcomers.

“Why’s he barking so loud?” Andy asked with a laugh.

“He’s just not used to seeing this many people,” I told him.

While the rest of us continued talking, Andy and Wolfgang were more focused on each other.  Andy eventually dropped to his knees, as Wolfgang sat and cocked his head back and forth; the way dogs do when they’re still trying to figure out something or decide if they like you or not.  I told Andy to let Wolfgang sniff the back of his hand, before petting him, which he did.  Within no more than a moment, the two were playing.  Yes, a little boy and a little dog make good playmates!  They got along very well.

At that Thanksgiving gathering last year, Andy was 23 and had grown into a strikingly handsome young man with a deep voice and a full beard.  He said he worked for a trucking company north of Dallas and had earned a sizeable income in 2018.  I immediately congratulated him and then told him to save as much of that money as he could.

“Don’t go out buying cars and motorcycles and drinks for everyone in your crew when you go out partying,” I advised.  As a very young man, I knew Andy was almost naturally prone to getting the best products life has to offer.  I truly did not want to see him work so hard, only to end up destitute at 50-something.  “Work hard and play hard, yes.  You’re young.  There’s no harm in going out with your buddies and partying and meeting women.  Just don’t do that too much and waste all that money eating and drinking.  You don’t want to turn into an angry old fucker like me or Laura.”

Both Andy and Laura burst out laughing.  But I feel Andy understood how serious I was.  I then asked him if he remembered Wolfgang and I recounted that day I first met him and how he had played with the dog.  He had to think for a moment, before he finally did.  “Little gray dog with big brown eyes, right?”

“Yes!”

He asked me what had become of him.  I had to explain how the dog’s health had begun to fail at the start of 2016 and the stroke-like episodes he’d started to experience were a heart murmur gradually worsening.  I then detailed how Wolfgang acted on the day my father died and how he himself passed away less than five months later.

Andy stared at me blankly for a few seconds – and I thought briefly he was going to cry.  His eyes seemed to quiver, before he muttered, “Oh, man.  Sorry to hear that.  I guess that was kind of unexpected, huh?”

“No,” I answered.  “Dogs get old and sick – just like people.”  No, Wolfgang’s death wasn’t unexpected.  When he turned 10 in 2012, I told my parents we needed to brace ourselves for his eventually demise.  It seemed they didn’t want to talk about it.  I could understand.  We never discussed how and when our German shepherd, Joshua, would die – until the day we had to carry him into the vet’s office.

Another thing my parents had advised me to do many years ago was to complete my higher education.  I promised them I would and even after I started working for the bank, I maintained at some point I would return.  I didn’t fulfill that promise until 2007.

About 10 years ago I attended a dinner party with some close friends and met a young woman who had dropped out of college because she was having so much trouble at that time.  She was now gainfully employed, but still longed for completion of that collegiate endeavor.  I strongly suggested she make the effort because it would be worth the trouble.  “You’ll find life gets busier as you get older,” I said.  “It just does.  You realize you want to do more things.”  I emphasized I wasn’t chastising her or telling her what to do with her life.

Someone else asked, if I felt at that point in my life, it was proper to give advice to younger people.

“I don’t like to say I give advice,” I replied, “because that’s almost condescending.”  But I was entering the phase of my life where, if I know or meet someone who’s making the same mistakes I made when I was young, I feel the obligation to relay my own experience with that issue and how I dealt with it.  As the adage goes, hindsight is 20-20.  Education had grown to become more important to me as I reached my 40s – and, as with my creative writing, it’s not so much that life kept getting in the way.  I let life keep getting in the way.

It’s a curious sensation, though.  Life is now coming full circle.  And it actually feels pretty good.

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Voodoo You

“It just isn’t going to work, and it’s very interesting that the man who invented this type of what I call a voodoo economic policy is Art Laffer, a California economist.” – George H.W. Bush, Carnegie Mellon University, April 10, 1980

 

I’m frightened for the United States, and it’s not just because of my disdain for our faux president, Donald Trump.  I’m genuinely concerned about what could happen over the next few years.

In the above quote, George H.W. Bush was referring to the plans of fellow Republican and 1980 presidential candidate Ronald Reagan for revitalizing a stagnant U.S. economy.  Then, when Reagan won in most of the primaries, his camp offered Bush the vice-presidential position, and the former Texas congressman shut up about economics.  In 1980, the nation was in a bad financial situation.  The costs of the Vietnam War, coupled with oil embargoes from OPEC nations, had finally taken their toll.  Unemployment stood at nearly 10%; the prime interest rate was 21%; inflation was 14%; home mortgage rates were 17%; and the top marginal tax rate was 70%.  In the second quarter of 1980, the U.S. gross domestic product (GDP) declined by 8%.  By the end of the year, the overall GDP boasted about $3 trillion (in today’s dollars).

With the help of some Democrats in both houses of the U.S. Congress, Reagan was able to generate an agreement that slashed taxes down to 50% on wages, to 48% on corporate income, and to 20% on capital gains.  These measures initially jumpstarted the economy.  Average citizens had more expendable income, which they poured back into the economy by purchasing many so-called big ticket items, like vehicle and electronics.  By 1990, the size of the U.S. economy had grown from $3 trillion to $6 trillion, with roughly 4 million new businesses and 20 million new jobs created.  Although the national debt increased from $1 trillion to $4 trillion during the same period, overall revenues doubled.

Reagan’s economic policies were in line with conservative views on taxation: if we give the “investing class” (meaning, the most affluent) generous tax breaks, they will respond by expanding their businesses or starting new ones, which in turn, will create more products and / or services and more jobs.  Along with reduced business regulations (“job killers” in conservative lingo), average citizens will have more income, which of course, they will pour back into the economy.  Such growth then will expand the tax base; the additional revenue will replace any money lost to the initial tax cuts.

Ask any frustrated project manager and they will tell you that everything always looks great on paper.  While Reagan disciples keep championing his financial moves, the reality is that “Reaganomics” didn’t work out as planned.  One thing people forget is a little thing called the Garn-St. Germain Depository Institutions Act of 1982, which rolled back financial regulations that had been established by the administration of Franklin D. Roosevelt to prevent further damage caused by the 1929 stock market crash and the ensuing Great Depression.  It’s interesting that Bush’s voodoo comment was made at Carnegie Mellon University.  Founded by Andrew Carnegie in 1900 as Carnegie Technical School, it merged with the Mellon Institute of Industrial Research in 1967 to become Carnegie Mellon.  The Mellon Institute had been established in 1913 by brothers Andrew and Richard B. Mellon who, like Carnegie, were self-made businessmen and titans of early 20th century America.  Andrew Mellon served as Secretary of the Treasury from 1921 – 1932, one of the longest tenures for this position.  He created the “trickle-down” economic theory by declaring, “Give tax breaks to large corporations, so that money can trickle down to the general public, in the form of extra jobs.”

But Andrew Mellon is also known for a notoriously rotten hands-off policy with the Great Depression.  The banks that failed had put themselves in such a precarious financial position, he believed, and thus, they were responsible for extricating themselves from it.  It didn’t seem to matter that these bank failures took people’s money with them; therefore, amplifying the effects of the 1929 crash.

Still, President Reagan – like any good fiscal conservative – held onto these beliefs and eagerly signed the Garn-St. Germain bill.  That reduced the number of regulations on financial institutions and allowed them to expand and invest more of their customers’ deposits in various ventures, particularly home mortgages.  Again, that looks-great-on-paper ideology swung back around to bite everyone when the Savings & Loans Crisis erupted.  Between 1986 and 1995, 1,043 out of the 3,234 savings and loan institutions in the U.S. failed; costing $160 billion overall, with taxpayers footing $132 billion of it.  It was the worst series of bank collapses since the Great Depression.  That led to the 1990-91 Recession, the longest and most wide-spread economic downturn since the late 1940s.  I started working for a large bank in Dallas in April of 1990 and saw the S&L crisis unfold in real time.

Nonetheless, trickle-down economics saw a rebirth with George W. Bush, as his administration further deregulated the banking industry and also deregulated housing.  Combined with the costs of wars in Afghanistan and Iraq, the U.S. economy almost completely collapsed at the end of 2008.  The 2007-08 Recession was the worst economic downturn since the Great Depression.  Unemployment reached double digits for the first time since the start of the Reagan era, as millions of citizens lost their homes and their savings.  Had it not been for such programs as the Federal Deposit Insurance Corporation (the FDIC, established by Roosevelt), we surely would have plunged into another depression.

Now, with Donald Trump in office, I fear we’re headed for the same morass.  On December 22, 2017, Trump signed the Tax Cuts and Jobs Act; the largest overhaul of the U.S. tax code in 30 years.  Financial prognosticators have already forecast the act will raise the federal deficit by hundreds of billions of U.S. dollars over the next 10 years.  The law cuts individual taxes temporarily, but cuts corporate tax rates permanently.  As suspected, the most affluent citizens will benefit greatly, as they experience a significant reduction in their taxes.  The rest of us lowly peons may see a tax increase after those temporary provisions expire in 2025.

You know that classic definition of insanity?  Doing the same thing over and over, while expecting different results.  It’s more like, well, if you keep doing stupid shit, stupid shit will keep happening!

Ignore Russia-gate for a moment and the fact Melania’s side of the First Bed is colder than a Chicago winter.  This past week Trump visited the World Economic Forum (WEF) annual meeting in Davos, Switzerland.  This is where the most elite members of the business world meet (conspire) with leaders of developed nations to create economic policies and decide what’s best for us peons.  Kind of like evangelical Christians often meet to decide what people should see and read.  They’ve set themselves up as the righteous few; the ones who supposedly understand exactly what works and what doesn’t and are divinely compelled to bestow such knowledge upon the rest of us.

Trump ran his presidential campaign on the wave of anti-Washington sentiment; appealing to average citizens about reviving a once-lost “Great America” with a variety of clever ruses: ban Muslims, build a wall along the Mexican border, etc.  So many people, of course, bought into it.  Like Ronald Reagan, Trump was able to tap into that sensitive nerve of everyday angst; spitting out a slew of quaint buzz words to appeal to average folks.  He had said he would never take part in a WEF convention.  Yet, there he was; leading a parade of those self-righteous few into another kind of revitalization: the Gilded Age.

I doubt if most Trump voters even know what Davos means and how it could impact their lives.  Understand, though, that Switzerland is a place where Hollywood celebrities often went for a retreat or a little vacation – code words for cosmetic surgery; long before Phyllis Diller made it openly acceptable.  That’s essentially what Donald Trump did this past week.  He flew to Davos to tell the world, “America first is not America alone.”

I’m frightened for the United States.

 

Image: Golden Spike National Historic Site, Utah.

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Drugged Banking

drugs-and-money

In 2012, HSBC Bank USA N.A. agreed to a $1.256 billion settlement with the U.S. Justice Department for its failure to monitor the activities of drug cartels using the bank to launder their money.  HSBC USA, which is headquartered in McLean, Virginia, and part of the international financial conglomerate known as HSBC Holdings, didn’t admit any wrongdoing (no surprise there), but agreed to the massive settlement to avoid prosecution.  According to documents released by the DOJ, HSBC essentially violated the Bank Secrecy Act (BSA), the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) by not adhering to anti-money laundering measures and by not conducting appropriate due diligence of its foreign account holders as required by U.S. banking laws.  In other words, they simply looked the other way while gladly accepting customer deposits and didn’t ask any questions.

HSBC (formerly the Hong Kong and Shanghai Banking Company) traces its roots to the ambitions of a Thomas Sutherland, a Scotsman with the Peninsular and Oriental Steam Navigation Company.  Realizing the need for solid banking facilities in the Orient, Sutherland founded the Hong Kong and Shanghai Banking Company in Hong Kong in March of 1865.  He opened its Shanghai affiliate a month later.  Within a few years, the entity grew to become the largest financial institution in Asia.  In 1992, the corporation acquired London-based Midland Bank and evolved into the present-day HSBC Holdings PLC.

Law enforcement officials in the U.S. and other nations like to talk tough when discussing the multi-national drug war.  In June of 1971, President Richard Nixon formally declared a “war on drugs,” a direct response to the increased usage of marijuana, LSD and other narcotics.  He advocated mandatory sentencing for even minor drug possession offenses and no-knock warrants.  However, in 1972, an independent commission recommended decriminalization of marijuana and allowing it for personal use.  Nixon, of course, balked at the idea.  But, between 1973 and 1977 eleven states decriminalized marijuana possession.  In October of 1977, the Senate Judiciary Committee voted to decriminalize marijuana possession for anyone caught with no more than an ounce of the drug.  President Jimmy Carter tried to focus attention on treatment instead of imprisonment.  But, by the 1980s, the tide had begun to shift against such reasonable approaches.  Many parents were growing concerned about the rising rates of marijuana usage among teenagers.  Ronald Reagan came into office in 1981 promising to intensify the war on drugs.  The number of people jailed for drug offenses skyrocketed from 50,000 in 1980 to 400,000 in 1997.  Even First Lady Nancy Reagan jumped into the fray with her quaint but laughable “Just Say No” campaign.

Today, the United States spends an average of $51,000,000,000 annually to combat illegal narcotics possession, transport and sales.  In 2012 alone, 1.55 million people were arrested in the U.S. for nonviolent drug charges.  We have more than 2.2 million incarcerated (more than any other nation), mostly on drug charges.  The U.S. – Mexican border has become highly militarized.  Both people and dogs are trained to detect illegal narcotics stored away in suitcases and vehicle glove compartments.  Traffic flows on border crossings between the U.S. and México has slowed dramatically in the past decade, due primarily to drug searches.

But, we’ve seen no improvement.  Drug usage in the U.S. remains high.  So does the violence.  The crack cocaine epidemic that exploded in the 1980s has metamorphosed into a seemingly persistent state of bloodletting.  By the turn of the century, the narcotics trade had migrated from such far-flung places as Bolivia and Columbia to México.  In 2006, Mexican president Felipe Calderón launched his own war on drugs.  And, that’s when things worsened.  The level of violence resulting from this half-hearted venture has culminated in the deaths of at least 100,000 people and the disappearance of more than 20,000 along the U.S. – Mexican border.  México already has a reputation for police corruption, but the average Mexican citizen is vulnerable to the fierceness of drug cartels.  Border towns have become especially dangerous.  Even people who aren’t involved in drug activities can fall victim to the violence.  Ciudad Juarez, just across the Rio Grande from El Paso, Texas, is one of the most dangerous cities on Earth.

But, this all goes back to the banks.  Mexican drug cartels are not only incredibly brutal; they’re also unbelievably wealthyJoaquin “El Chapo” Guzman Loera, former head of the Sinaloa cartel who was captured recently in México, had the unique distinction of being on the United States’ “Most Wanted” list as well as one of the richest people in the world, according to Forbes.  In fact, Forbes estimated that the Sinaloa cartel’s annual revenue exceeds $3 billion.

People often ask where all that money originates.  But, I always wonder where it’s stored.  This isn’t digital currency, as in “bitcoin.”  They’re hard dollars.  U.S. paper currency is rectangular-shaped and measures 2.61” wide by 6.14” long with a thickness of 0.0043”.  A stack of 100 pieces of U.S. paper currency, therefore, would stand 43” (3’ x 7”) high.  If you multiply that into the billions, then it becomes obvious that the money not only weighs a lot, but it takes up a great deal of room.  Where would one keep, say, a million dollars in hard currency?

Enter the duplicity of the banks.  Drug cartels wouldn’t be able to operate and function without seeming impunity if financial institutions actually enforced laws regarding cash deposits, which are lengthy and detailed.  Banks must notify the government if they receive $10,000 or more in a single cash deposit.  They must also report to the government any cash withdrawals of that amount.  They have to file a Form 8300 within 15 days after such a transaction.  But, the laws grow vague regarding “suspicious activity.”  If a customer suddenly starts making cash withdrawals in the thousands, for example, the bank is legally obliged to report it.  That, however, leaves it up to the institution.

When I worked for a major bank in Dallas, each associate was required to partake in a money laundering seminar every year.  We viewed videos and slide presentations of how money is surreptitiously moved through a bank to avoid detection of criminal activity.  The “know your customer” rule was hammered into us.  In retrospect, I realize my colleagues and I were on the low rung of the financial totem pole.  Technically, we were the first line of defense.  But, do the same rules apply to the executives who actually run the company?

In 2010, Wachovia Corporation, another large U.S. banking conglomerate, agreed to pay $160 million in forfeitures and fines after officials accused it of “willfully overlooking” the suspicious nature of $420 billion in transactions between the bank and Mexican currency-exchange houses.  The movement of that much money should have alerted Wachovia associate to a nefarious undercurrent.  But, it didn’t.  Or, maybe it did, and no one bothered to investigate further.  I suspect Wachovia and other banks often know exactly what’s going on with the transfer of so much money, but deliberately ignore it.  Are drug cartels that intimidating?  Or, is the lure of vast cash reserves just too great of an opportunity to pass up?  Perhaps, it’s both.

The fiascos involving both HSBC and Wachovia remind me of Bank of Credit and Commerce International (BCCI), an international banking organization established in Luxembourg in 1972 by a Pakistani financier, Agha Hasan Abedi, with offices in London and Karachi.  Within a decade, BCCI boasted more than 400 branches in 78 countries and assets over $20 billion in assets.  But, its goals were purely criminal.  BCCI deliberately avoided regulatory oversight in the countries in which operated for the express purpose of enriching its executives and shareholders.  But, it all came to an extraordinary end in 1991 as bank regulators in seven nations became fully aware of BCCI’s activities and began shutting down its operations.  It was one of the boldest and most flagrant acts of financial malfeasance the world had ever seen.  Critics joked that BCCI stood for “Bank of Crooks and Criminals International.”

Every day in America someone gets arrested for minor drug possession.  These individuals aren’t the brains behind the giant drug cartels wreaking havoc on the citizenry.  They’re usually people just trying to make some quick cash, or hoping to get relief from the traumas of their everyday lives.  Yet, they’re the ones who get caught up in the criminal justice system and are sent off to prison.  The people inciting drug-fueled violence aren’t necessarily the ones stalking dusty streets and dimly-lit back alleys.  They’re the folks in business suits, lunging in corner offices.

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