Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=56445"><span class="small">Matt Taibbi, Substack</span></a>
Tuesday, 29 September 2020 12:37
Taibbi writes: "On December 11, 2012, U.S. Justice Department officials called a press conference in Brooklyn."
President Trump's one-time campaign manager Paul Manafort arrives at Manhattan Supreme Court, June 27, 2019, for his arraignment on mortgage fraud charges. (photo: Timothy A. Clary/Getty Images)
Revenge of the Money Launderers
By Matt Taibbi, Substack
29 September 20
The "FinCen files" story reveals: getting caught doesn't stop banks from taking dirty money. It may even encourage them
n December 11, 2012, U.S. Justice Department officials called a press conference in Brooklyn. The key players were once and future bank lawyer Lanny Breuer (disguised at the time as Barack Obama’s Assistant Attorney General in charge of the DOJ’s Criminal Division), and Loretta Lynch, the U.S. Attorney for the Eastern District of New York, and future Attorney General. The duo revealed that HSBC, the largest bank in Europe, had agreed to a $1.9 billion settlement for years of money-laundering offenses.
An alphabet soup of regulatory agencies was represented that day, from the Justice Department, to Immigration and Customs Enforcement (ICE), the U.S. Treasury, the New York County District Attorney, and the Office of the Comptroller of the Currency, among others.
The regulators outlined a slew of admissions, with HSBC’s headline offense being the laundering of $881 million for Central and South American drug outfits, including the infamous Sinaloa cartel.
The laundering was so brazen, regulators said, the bank’s Mexican subsidiary had developed “specially shaped boxes” for cartels to pack with cash and slide through teller windows. The seemingly massive fine reflected serious offenses, including violations of the Bank Secrecy Act (BSA), the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA).
The next years would follow up with a flurry of similar settlements extracting sizable-sounding fees from other transnational banks for laundering money on behalf of terrorists, sanctioned businesses, mobsters, drug dealers, and other malefactors. Firms like JP Morgan Chase ($1.7 billion), Standard Chartered ($300 million), and Deutsche Bank ($258 million) were soon announcing settlements either for laundering, sanctions violations, or both.
Even seasoned financial reporters accustomed to seeing soft-touch settlements scratched their heads at some of the deals. In the case of HSBC, the stiffest penalty doled out to any individual for the biggest drug-money-laundering case in history — during which time HSBC had become the “preferred financial institution” of drug traffickers, according to the Justice Department — involved an agreement to “partially defer bonus compensation for its most senior executives.” If bankers can’t get time for washing money for people who put torture videos on the internet, what can they get time for?
When I did a story on the case in early 2013, I found the HSBC settlement was the latest step in a dizzying, decade-plus cycle of offenses and ignored reprimands, involving multiple regulatory bodies. The number of times HSBC had blown off compliance orders seemed too absurd to be real. In one stretch between 2005 and 2006, the bank received (and, apparently, ignored) 30 formal warnings just from the Office of the Comptroller of the Currency.
Prosecutors insisted the deferred prosecution settlements slapped on companies like HSBC, Standard Chartered, and JP Morgan Chase were tougher than jail terms. The deals would place banks in a permanent state of quasi-arrest, with regulators granted enormous supervisory power and serious charges pre-filed and hanging over the firms going forward.
As one federal investigator put it to me back then, “This way, we have them by the short ones.”
Fast-forward eight years. On September 20th, a combination of Buzzfeed and the International Consortium of Investigative Journalists (ICIJ) published the details of a major document leak highlighting a decade of money-laundering incidents, involving hundreds of billions of dollars and a number of the world’s biggest banks. The leak centered on a cache of over two thousand “suspicious activity reports,” or SARs, filed by those banks to the Financial Crimes Enforcement Network, a regulatory arm of the U.S. Treasury.
Today we reveal that tactics by US regulators to force banks to change their ways have not worked.
Though the ICIJ was also behind the release of the Panama Papers, investigative editor Michael Hudson told me he believes the FinCen leak is “the most important” project they’ve worked on. Instead of being about one group of actors, or one jurisdiction, these revelations span the banking sector as a whole.
“It shows the widest set of problems,” he says.
The story has been covered around the world, but some press accounts particularly here in the States seem to have missed the punchline, i.e. that the banks figuring most prominently in the FinCen leak are exactly the same institutions paraded before the public as subjects of “message-sending” punishments back in 2012-2014.
HSBC, for instance, continued to take in questionable money through 2012 and beyond, including $30 million from Hong Kong accounts related to a Ponzi scheme called World Capital Market. WCM was suspected of bilking “investors” — most of them ordinary people scraping together five or ten thousand dollars and throwing them at false promises of guaranteed returns — of nearly $80 million.
The leaked records show HSBC flagged the account as suspicious as early as 2013, but continued to take the money from this and a wide variety of other dicey accounts. Although regulators saw all of this information, the Department of Justice not only didn’t take action, it announced in 2017 that HSBC had “lived up to all of its commitments” and agreed to file a motion to lift the deferred prosecution deal.
A similar pattern held with JP Morgan Chase, which in 2013 was hit with a cease and desist order over “systemic deficiencies” in its money-laundering controls, yet continued to do business with rogue accounts, including some infamous and obvious ones. To give some sense of the sums involved, JPM made roughly a half-billion dollars just servicing the accounts for con artist Bernie Madoff.
As far back as 2006, JP Morgan Chase knew enough to pull its own money out of investments in hedge funds tied to Madoff, but never told investors, and continued to manage his accounts for years. The bank ultimately settled with the government over the Madoff episode in 2014, after the 2013 “cease and desist” order, while continuing to manage money for other malodorous accounts — including, according to the ICIJ, more than $1 billion for Jho Low, the fugitive financier behind Malaysia’s infamous 1MDB fund.
In a detail that should infuriate the #Resistance crowd, Jamie Dimon’s bank also continued to do business in huge sums for former Trump campaign manager Paul Manafort even after Manafort stepped down in scandal, and even after the bank flagged Manafort’s accounts. From the ICIJ report:
JPMorgan also processed more than $50 million in payments over a decade, the records show, for Paul Manafort, the former campaign manager for President Donald Trump. The bank shuttled at least $6.9 million in Manafort transactions in the 14 months after he resigned from the campaign amid a swirl of money laundering and corruption allegations spawning from his work with a pro-Russian political party in Ukraine.
“If you look at the cases where they tried to punish and deter the big banks, the headline-making efforts just haven’t worked,” says Hudson. “In the aftermath of these supposed crackdowns, the banks continued to move money in staggering amounts, for powerful and dangerous characters.”
“The big takeaway is, the system just doesn’t work,” adds former federal prosecutor Paul Pelletier. “I think these SARs represent about $2 trillion in suspicious transactions, and nearly all of it went through. And this is just a small fraction of the overall amount of money.”
According to Hudson, the FinCen files represent about two-tenths of one percent of the suspicious activity reports filed between 2011 and 2017.
In the aftermath of the HSBC deal in 2012, money laundering cases began to attract a fair amount of press attention. HSBC’s case even became one of the subjects for Oscar-winning documentarian Alex Gibney’s “Dirty Money” series:
At the time, there was an expectation that these stories could be told in the past tense, because firms like HSBC had been busted. The FinCen leaks show the opposite. The settlements may actually have been an accelerant, allowing for the appearance of regulation, while alerting banks to broader weaknesses that encouraged more brazen behavior going forward. We may have to change the way we think about “dirty money,” from being an outside contaminant, to endemic to the system at its core.
Public legend about movement of ill-gotten cash usually centers on crooks sitting under ceiling fans in tropical locales, receiving mysterious wire transfers in places outside the physical reach of American regulators, like Vanuatu, Panama, or the British Virgin Islands. The FinCen leaks make clear the real hub of money laundering is in what Hudson calls the “choke point” of New York, where the world’s largest financial institutions have streamlined the process of moving shady money.
SARs don’t always indicate a crime. They’re the regulatory equivalent of a call to police to check something out that doesn’t add up. Bank monitors who compile them might be spotting something in their account rolls like high numbers of cash transactions, large numbers of wire transfers to a country where the customer doesn’t do business, etc.
The requirement to produce these reports creates a cat-and-mouse game for banks. Every time compliance officers discover derogatory information that leads to an account being closed, it’s a direct hit to a bank’s revenues. On the other hand, to keep regulators off their backs, banks have to be seen to be doing all they can to sniff out illegalities. Therefore there’s an incentive for banks to cycle through creative ways of looking like they’re engaging in compliance, without actually doing so.
A bank might create sizable AML departments, but pad them with inexperienced, entry-level employees incapable of spotting problems (see here for the HSBC example I wrote about years ago). A firm may hire a top-of-the-line department head, but not give him or her real resources. Required hiring boxes may be checked, but the company may non-report or under-report problems. Companies may even generate huge numbers of suspicious activity reports while leaving key data like names or addresses missing.
In a different scenario, reports are filed too late for action to be taken. SARs are supposed to be filed within 30 days, for instance, but the FinCen documents were filed to the government an average of 166 days after the initial detection of a potential problem.
In another stalling method, banks informally agree not to close suspicious accounts until a certain number of SARs have accrued. When the Senate Permanent Subcommittee on Investigations looked at HSBC in 2012, for instance, they found internal emails from bank executives suggesting that HSBC’s Mexico operations had settled on a policy of not closing accounts until four SARs had been filed.
When the company’s chief compliance officer found out about its subsidiary HMEX’s standard, he wrote, in a bemused tone, “4 SARs seems awfully indulgent, even by local standards.” HMEX later cut the standard to two SARs, which seems to be the exception rather than the rule. In the FinCen leaks, companies are seen repeatedly filing reports about the same actor, each time implying they’ve dug just enough to write a report, but never quite enough to actually close the account.
Of course, in banking, size matters. “Maybe the bank looks at a wire transfer and says, ‘This smells.’ Do that in a $12,000 transaction, and they’ll kick you out of the bank,” says Pelletier. “Do it at $12 million, and they’ll let it go.”
What’s unique about this leak it shows bad behavior the banks actually reported. As one former investigator put it this week, “This is the stuff they actually have a suspicious activity report for!” That banks keep taking the money is bad, but the fact that regulators keep receiving the reports and letting shady transactions slide makes the dirty-money problem a bizarre symbiosis of private rapaciousness and (at best) governmental apathy.
While credit card companies are able to detect fraud and banks are able to detect suspicious activity thanks to technological advances, the government lacks the same capability, in part perhaps because the reporting system is not automated. Since it’s a crime to leak a “SAR” — you “literally have to steal one” to make one public, as one former investigator puts it — they’ve rarely been seen by the public. The ICIJ has now put them on display:
BSAR Transcript
The government receives millions of these written reports, which often appear to reflect a fair amount of person-hours of research by the bank. However, the government lacks what one investigator described to me as an “AI-type test” for passive review of this material, and lacks the personnel to go through it all individually.
At best, a federal investigator may go through the SAR database to check an individual or company already targeted in another probe. This particular batch of SARs seems to have been gathered as part of a congressional investigation into Russian interference, for instance. The rest of the reports are fated to be memory-holed by overwhelmed regulators.
What do you get in this seeming worst-case scenario, when banks pretend to monitor, and regulators pretend to collect the monitoring? A short list of some of the messes found in the FinCen docs:
— In one ridiculous case, Deutsche Bank’s New York branch processed $2.6 billion and $700 million, respectively, for a pair of companies called Ergoinvest and Chadborg trade. Both companies declared annual incomes of $35,000, and the statements for both firms bear the signature of the same obscure dentist in Belgium, who claims he doesn’t even own a car. Yet the money kept rolling through! The companies earned British registrations through “formation agencies” located in the Baltics, where investigators have found a rat’s nest of problems in recent years. Deutsche Bank, the originator of 62% of the leaked SARs (perhaps reflecting the focus of the Russia investigation that produced the FinCen docs), moved at least $150 billion just from one small Tallinn-based bank, Danske Estonia, for instance.
The crux of accusations by prosecutors is that Kolomoisky employed gangland tactics at home (including using “armed goons” to take over an oil company), then funneled the money to places like the States, to be invested in legit vehicles like real estate. This is exactly the kind of person the SAR process is designed to identify and disqualify quickly. Nonetheless, the FinCen files show Deutsche Bank, which had entered into a settlement deal in 2015 for moving over $11 billion in suspicious transactions, moved at least $240 million for a Kolomoisky-connected account at exactly that time, between 2015 and 2016.
— Even as Russian aluminum baron Oleg Deripaska garnered enormous media attention in recent years, including during the Russiagate furor, he continued to move money freely through the American banking system. The FinCen files contain a total of 58 SARs related to Deripaska, issued between 1997 and 2017, covering an amazing $12.41 billion in transactions. The Bank of New York Mellon flagged 16 transactions involving a Deripaska subsidiary company called Mallow Capital, but apparently kept doing business. To quote the ICIJ, “Mellon said Mallow Capital appeared to be a shell company operating in a high-risk area with no known legitimate business purpose. In 2012 and 2013, Mallow sent itself nearly $420 million using different British Virgin Islands addresses and different banks…”
The FinCen leaks highlight two major weaknesses of the regulatory system. One is the longstanding absence of a requirement that anyone opening a U.S. account name a “beneficial owner,” i.e. who is really controlling the account. The other is correspondent banking. Banks in the U.S. are required to “know your customer” in addition to monitoring and reporting domestic accounts. Still, any foreign bank with a license may open “correspondent” accounts in those same regulated Western banks. A lot of the worst instances catalogued in the FinCen leaks involve these correspondent accounts, opened in Asia, Eastern Europe, the Middle East, etc.
In the long run, the regulatory system ends up serving as a de facto partner for banks that all but admit they’re taking in money from Ponzi schemers, mobsters, drug lords, and rogue states.
This is a “feature, not a bug” problem. Going back to the years after the crash, regulators spoke often about the need to carefully construct settlements, so that even repeat offenders might remain viable.
In late 2012, for instance, at a press conference announcing a market manipulation settlement for the Swiss Bank UBS, Breuer told reporters, "Our goal here is not to destroy a major financial institution."
"This is a bank that has broken the law before," a reporter said that day. "So why not be tougher?"
"I don't know what tougher means," Breuer answered.
Some time later, then-Attorney General Eric Holder gave a video message on the theme, “There is no such thing as Too Big to Jail.” While insisting “no one is above the law,” Holder pointed out that some criminal charges carried automatic regulatory penalties that “may even trigger the loss of that institution’s charter.” This, he implied, is not always a good thing.
This issue had come up at the HSBC press conference the previous year, when Breuer said, “had the US authorities decided to press criminal charges, HSBC would almost certainly have lost its banking license in the US.”
For that reason, Holder insisted, regulators often “must go the extra mile to coordinate closely with the regulators who oversee these institutions’ day-to-day operations.”
Translated, this meant the Justice Department was crafting punishments to make sure banks landed on their feet and remained functional as American businesses, even in the face of public reprimand.
A typical settlement involved a fine that sounded large but was really equal to months or weeks of profit, with penalties in some cases also being deductible, so taxpayers could share in the joys of paying a bank’s debt to society. In other words, settlements were designed not to hurt too much, but just the right amount.
Even a “record” harsh settlement doled out to the French bank BNP-Paribas in 2014 for sanctions violations, which included a rare plea to a real criminal charge in addition to a $9 billion penalty, only incurred a one-year exile from U.S. dollar transactions. Even when throwing the proverbial book at firms, regulators made sure to pave clear roads to redemption.
This was not necessarily a bad thing. There’s no reason why anyone should want systemically-important institutions (who are often major employers) to be wiped off the face of the earth, willy-nilly. The problem is that if you completely remove the threat of a lost charter, it signals to everyone that regulators will tolerate even open repeat violations. In this light, even a “tough” public punishment becomes a license to steal.
Hudson, for instance, notes that announcements of many of the biggest money laundering settlements involving the firms in the FinCen files were accompanied by jumps in the company’s share prices. HSBC’s shares rose in London and Hong Kong after the 2012 settlement, and even BNP’s criminal plea deal prompted a 3.6% jump in share price. Markets see the settlements as seals of approval going forward, and “send the signal that the regulators are looking to do a deal,” Hudson says.
The irony of all this is that the Trump era has seen much gnashing of teeth over America’s withdrawal from global bureaucracies like the Paris Agreement, the “Open Skies” arms control treaty, the Iran deal, and other conventions. Meanwhile, in the one place we want an isolationist-style wall, around the Federal Reserve-connected American banking system, barriers are wearing away. Only in crime, it seems, is America becoming more global in outlook.
The Mobster-in-Chief: Will the November Election Be Decided in the Streets?
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=53611"><span class="small">John Feffer, TomDispatch</span></a>
Tuesday, 29 September 2020 12:33
Feffer writes: "The white mobs didn't care whom they killed as long as the victims were Black. They murdered people in public with guns and rocks. They set fire to houses and slaughtered families trying to escape the flames. In East St. Louis in July 1917, white vigilantes lynched Blacks with impunity."
Two National Guard soldiers escort a Black man in East St. Louis, Illinois, during the tense days leading up to the race riot that launched the Red Summer in 1917. (photo: Getty Images)
The Mobster-in-Chief: Will the November Election Be Decided in the Streets?
By John Feffer, TomDispatch
29 September 20
[Note for TomDispatch Readers: As ever, when John Feffer has a piece at this site, I remind you that, should you be willing to donate $100 ($125 if you live outside the U.S.), you can get a signed, personalized copy of his gripping dystopian novel, Frostlands, the second volume in his must-read Splinterlands series (that only grows more relevant in this splintering, melting age of The Donald). And in this grim moment, every dollar you give this site is crucial to keeping it going and so, believe me, deeply appreciated. If you have the urge, check out our donation page before you read about our Mobster-in-Chief. Tom]
It’s odd. These days as right-wing “militias” multiply -- that is, armed groups of whites taking to the streets of our cities to protect Donald Trump, white supremacy, and god knows what else -- I always think to myself: if such groups were Black, what would they be called? And you know the answer to that question perfectly well. They would be called “gangs.” But gangs, of course, sounds so much less romantic and constitutional than “militias,” right?
So militias it evidently is (even in the mainstream media). And in a nation whose president defended a militia-loving teenager who killed two protesters with an AR-15-style assault rifle (while the pundits Trump watches on Fox News praised the murderer), in a nation that leads the world by a country mile when it comes to civilians who own guns (including battlefield-style weaponry), a militia-ized future is not so hard to imagine -- especially given American history thus far. If you doubt that for a second, then check out the latest piece by TomDispatch regular, Foreign Policy in Focuscolumnist, and author of the Splinterlands series of dystopian novels John Feffer. Tom
-Tom Engelhardt, TomDispatch
The Mobster-in-Chief Will the November Election Be Decided in the Streets?
he white mobs didn’t care whom they killed as long as the victims were Black. They murdered people in public with guns and rocks. They set fire to houses and slaughtered families trying to escape the flames. In East St. Louis in July 1917, white vigilantes lynched Blacks with impunity.
It was the prelude to what civil rights activist James Weldon Johnson would ultimately call Red Summer. The “red” referred to the blood that ran in the streets. The “summer” actually referred to the months from April to October 1919, when violence against African Americans peaked in this country.
In reality, though, that Red Summer stretched across six long years, beginning in East St. Louis in 1917 and ending with the destruction of the predominantly African-American town of Rosewood, Florida, in 1923. During that time, white mobs killed thousands of Blacks in 26 cities, including Chicago, Houston, and Washington, D.C. In 1921, in a slaughter that has been well documented, white citizens of Tulsa, Oklahoma, destroyed the country’s wealthiest African American community (“Black Wall Street,” as it was then known), burning down more than 1,000 houses as well as churches, schools, and even a hospital.
During this period of violence, the mobs sometimes cooperated with the authorities. Just as often, however, they ignored the police, even breaking through jail walls with sledgehammers to gain access to Black detainees whom they executed in unspeakable ways. In Tulsa, for example, that campaign of murder and mayhem began only after the local sheriff refused to hand over a Black teenager accused of sexual assault.
Although white America repressed the memories of Red Summer for many decades, that shameful chapter of our history has gained renewed scrutiny in this era of Black Lives Matter. The Tulsa massacre, for instance, features prominently in the recent Watchmen series on HBO and several documentaries are in the works for its centennial anniversary in 2021. Other recent documentaries have chronicled killings that took place in the immediate aftermath of World War I in Elaine, Arkansas, and Knoxville, Tennessee.
But memories of that Red Summer are resurfacing for another, more ominous reason.
White mobs have once again moved out of the shadows and into the limelight during this Trump moment. Militia movements and right-wing extremists are starting to turn out in force to intimidate racial justice and anti-Trump demonstrators. Predominantly white and often explicitly racist, these groups now regularly use social media to threaten their adversaries. This election season, they’re gearing up to defend their president with an astonishing degree of support from Republican Party regulars.
According to a January 2020 survey by political scientist Larry Bartels, most Republicans believe “the traditional American way of life is disappearing so fast that we may have to use force to save it.” More than 40% agree that “a time will come when patriotic Americans have to take the law into their own hands.” In a recent essay on his survey’s findings, Bartels concludes that ethnic antagonism “has a substantial negative effect on Republicans’ commitment to democracy.”
As the 2020 election nears, that party is also desperately trying to flip the script by using fear of “their mobs” and “Antifa terrorists” to drive its base to the polls. “We have a Marxist mob perpetrate historic levels of violence & disorder in major American cities,” tweeted Florida Senator Marco Rubio in response to the Democratic National Convention in August. Not to be outdone, the president promptly said: “I’m the only thing standing between the American dream and total anarchy, madness, and chaos.”
Of course, this country has no such Marxist mobs. The only real groups of vigilantes with a demonstrated history of violence and the guns to back up their threats congregate on the far right. The white supremacist Atomwaffen Division, for instance, has been linked to at least five killings since 2017. In late May and early June, members of the far-right Boogaloo Bois conducted two ambushes of police officers and security personnel, killing two of them and injuring three more. Over the summer, as far-right organizations spread the meme “All Lives Splatter” around the internet, dozens of right-wingers drove vehicles of every sort into crowds of Black Lives Matter protesters.
The prospect of far-right vigilantes or “militias” heading into the streets to contest the results of the November election has even mainstream institutions worried. “Right-wing extremists perpetrated two thirds of the attacks and plots in the United States in 2019 and over 90% between January 1 and May 8, 2020,” reports the centrist think tank Center for Strategic and International Studies. “If President Trump loses the election, some extremists may use violence because they believe -- however incorrectly -- that there was fraud or that the election of Democratic candidate Joe Biden will undermine their extremist objectives.”
As the violence of Red Summer demonstrated, such acts were once a mainstay of American life. Indeed, the not-so-hidden history of this country has featured periodic explosions of mob violence. Racial justice activists rightly call for the radical reform of police departments. As November approaches, however, uniformed representatives of the state are hardly the only perpetrators of racist violence. Beware the white mobs, militias, and posses that are desperate to establish their own brand of justice.
Mob History
When Donald Trump paints a picture of lawlessness sweeping through the United States, he’s effectively accusing the institutions of government of not doing their jobs. In a September 2nd memo, the Trump administration laid out its charges:
“For the past few months, several State and local governments have contributed to the violence and destruction in their jurisdictions by failing to enforce the law, disempowering and significantly defunding their police departments, and refusing to accept offers of Federal law enforcement assistance.”
As president, Donald Trump has refused to take responsibility for anything, not the more than 200,000 Covid-19 deaths in the United States, not the pandemic-induced economic collapse, and certainly not the racial injustices that prompted this summer’s wave of protests. Simultaneously above the law and outside it, the president consistently portrays himself as a populist leader who must battle the elite and its “deep state.” With conspiracy-tinged tirades about Democrat-run cities failing to enforce the law, he has already symbolically put himself at the head of a mob -- for this is just how such groups justified their extra-legal actions throughout our history.
The right-wing racists who currently bear arms in defense of the president are part of a long tradition of Americans resorting to vigilantism when they believe the law is not protecting their interests. Whether it was the displacement and massacre of Native Americans, the horrors that slaveowners inflicted on African Americans, the wave of lynching that followed Reconstruction, the bloodletting of Red Summer around World War I, the murders conducted by the Ku Klux Klan and other extremist organizations, or even everyday resistance to federal policies like school desegregation, gangs of Americans have repeatedly taken the law into their own hands on behalf of white supremacy.
To be sure, mobs are hardly responsible for all the racist ills of this country. America has always been a place of institutional racism and violence. Slavery, after all, was legal until 1865. The U.S. government and its military did the bulk of the dispossessing of Native Americans. Police departments cooperated early on with the Ku Klux Klan and today’s police officers continue to kill a disproportionate number of African Americans. Mobs have eagerly cooperated with state institutions on the basis of shared racism. But they have also stood at the ready to enforce the dictates of white supremacy even when the police and other guardians of order treat everyone equally before the law.
The mob has occupied an unusually prominent place in our history because Americans have cultivated a unique hostility toward the state and its institutions that goes back to the early years of the Republic. As historian Michael Pfeifer notes in his groundbreaking book, The Roots of Rough Justice, the violent libertarianism associated with the American Revolution and the subsequent lack of a strong, centralized state gave rise to mob violence that gathered force before the Civil War. He writes,
“Antebellum advocates of vigilantism in the Midwest, South, and West drew on Anglo-American and American revolutionary traditions of community violence that suggested that citizens might reclaim the functions of government when legal institutions could not provide sufficient protections to persons or their property.”
Those mobs didn’t necessarily think of themselves as anti-democratic. Rather, they imagined that they were improving on democracy. As Pfeifer points out, many of the vigilante outfits that targeted minorities practiced democratic procedures of a sort. Some adopted bylaws and even elected their own leaders. They held mock trials and votes on what punishments to mete out: hanging or burning alive.
Such mobs functioned both as a parallel military and, to a certain extent, a parallel state.
The two, in fact, went hand in hand. German sociologist Max Weber famously defined the state as possessing a monopoly on the legitimate use of physical force, but that was the German tradition. In the United States, particularly during its first 150 years, the state only aspired to possess such a monopoly.
Instead, a rough form of frontier justice often prevailed. Before and just after the American Revolution, even whites were its targets, but increasingly its victims were people of color. Slave owners, slave patrols, and ad hoc mobs dispensed justice throughout antebellum America and the tradition of “Judge Lynch” continued long after the abolition of slavery. The pushing of the frontier westward involved not only the Army’s killing of Native Americans but extrajudicial violence by bands of settlers. Historian Benjamin Madley estimates that the Native population in California declined by more than 80% between 1846 and 1873, with as many as 16,000 killings in 370-plus massacres. This “winning” of the West also involved the widespread lynching of Latinos.
The “Right” to Bear Arms
Mobs were able to dispense frontier justice not only thanks to a strong libertarian tradition and a weak state, but also because of the widespread availability of guns. Coming out of the Civil War, this country developed a distinct gun culture sustained by a surge in firearm production. Gun prices fell and so guns fell into the hands of more and more citizens.
Mobs used firearms in the infamous Draft Riot in New York in 1863, which ended up targeting the city’s Black community, and in New Orleans in 1866 when enraged whites attacked a meeting of Republicans determined to extend civil rights protections to African Americans. In their drive westward, settlers favored Winchester rifles with magazines that could fire 15 rounds, giving them a staggering advantage over the people they were displacing. Early gun control laws seldom prevented whites from acquiring firearms because they were mainly designed to keep guns out of the hands of Blacks and other racial minorities.
Even today, widespread gun ownership distinguishes the United States from every other country. Approximately 40% of American households own one or more firearms, a figure that has remained remarkably consistent for the last 50 years. If you look at guns per capita, the United States ranks number one in the world at 120 firearms per 100 civilians. The next country on the list, war-torn Yemen, comes in a distant second with 52 per hundred. With more guns than people within its borders, it’s no wonder that the federal government has often struggled to maintain its monopoly over the legitimate use of physical force.
Gun enthusiasts have erroneously enlisted the Constitution to justify this extreme democracy of firepower. To guard against tyrannical federal behavior, the Second Amendment of the Constitution preserved the right of state militias to bear arms. However, organizations like the National Rifle Association have campaigned for years to reinterpret that amendment as giving any individual the right to bear arms.
That has, in turn, provided ammunition for both the “castle doctrine” (the right to use armed force to defend one’s own home) and “stand your ground” laws (the right to use force in “self-defense”). Armed extremist groups now imagine themselves as nothing less than the Second Amendment’s “well-regulated Militia” with a constitutionally given “right” to own weapons and defend themselves against the federal government (or anyone else they disapprove of).
Improbably enough, for the last four years, the head of the federal government has become one of their chief supporters.
Donald Trump: Leader of the Pack
Long before becoming president, Donald Trump was already acting as if he were the head of a lynch mob. In 1989, he published full-page ads in the New York Times and three other local papers calling for New York City to reinstate the death penalty in response to a brutal gang rape in Central Park. He swore that the city was then “ruled by the law of the streets” and that “muggers and murderers... should be forced to suffer and, when they kill, they should be executed for their crimes.”
It was language distinctly reminiscent of white mobs bitter about the failure of local law enforcement to execute Blacks accused of crimes. Like many of their predecessors, the accused Black and Latino teenagers were, in the end, found to be quite innocent of the crime. After a long legal struggle, the Central Park Five (as they came to be known) were released from prison. Trump has never apologized for his campaign to kill innocent people.
When he ran for president, he quickly moved beyond mere “law and order” rhetoric. In his 2016 presidential campaign, Trump deliberately cultivated a following among armed extremists. At a rally in North Carolina, for instance, he warned of what might happen to the Supreme Court if Hillary Clinton were to win.
“If she gets to pick her judges, nothing you can do, folks,” he lamented. Then he added in his typically confused and elliptical manner of speaking: “Although the Second Amendment people, maybe there is. I don’t know.” He was, in other words, suggesting that followers with guns could do something about Clinton’s choices by shooting her or her judicial picks.
Throughout that campaign season, he regularly retweeted white supremacist claims and memes. At the time, it was estimated that more than 60% of the accounts he was retweeting had links to white supremacists. At his rallies, he encouraged his supporters to get “rough” with protesters.
As president, he’s continued to side with the mob. He infamously refused to denounce neo-Nazis gathering in Charlottesville in August 2017, applauded the armed demonstrators who demanded the reopening of the economy in the pandemic spring of 2020, and defended 17-year-old Kyle Rittenhouse after he killed two Black Lives Matter protesters in Kenosha, Wisconsin, in August.
Trump has stood up for the Confederate flag, Confederate statues, and keeping the names of Confederate generals on U.S. military bases. In a recent speech denouncing school curricula that teach about slavery and other unsavory aspects of our history, he pledged to erect a statue of a slaveowner in a project he’s been promoting -- building a National Garden of American Heroes park. The current administration has cultivated direct links to white nationalists through disgraced figures like Steve Bannon and Sebastian Gorka, as well as current advisers like Stephen Miller.
In his reelection bid, Trump pointedly held his first pandemic rally in Tulsa, Oklahoma, where he excoriated Democrats who “want to take away your guns through the repeal of your Second Amendment” and “left-wing radicals [who] burn down buildings, loot businesses, destroy private property, injure hundreds of dedicated police officers.” In a literal whitewashing of history, he made no mention of the White mobs that had looted businesses and destroyed property in that very city in 1921.
Trump’s exhortations to his followers over the heads of state and local officials appeal to the mob belief that citizens must reclaim the functions of government, if necessary through force. Right-wing militias explicitly embrace that history. The “Three Percenters,” a militia movement that emerged in 2008 after the election of Barack Obama, purports to protect Americans from tyrannical government. Their name derives from the inaccurate belief that only 3% of Americans took up arms to fight the British empire in the eighteenth century.
Of course, three percent of Americans are not now members of such militias and White nationalist movements, but their numbers are on the rise. White nationalist groups increased from 100 in 2017 to 155 in 2019. The several hundred militia groups now in existence probably have a total of 15,000 to 20,000 members, including an increasing number of veterans with combat experience. Far from a homogeneous force, some are focused on patrolling the southern border and targeting the undocumented. Others are obsessed with resisting the federal government, even in a few cases opposing Trump’s various power grabs.
West Virginia University professor John Temple argues, in fact, that not all right-wing militias hold extremist views. “I have listened to many hours of ‘patriot’ conversations that didn’t sound all that different from what you would hear during a typical evening on Fox News,” he writes. “Many seemed to have joined the cause for social reasons, or because they liked guns, or because they wanted to be part of something they saw as historic and grandiose -- not because their views were far more radical than those of typical right-leaning Americans.”
This is not exactly reassuring, since the politics of right-leaning, Fox News-watching Americans have grown more extreme. With nearly half of the Republicans surveyed by Larry Bartels prepared to take the law into their own hands, Trump has nearly succeeded in transforming his party into a mob of vigilantes.
Don’t be fooled into thinking that the president is a law-and-order candidate. He flourishes in chaos and routinely flouts the law. By siding with right-wing militias and their ilk, he daily undermines the state’s monopoly on legitimate violence.
The debate over defunding the police must be seen in this context. In a country awash in guns and grassroots racism, with a major party flirting with mob violence, getting rid of police departments would be akin to jumping out of the frying pan and into the fire of uncontained extremism. Sure, local law enforcement needs major reforms, massive civic oversight, and right-sized budgets. Police departments must be purged of white nationalists and neo-Nazis. The Pentagon has to stop supplying the cops with military-grade weaponry.
But remember: the police can be reformed. What was once an all-white force now better reflects America’s diversity. The mob, by definition, is not subject to reforms or any oversight whatsoever.
This is no time to permit the return of frontier justice administered by white mobs and a lawless president, especially with a critical election looming. Mob violence has often accompanied elections in the past, with rival factions fighting over the results, as in the street battles of 1874 in New Orleans between Republican integrationists and racist Democrats. Like nineteenth-century Louisiana, the struggle this November is not just about Democrats versus Republicans. It’s about the rule of law versus racist vigilantism.
White supremacy is not going to give up its hold on power without a fight. If you thought you’d seen real American carnage in Trump’s four years in office, prepare yourself for the chaotic aftermath of the November election. The mob is itching to take the law into its own hands one more time on behalf of its very own mobster-in-chief.
John Feffer, a TomDispatch regular, is the author of the dystopian novel Splinterlandsand the director of Foreign Policy In Focus at the Institute for Policy Studies. His latest novel is Frostlands, a Dispatch Books original and book two of his Splinterlands series.
RSN: Tax Revelations and Corporate Media Won't Defeat Trump
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=48990"><span class="small">Norman Solomon, Reader Supported News</span></a>
Tuesday, 29 September 2020 11:20
Solomon writes: "To a large extent, the corporate media - especially the TV networks that gave Trump billions of dollars' worth of free airtime while raking in enormous ad revenues - made him president."
MSNBC Studio 3A in New York City, New York. (photo: NewscastStudio)
Tax Revelations and Corporate Media Won't Defeat Trump
By Norman Solomon, Reader Supported News
29 September 20
he big banner headline across the top of the New York Times home page as Tuesday got underway – “TRUMP’S TAXES SHOW CHRONIC LOSSES AND YEARS OF TAX AVOIDANCE” – might give the impression that Donald Trump is finally on the verge of political downfall. Don’t believe it for a moment.
The same kind of mistaken belief has led many to put undeserved trust in a corporate-media system. But The New York Times isn’t going to save us. Neither is The Washington Post, MSNBC, CNN or any of the other mass-media outlets, “liberal” or otherwise.
To a large extent, the corporate media – especially the TV networks that gave Trump billions of dollars’ worth of free airtime while raking in enormous ad revenues – made him president. The advertising-and-ratings-bedazzled head of the CBS network, Leslie Moonves, uttered an infamously emblematic comment eight months before the 2016 election, in the midst of a campaign that Trump dominated with TV coverage: “It may not be good for America, but it’s damn good for CBS.”
Less well-known are other statements that Moonves also made while speaking to a Morgan Stanley conference in February 2016. “Man, who would have expected the ride we’re all having right now?” And: “The money’s rolling in and this is fun.” And: “I’ve never seen anything like this, and this is going to be a very good year for us. Sorry. It’s a terrible thing to say. But, bring it on, Donald. Keep going.” And: “Donald’s place in this election is a good thing.”
At the same time, CNN president Jeff Zucker – who presided over the network’s “all-Trump-all-the-time” policy during the 2016 primaries – was privately offering guidance to candidate Trump. Zucker had helped build the Trump myth years earlier when he was at NBC presiding over Trump’s “Apprentice” show, which turned out to be financially and politically crucial for his path to the White House.
Under the ongoing reign of the casino economy, the corporate house is set up to always win.
Now, after doing so much to help create a political Frankenstein, most of the big media organizations are largely disapproving. While the right-wing zealots at places like Fox News and aligned talk-radio and online entities are determined to re-elect Trump, the majority of mainstream media outlets are down on him. Yet the tenor of their coverage, including news of the latest polls, should not lull anyone into a false sense of security about Trump’s impending demise – a demise they’ve predicted before.
Trump won in 2016 while the bubble inhabited by elite media was rarified and cut off from the everyday experiences, frustrations and anger of everyday people. As a consummate demagogue, he knew how to stoke and pander to resentments against elites – resentments that mainstream media seemed clueless about.
The corporate media are part of a system that thrives on rampant income inequality, giving more and more power to the rich while doing more and more harm to people the less money they have. Media elites are apt to do fine whether Trump wins or loses the election.
Four years ago, Trump played off the elitism of the establishment to ply his toxic political product laced with racism, xenophobia and misogyny. He has governed the same way he ran in 2016, and he hopes to govern for the next four years the way he’s running in 2020 – using the broadly and vaguely defined establishment as a foil for his poisonous, pseudo-populist messaging.
Amid the bombshell coverage of Trump’s tax records, it might be tempting to believe the tide has turned and will drown his election hopes. But that’s wishful thinking.
It would take more than two hands to count the times during the last several years when Trump's preposterous and vile statements – or the emergence of incontrovertibly damning facts – provided ample reasons for his political fortunes to turn into toast. Instead, he has continued to conduct a national master class in demagogy.
Trump would like nothing more than to play his victim card yet again while media give the impression that he’s headed for defeat – a combination that worked like a charm for him in 2016. It could easily happen again. With voting now underway, healthy skepticism toward media spin is badly needed.
Four years ago, corporate media overwhelmingly insisted that the likelihood of a Trump presidency was remote. On Election Day, The New York Times categorically pegged the chances of a Trump win at less than 10 percent. Now, those who want to prevent another Trump victory should go all-out to show they won’t be fooled again.
Norman Solomon is the national director of RootsAction.org and the author of many books, including War Made Easy: How Presidents and Pundits Keep Spinning Us to Death. He was a Bernie Sanders delegate from California for the 2020 Democratic National Convention.
Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=51503"><span class="small">Paul Krugman, The New York Times</span></a>
Tuesday, 29 September 2020 08:29
Krugman writes: "Lysenko was a Soviet agronomist who decided that modern genetics was all wrong [...] He even denied that genes existed, while insisting that long-discredited views about evolution were actually right."
Paul Krugman. (photo: MasterClass)
Trump's Stalinist Approach to Science
By Paul Krugman, The New York Times
29 September 20
Bully and ignore the experts, and send in the quacks.
Who? Lysenko was a Soviet agronomist who decided that modern genetics was all wrong, indeed contrary to Marxist-Leninist principles. He even denied that genes existed, while insisting that long-discredited views about evolution were actually right. Real scientists marveled at his ignorance.
But Joseph Stalin liked him, so Lysenko’s views became official doctrine, and scientists who refused to endorse them were sent to labor camps or executed. Lysenkoism became the basis for much of the Soviet Union’s agricultural policy, eventually contributing to the disastrous famines of the 1930s.
Does all of this sound a bit familiar given recent events in America?
Trump's Tax Avoidance Is a National Disgrace. Don't Let Him Blame 'the System'
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=49798"><span class="small">Nathan Robinson, Guardian UK</span></a>
Tuesday, 29 September 2020 08:29
Excerpt: "Americans paid for Trump's $73m tax refund - and he's laughing all the way to the bank."
Donald Trump. (photo: Scott Olson/Getty Images)
Trump's Tax Avoidance Is a National Disgrace. Don't Let Him Blame 'the System'
By Nathan Robinson, Guardian UK
29 September 20
Americans paid for Trump’s $73m tax refund – and he’s laughing all the way to the bank
ell, now we know why Donald Trump didn’t want the public to see his tax returns. A New York Times investigation looking at years of previously undisclosed documents found that Trump used countless maneuvers to avoid having to pay federal income tax. He ended up paying $750 total in 2016 despite hundreds of millions of dollars in income from The Apprentice and his various companies and licensing arrangements. Many years he paid nothing at all, and even received an income tax refund of $72.9m, which included millions in interest, straight from the federal treasury to Trump’s pocket.
The New York Times paints a picture of an elaborate shell game in which losses from some of his companies are used to wipe out tax liabilities elsewhere. It is not always clear how much of his “losses” are real losses rather than creative accounting, but the Times suggests that Trump may be both living large on hundreds of millions in annual income and overseeing distressed and unprofitable businesses.
We had known some of this already. Trump had admitted publicly that he used a $916m loss reported on his 1995 tax return to avoid paying any federal income tax for years. Trump’s former attorney Michael Cohen testified last year that he remembered Trump “showing him a huge check from the US Treasury some years earlier” and commenting “that he could not believe how stupid the government was for giving someone like him that much money back”. But now we have stark confirmation of the facts: Trump is a billionaire who doesn’t pay his taxes, leaving the financial responsibility for funding the government to ordinary working people. It’s a national disgrace.
Trump will, of course, spin all of this as simply sound business practice. He has previously said that tax avoidance makes him “smart”, and that he is simply taking advantage of perfectly legal and legitimate loopholes. Indeed, some Americans might be inclined to see it the same way. Everyone gets to pay as little in tax as they can get away with under the law, if Trump has found a way to pay nothing, that’s a problem with the system rather than with him.
There are a few reasons why we shouldn’t dismiss it like this, though.
First, the New York Times not only showed that Trump didn’t pay taxes, but it also revealed that some of the methods he used may have bordered on the criminal. The usual distinction made between “tax avoidance” (legal) and “tax evasion” (illegal) is murky in Trump’s case, and the Times reports that the IRS has been looking into his questionable refund and the New York attorney general has been investigating whether he inflated land appraisals to increase his deductions. In his returns, there are allegedly questionable “consulting” fees that seem to have been paid to his children and then claimed as business expenses, thus reducing his liability. Much of Trump’s lavish lifestyle is treated as a business expense. This is easy to claim, since much of his “business” consists of “being Donald Trump”. So he wrote off $70,000 of hairstyling as a business expense. If he is selling a brand, and the brand is “hedonistic self-indulgence”, then, as the Times put it, “everything that feeds the image … can be written off.”
A particularly egregious instance of bending the law stands out. In 1996, Trump bought a 50,000 sq ft historic mansion in Westchester county, which is surrounded by nature preserves. Trump threatened to develop the property and the people in surrounding towns objected, so instead he agreed not to develop it in exchange for a “$21.1m charitable tax deduction” for land preservation. Trump then classified the mansion as an investment rather than a residence so that he could reduce his property taxes, even though it appears the Trump family did indeed live in it.
So it may not just be that Trump is a businessman with unusually shrewd accountants. He might be exactly what he looks like: a tax cheat. The New York Times reports that most similarly wealthy people pay far more than Trump in taxes. Hell, I pay far more than Trump in taxes, and I edit a tiny print magazine. This could be more a case of fraud than cleverness, even if the law has not yet caught up with Trump.
It’s true that Trump benefited from a system that rewards those who can afford the most creative accountants. We obviously won’t fix the problem by encouraging Donald Trump to feel ashamed of himself, or even by voting him out of office. But Trump is not a mere passive beneficiary of a broken set of rules. The billionaires don’t just exploit the loopholes. They also make them through pushing for ever-expanding exemptions from the tax burden they would otherwise pay. In Trump’s case, it is true in the most literal sense that he made the rules he benefits from. Trump’s major legislative initiative was a whole new tax cut tilted toward giving wealthy people like himself even more favorable treatment. It’s one thing to pay only your legal minimum but understand that the system is unfair. It’s quite another to be actively trying to make that system more grotesquely unequal.
Americans should be disgusted that Trump paid sums ranging from $750 to nothing in federal income taxes. Both his own behavior and the system that made it possible are outrageous. After all, when billionaires don’t pay their taxes, the rest of us have to cover the gaps. When you look at your own tax bill, understand that it could be lower if super-wealthy people like Trump weren’t trying to shift the burden onto everyone else. You paid for Trump’s $73m tax refund and he’s laughing all the way to the bank.
The Times investigation shows us both a system that is corrupted and the way the president has made every sketchy maneuver possible to avoid contributing to the public good. Anyone who believes the rich should pay their fair share should realize that the situation will only grow worse so long as Trump holds power.
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