You are invited to debunk this...

[JackRiddler]

The following is mostly news to me, and I invite counterarguments and contrary evidence (or supporting evidence) from anyone willing to read the entire article, especially those who know the relevant law and finance.

FISCAL COMMENTARY:
Follow the Money? God forbid.
Why was the cashing out of billions of dollars just before the 9/11 attacks never investigated?
by Jim Hogue

http://www.baltimorechronicle.com/2008/012908Hogue.html

Warning bells about anomalies in the fiscal sector were sounded in the summer of 2001, but not heeded. Among those who has since raised questions was Bill Bergman. As a financial market analyst for the Federal Reserve, he was assigned in 2003 to review the record of July and August of 2001. He noticed an unusual surge in the currency component of the M1 money supply (cash circulating outside of banks) during that period. The surge totaled over $5 billion above the norm for a two-month increase. The increase in August alone was the third largest single monthly increase since 1947, even after a significantly above-average month in July.

(...)

Bergman "followed the money," including developing a framework for working with money-laundering data and “suspicious activity” reports for monitoring and investigating terrorism. The questions he asked about what happened during the summer of 2001 should have led to investigations, which should have resulted in the prosecution of those with foreknowledge of the attacks.

(...)

Bergman's supervisor instructed him follow up on an unanswered question he had raised pertaining to an August 2, 2001 letter from the Board of Governors of the Federal Reserve to the 12 Reserve Banks. This letter urged scrutiny of suspicious activity reports. Bergman learned of the pervasiveness of the warnings of the 9/11 attacks, and wondered how thoroughly these warnings had permeated the financial system. In this capacity as Federal Reserve investigative point-man, and with his money-laundering portfolio being guided by his supervisor's directive, he asked the Board why they had issued their August 2, 2001 directive, and whether this related to any heightened intelligence of a terrorist threat. His position was then eliminated, and a crucial investigation was terminated before it could even begin.

(...)

Another 9/11 Commission Misrepresentation

Footnote 28 of the Staff Monograph on Terrorist Financing from the official 9/11 Commission Report states that the National Money-laundering Strategy Report for 2001 “didn’t mention terrorist financing in any of its 50 pages.” True? No. The NMLS Report mentions it 17 times. One gets the impression that the commission staff (under Philip Zelikow) was trying to paint the picture that there wasn’t a lot of co-operation between those involved in counterterrorism and the banking regulators in 2001. Why do they paint this picture, inasmuch as the contrary is the case? In fact, anti-terrorism was an important element of the National Money Strategy, and it was included and emphasized in its Report annually. It may have been part of the reason why the August 2, 2001 letter urging scrutiny of suspicious activity reports was issued in the first place.

(...)

The law is not always followed, and the required “currency transaction reports” are sometimes not filed. The 9/11 Commission Report and the National Money-laundering Strategy Report for 2001 did not identify those who are involved with large cash transactions. Had the paperwork been done in August of 2001, or an investigation done into the crime of failing to file the “currency transaction reports,” then we would know who made the cash withdrawals in $100 bills amounting to the $5 billion surge.

[Bolo Boffin]

1. Haas wrote about this last year.

http://www.muckrakerreport.com/id427.html#_ftn9

In response to the Government Accountability Project’s inquiry into this matter, Reinhart wrote:

As you noted, the change between June and August 2001 of the currency component of the money stock was the largest recorded since 1947. This change, however, is largely explained by a surge in net shipments of U.S. currency to Argentina in response to a major financial crisis affecting that country. Absent the shipments to Argentina, the increase in currency over these months would have been within its typical range.

Reinhart needs to explain what he means by largely. What we are considering here are traceable currency shipments that could potentially identify individuals that had prior knowledge of the September 11, 2001 events. Whether it was a foreign government trying to hedge against frozen assets, or a corporation, group, or even an individual aware of, if not responsible for, the attacks - largely explained - is not sufficient. Eighty percent could fall under the largely explained category, which would still leave $1 billion in $100 bills unaccounted for which is unacceptable. Many have killed for much less. I suggest full, public disclosure including shipping tickets and transaction slips that clearly support his assertion that in July / August 2001 - $5 billion in $100 bills was shipped to Argentina. Until Reinhart produces such documentation, I will remain convinced he is participating in the perpetuation of a fraud upon the American people.

I'll explain what Reinhart meant by largely. Reinhart says that there is a typical range of M1 currency component increase. Without the Argentinian shipments, that increase in July and August would have been within the typical range.

Argentinian shipments + typical increase = largest increase since 1947.

The Argentinian shipments largely explain that increase. There are other reasons for the increase, but they fall inside the typical range. It is the Argentinian shipments that pushed the M1 currency component well outside the typical range.

Haas' 80% figure is something he produces from thin air. His assertion that this could potentially expose people who knew about 9/11 is post hoc speculation.

The Hogue article mentions this in passing, but doesn't get into the details. It looks like a large amount of post hoc as well. There's no reason to think that the July/August capital transfers to Argentina have anything to do with 9/11 other than proximity in time.

Some other links on the Argentinian crisis:

http://www.businessweek.com/magazine/content/01_21/b3733172.htm

http://goliath.ecnext.com/coms2/gi_0199-3238834/Debt-intolerance.html

http://www.euromoney.com/Article/1015493/Title.html

PDF: http://www.economia.unimore.it/marotta_giuseppe/didattica/scem2_0607/Sovereign%20Ratings%20History%20Since%201975.pdf

[William Seger]

2. I thougt it was interesting... until I started reading more

First, you left out a part of the article that's interesting:

Bergman points out that the August 2001 withdrawals may have been, to a large extent, caused by the Argentinian banking crisis that was occurring at the time. However, he raises the point that no explanation has yet fully answered the important question: Why was the cashing out of billions of dollars just before the 9/11 attacks never investigated?

So, the money transfers may in fact be perfectly explainable, but the issue from Bergman's point of view is that he doesn't believe it was sufficiently investigated. Fair enough -- provided that we accept Bergman's perception that it wasn't. But that could be a mis-perception: he might just be unaware of a follow-on investigation. I don't know, of course, but that would be an issue before jumping to conclusions.

But then, the article implies that there's something suspicious about an "error" in a commission staff report's footnote: "Footnote 28 of the Staff Monograph on Terrorist Financing from the official 9/11 Commission Report states that the National Money-laundering Strategy Report for 2001 “didn’t mention terrorist financing in any of its 50 pages.” True? No. The NMLS Report mentions it 17 times. One gets the impression that the commission staff (under Philip Zelikow) was trying to paint the picture that there wasn’t a lot of co-operation between those involved in counterterrorism and the banking regulators in 2001."

So, what is footnote 28 in reference to?

With the exception of some limited attempts by Treasury’s Financial Crimes Enforcement Network (FinCEN) to match classified information with reports filed by banks, U.S. financial institutions and Treasury regulators focused on finding and deterring or disrupting the vast flows of U.S. currency generated by drug trafficking and by high-level international fraud. Large-scale scandals, such the use of the Bank of New York by Russian money launderers to move millions of dollars out of Russia, captured the attention of the Department of the Treasury and Congress. As a result, little attention was paid to terrorist financing.
²⁸
...
²⁸ The 2001 National Money Laundering Strategy, for example, issued by Treasury in September 2001,
does not discuss terrorist financing in any of its 50 pages.

Let's not make too big a deal about the article's misquoting the footnote ("didn't mention terrorist financing" versus "didn't discuss terrorist financing") but journalists should be more careful. But looking at that document, I could only find "terror" mentioned or discussed in the following section:

Priority 3: Aggressively exploit OFAC-held information about blocked assets of foreign terrorist groups and agents and of those individuals and entities appearing on the OFAC Narcotics Sanctions Programs designation lists for potential forfeiture.

Lead: Director, Office of Foreign Assets Control, Department of the Treasury; Office of the Deputy Attorney General, Department of Justice.

Goals: Pursue investigative leads developed from exploitation of information concerning assets blocked pursuant to OFAC?s Narcotic Sanctions Programs or Foreign Terrorists Programs. By October 2001, create a mechanism to develop investigative leads and evidence from exploitation of information concerning assets blocked pursuant to OFAC?s Narcotics Sanctions or Foreign Terrorists Programs. FLETC will incorporate this mechanism into its advanced asset forfeiture training programs.

The President, through the promulgation of Executive Orders pursuant to the International Emergency Economic Powers Act (IEEPA), and Congress, through the enactment of other statutes, have established sanctions programs that prohibit named foreign terrorists, foreign drug kingpins, and their fronts and operatives from using their assets within U.S. jurisdiction or engaging in business or other financial activities with U.S. persons, including companies or individuals. Asset blockings are a valuable tool to fight foreign-origin threats to U.S. national security and foreign policy, including foreign criminal organizations. The 2001 Strategy requires that law enforcement step beyond the sanctions programs and use the sanctions-based asset blockings as a ?force multiplier— to pursue all foreign terrorist and narcotics program asset blockings as leads for potential forfeitures through money laundering prosecutions.

Inter- and intra-agency cooperation is essential to implement this priority. OFAC, the Executive Office of Asset Forfeiture, and bureau heads will cooperate to design a mechanism that identifies leads from OFAC-held information relating to blocked assets of foreign narcotics traffickers and terrorists, as well as from the relevant administrative record in support of a designation. Criminal investigative agencies will, thereafter, pursue these leads to determine if legal cause exists to civilly or criminally forfeit the assets.

So, it appears to me that this section doesn't really do much to "discuss terrorist financing" (except to state the obvious, that asset blocking is an "valuable tool"); it talks about seizing already blocked assets. I would expect a discussion of terrorist financing in a strategy document to have some goal of detecting suspicious activity by cooperating with counterterrorist intelligence offices, and perhaps blocking more assets as a result. So, where are all the other "mentions" that are alleged to be in there? Are they just implicit? It seems to me that the footnote is not entirely misrepresenting the situation.

And that looks like a pretty flimsy case to base this accusation on:

To state the obvious, there are two reasons why Zelikow et al. made the false statement regarding there having been no references to terrorism in the National Money-laundering Strategy Report. One reason could be to justify and encourage more scrutiny (legal or otherwise) of small transactions generally, e.g. via USAPA, and the other could be to establish (read: invent) a reason for missing the evidence pertaining to the attacks. ('Transactions too small. No one could find.') And since the real money trail points to foreknowledge within the financial community at large, and, possibly, the Federal Reserve specifically, the "low-budget terrorism" story-line that the 9/11 Commission had established needed to be protected.

Sorry, Jack, but this looks like, um, a bit of a reach to me. Well, actually it looks like a giant stretch. After not really making the case that the staff report's characterization of too little cooperation between banking and counterterrorism -- a characterization I read as a criticism -- was inaccurate (and basing even the weak case it made on one footnote!) the article nonetheless proceeds to invent a conspiracy-assuming, Zelikow-bashing rationalization for the alleged misrepresentation, which it calls "obvious" but I call obviously strained.

I'm no Zelikow fan, for sure, but CTists seem to be a little too eager to tar the entire commission and staff on fairly flimsy pretext, then insinuate that the pretext is credible just because Zelikow was the head of the commission. I think there are plenty of legitimate criticisms of the commission -- most especially in the areas that were avoided, and the lack of any real action or accountability coming out of any of it -- without doing that sort of thing.

[truedelphi]

3. You bring up some very good points.

Still at the end of the day, you have to wonder why a normal person depositing 10,002 dollars in cash into a normal bank bank evokes scrutiny and yet the important investigations were called off.

Even if there is a South American banking crisis in question, and that might explain everything, it still would be nice to see the 9/11 Commission actually call someone out, for any reason at all.

The ten or twelve hours of 9/11 Commission hearings I watched on C-Span amazed me, as witness after witness made incredulous statements - while nary an eyebrow shot skyward.

I for one was amazed beyond incredulity that the explanation for the planes coming out of Langley rather than Andrews (in defense of the Nation's Capital) was that no one at NORAD had the phone number for Andrews! Only the Secret Service!

Even if there is no possible way that MIHOP or LIHOP might have occurred, heads should have rolled for that statement alone. Because the discussion needs to look at the overall security methods and if those suck, what does it say about the commanders at the helm of those security institutions?

I mean, we are only talking about the Nation's security for which we taxpayers have paid between 32 and 40 TRILLION dollars.

[JackRiddler]

4. Don't be "sorry" to me...

I didn't write it, Hogue did, and I have zero stake in it. This being news to me, I invited posts like yours and the other ones here so far. Very good and thanks. I find you persuasive on the main points.

Nevertheless, I'd like to see an overview of the transactions laid out, as Bergman also apparently wanted. If you see 3.5 billion attributable to Argentina, for example, that would tend to close this line of questioning as relevant to 9/11, but saying it's "mostly" due to Argentina really doesn't guarantee that it's really "mostly." Prefer the numbers (are they available?). But Bergman was apparently prevented from investigating, raising suspions - which is not to say that everything one finds suspicious is a lie, or a cover-up.

While you split hairs about how Hogue should be more careful about the meaning of "discuss" as opposed to "mention," surely the Commission must be held to the same or higher standard of accuracy ("does not discuss in any of its 50 pages" sure comes close to "does not mention," in tone if not literal meaning. One should spare the superlatives. They could have said, "barely mentions" and been correct, making the same point.)

There is no need or reason really for your added-on generalizations about "CTists" at the end, whatever or whoever that category may encompass in your mind. It's a construct.

But long as you bring it up: Why would anyone ever need to use "flimsy pretexts" to "tar" the commission? The mere fact that "Zelikow was the head," as you say, already suffices to tar the entire Commission process as hopelessly conflicted. Zelikow came straight from his White House functions on the PFIAB and, earlier, the transition team (where he was responsible for Clarke's informal demotion, according to Shenon!). Zelikow was a close associate of Rice, works for her even today, and had a prior career under both Bush administrations.

That doesn't mean one can use this self-evident corruption of the Commission starting on Day One as evidence on behalf of every claim that conflicts with the Commission's claims, of course, as you correctly point out.

However, it also doesn't mean that the entire "commission and staff" would be tarred, something you seem to think anyone implied. I certainly didn't. I'm sure some or most of the staffers are just honest people doing their job and there's no need for you to bring them into this at all.

True, if we go through the careers of each Commission member and some of the major staff like Snell and May, we find equally relevant conflicts of interest, as Kean admitted in when he defended Zelikow with words to the effect of, "we will all have to be recused at one point or another."

But that has to be assessed on an individual basis, and again, there's no need to imply that the tarring of the Commission tars "the staff" per se. This reminds me of a common technique of avoidance - when one questions Bush's war, for example, his supporters turn it into a question about the troops.

Because the head is rotten, the process is rotten, the results are by definition suspect. But "the staff" as such doesn't matter or isn't automatically tainted. In fact, it's staff members who supplied Shenon with much of the dirt on Zelikow.

[JackRiddler]

5. kick because there's a dupe