UBS Money Laundering: What Did Phil Gramm Know?
In recent days yet another wealthy private customer of the Swiss-based banking conglomerate UBS admitted to criminal fraud in a growing parade of perp walks that could extend into the thousands. It is a case that threatens to ensnare former Sen. Phil Gramm, the Texas Republican who is vice chairman of UBS' investment banking business. Given the widespread involvement of UBS in what the Justice Department alleges were systematic efforts to violate U.S. tax laws, it must be asked: Did Gramm as a top executive have no inkling about what was going on?
Perhaps, but for Gramm this has to be a moment that at the very least tests his ideological commitment to the radical deregulation of banking that he championed during his 24 years in Congress. He joined UBS soon after the bank acquired Enron, a company that had gone bankrupt after jumping through the "Enron loophole" in the Commodity Futures Modernization Act, which Gramm had pushed though Congress. Gramm's wife, Wendy, had been an Enron board member and head of its audit committee but failed to sound the alarm before the Houston-based company collapsed. Then UBS itself ran into big trouble because of $37 billion in bad mortgage debt made possible by derivatives market deregulation engineered by then-Sen. Gramm. U.S. taxpayers have had to pony up money to heal UBS' self-inflicted wound. But the bank's involvement with tens of thousands of secret accounts tied to allegations of tax evasion raises starker issues -- of possible criminal fraud through practices that Gramm as a senator helped keep opaque.
In his last years in the Senate, Gramm succeeded in blocking legislation that, as the New York Times editorialized, would have made it easier "to crack down on offshore tax havens" and "would have expanded rules that require banks to find out more about individuals and foreign jurisdictions they are dealing with." The Times noted, "The legislation won bipartisan support but was blocked by Senator Gramm of Texas, a foe of government regulation. ... "
Following that victory, Gramm stepped into a top position at UBS, stating: "It will provide me with an opportunity to practice what I've always preached.... I have a strange combination of experiences that a lot of people don't have... knowledge of economics, a knowledge of government policy." Given that knowledge, it is legitimate to ask just how Gramm could have been unaware of the extensive efforts of his new employer, UBS, to thwart the IRS. In court cases involving UBS over the past year, witnesses have provided extensive details of the bank's alleged practices in abetting tax avoidance.
As the Wall Street Journal said of the federal government's campaign against UBS clients evading U.S. tax laws, "plea agreements ... are providing a clearer picture of UBS's sophisticated efforts to help Americans hide income or the existence of foreign bank accounts."
In agreeing in a U.S. district court last week to plead guilty, Los Angeles businessman John McCarthy disclosed how UBS facilitated his defrauding of the U.S. government through secret offshore accounts set up by the bank. "While banking with UBS Cayman Islands, the defendant was advised by UBS representatives that a lot of United States' clients don't report their income and just take it off the top," according to the court filing. Now that the Swiss-based bank has agreed to turn over the names of upward of 10,000 secret account holders, the arraignment of those charged with breaking U.S. tax laws could extend very high into the ranks of the affluent.
As the Wall Street Journal reported, "The U.S. crackdown on clients of UBS AG is widening into a global hunt, with the government detailing in court documents how the Swiss bank and outside advisers helped Americans hide money using enterprises set up in Hong Kong."
Was Gramm truly unaware of the widespread efforts at UBS to defraud the U.S. Treasury? Did extreme ideologically driven naiveté lead him to believe that the bank would never engage in such chicanery? In the past he was the first to deny any hint of business naiveté and indeed defended his being hired by a bank that benefited from his legislation. Deflecting any suggestion of a conflict of interests, Gramm told a reporter: "You know, there is something to be said for not hiring people who just came in off a turnip truck. I have always believed that when I left the Senate that I would go into financial services as something that I know something about."
Well, what exactly did he know about those offshore tax shelters that caused a revenue shortfall of at least $100 billion that honest taxpayers have to make up?
Eric Schurenberg: If TARP Was So Smart, Why Are So Many Banks Failing?
Things aren't going so well outside the pale of banks too big to fail. The FDIC faces losses of $21 billion from the 84 banks that have gone under so far this year -- more than in all of last year.
Loading comments…
Want to reply to a comment? Hint: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to
Seeing as how after 9/11 the biggest (and smartest) thing the nation did was actually work with the financial sectors around the world to clamp down on terrorist money. At one point ('05? '06?) we froze North Korean minister's money, cuz you know they ain't storing it at home. Why, with countless reports of the US getting involved in international money and cutting everyone's funds to it, did these people not think they'd get caught in that dragnet and start bringing it home?
Just one more example of the bankster's treasonous rape and pillage of the American public; we demand JUSTICE!
Banksters who raped the American people, caused the crisis, pocketed the profits on the way up for decades by creating nothing but worthless paper and mathematical subterfuge, and then got bailouts to SOCIALIZE their losses so we and our grandchildren are stuck with the losses, and are now being brought in as saviors in the highest government economic decision making positions and as the private investment "saviors" to buy up the toxic assets THEY CREATED for pennies on the dollar only to play several more profit taking angles with federal government, taxpayer, guarantees against any and all losses.
We must put these FINANCIAL TERRORISTS in JAIL next to their buddy madoff and C L A W B A C K! Otherwise it will all just happen again, and again... If we do not DEMAND Justice we are to blame!
I smell a problem though. Didn't Gramm push to make these things not illegal? So according to the laws on the books, were these tax havens actually illegal?
To tie this to the War on Drugs, didn't Gramm decriminalize possession of tax havens?
Please go back and read the first sentance, "UBS admitted to criminal fraud".
I beet Phil Gramm is one of those hiding money away at that bank and around all other tax havens.
Nothing will happen to him since he knows our members in congress who also have accounts there.
Let us be real - nothing will be done. They will fry a few small fish to pacify the masses who are
gullible!
Not only that, but I suspect a lot of our TARP money and other of our bailout money and Fed loans have gone to UBS. I heard at some point that UBS had toxic assets that were many times bigger than the entire GDP of Switzerland. I was also told that what Gramm really does for UBS is lobbying for them. So I suspect a lot of our money heading over to Switzerland via UBS to bail them out was what Gramm was paid to do.
I read something along those lines as well and there's no doubt in my mind he was a lobbyist for UBS and set it up to have the American taxpayer bailout the UBS losses. You know the republican's don't really believe in capitalism, their form of capitalism is " Capitalized profits and Socialized losses ", and yet the poor, clueless Americans are screaming socialism when we discuss healthcare. Gramm, leader of the pack.
Awesome article! Who can forget that Gramm was McCain's financial advisor. For me, an Obama supporter from the start, this was the lie and the obfuscation that the media helped cover up last year. McPalin supporters would never have believed or understood ,anyway, but we who were paying attention ...did.
Just like someone who owes $200.00...hound them...double what they owe...garnish their wages....ter.rorize them at work....keep them from buying food....send letters and agents every week.....
This is the bushgramm ideology... get blood from the people at the bottom to pay for the yachts at the top.
Fair share payment isn't enough for me. Tax cheats need to pay big penalties, interest and back taxes for multiple years. These crooks, and that's all they are is crooks, should then go to jail unless they supply info that let's IRS and DOJ get prosecutions of the scheme hatchers and if someone like Gramm is involved and found guilty, he should spend the rest of his life in jail. Put the heat on the bait fish and you'll catch a shark.
Didn't we all grow up wanting to be rich? Don't we all buy into this system on the chance that we will hit the proverbial lottery and abscond with our cash not to mention, finally benefiting from the tax structure? Phil showed us the way, we can all be rich can't we? Why else would we put up with this dreck?
yea and the number being audited is bs too..:5,000.
According to records it SHOULD be closer to 52,000 that are being audited..
Might want to check "Isle of Mann" as offshore taxhaven too.
and the Cayman Islands, and Belgium, etc.
Thanks for the article. It's unfortunate that the business news organizations such as CNBC or the WSJ have yet to make the Gramm connection.
Publicly!
They are all covering their @sses.
Gramm is an American conservative. For him, paying taxes is strictly for the suckers and losers. Dangle social issues to the masses; give the wealthy more money. Cap it off by convincing the masses to misplace their anger, by redirecting it away from the fat cats and towards government itself. It's the movement in a nutshell. And it's why our economy is in the toilet and the gap between the rich and the rest is at pre-Depression levels.
This is what thirty years of conservative control of Washington will get you. Nice job, Phil.
Something like that, though Mr Clinton didn't help matters with pushing NAFTA through and no one read it. Mr Phil Gramm and his corrupt wife Wendy belong to the same club of Bernie Madoff, called," Screw your fellow man and take the money and run." They both should be behind bars, his money hungry wife screwed Enron workers out of their life savings and tried to stick Washington state citizens with unlawful contracts for years to come. Thanks to our senator, Maria Cantwell ,she fought the sleaze balls with hard cold facts and won. People like Phil Gramm who brag they have knowledge of economics and government policy then claim they have no knowledge when the light is shined on him mainipulating the laws in his favor to stack the deck against hard working Americans trying to survive with their families. You know what, he and his deregulation pals believe in undermining Democracy and not really having a competitive marketplace, cause they know without gaming the system they're losers.
Hypocrisy in the practice of "tax law" and investing. Wall St., Congress and the IRS created a cash stream to the Wall St. financial apparatus through the creation and implementation of high tax liabilities conjugated with high tax deferred retirement products, shelters, investments, mortgage write-offs, more tax deferments, etc. This component of the financial crisis needs investigation. The government apparently did not need trillions of dollars diverted to investing in the casino market. Recently the said market requires trillions in a bailout that has not worked and Wall St. will demand more trillions for a bailout that will not work. Can anyone say how much money the Wall St. cabal and its' international associates, private central banks, has devoured of U.S. financial resources?
so far obama has proven that democrats are soft on crime by not prosecuting republican criminals. let's hope that changes.
It has only been 7 months. It takes a while to build a case what with all the rest of the cr@p President Obama met on 1-20-09. He is NOT soft on crime. It is HIS Administration going after these crooks while bush let them loot.
Thank you for your expose. I have so little patience for people who happily accumulate wealth, taking advantage of living in a country with a functioning democracy, a functioning government and judiciary, a widespread infrastructure, a basically law-abiding citizenry... and all the blessings this country has to offer... AND YET they strive, connive and scheme to avoid providing any financial support to that country whatsoever.
By evading their tax obligation, they are thereby burdening the rest of us "little people" with the task of picking up the slack.
You want to fund health care? Just make sure these flagrant tax dodgers pay their fair share.
Exactly, if these dudes lived in Russia, Putin would have already sent them to Siberia and put the money in state controlled enterprises. Happens all the time with rich boys who don't pay him his dues....
We know damm well we have the money for healthcare, it's a matter if making these sleazeballs pay their taxes. These people are the slime of the earth, they don't deserve to live in a democracy. Between the money wasted on the industrialized military complex and the rich tax evaders there is definitely enough money for Americans to have access to healthcare.
If there's one thing I've never accused Phil Gramm of - it's knowing something.
You must be logged in to comment. Log in or connect with
