Little RockImmigrants to the United States, Canada, and Europe from Somalia, Bangladesh, Haiti, and Nigeria where banking systems are unstable or virtually nonexistent are about to face expensive and difficult burdens as more banks curtail money transfer services for fear of running afoul of thorny terrorism regulations.The British-based bank, Barclays, has announced that shortly it will suspend all transfer channels to Somalia.Transfer companies in that country like Dahabshiil that depend on Barclays are reeling in the face of these cutoffs, as are Somalians around the world since 40% of the income in the country comes from remittances received from relatives and friends in more developed countries.
Alternatives are slim.Western Union, the big MTO internationally, has only one outlet in the entire country for example.
For ACORN International’s Remittance Justice Campaign, this is another example of the contradictions in national and international policies.Where Barclays is claiming the cutoff is meant to thwart terrorists, the truth in Somalia and many other African and Middle Eastern countries is that the hawala system also dominates which is of course a very inexpensive and informal system used for years in this part of the world based on networks of people and cash transactions.The New York Times story on Barclays raises the specter of suitcases of money being used to replace more usual remittance channels in this crisis, but something similar is exactly what is involved in the hawala system.
Advocates, both inside and outside the country are asking Barclays for an extension.Barclays is claiming that after paying hundreds of millions in fines they don’t want to be like HSBC, the other British-based bank, and end up paying over a billion for lax standards for money laundering.Others are correctly pointing, as ACORN International has argued, that the real issue is government regulation, or as we have advocated the lack of clear and consistent regulation that supports lower, less predatory costs in line with our 5% demands.
Perhaps with specter of starvation, reduction in school attendance, and real suffering imminent in Somalia, national banking authorities in developed countries will get a needed wakeup call that action is urgent for remittance justice now.
New Orleans Yes, I understand the politics and for reasons that are easy to guess but terrible to live through, President Obama at this late date can’t push his disastrous failure of a Treasury Secretary Tim Geithner to the curb despite the fact that he is owned from head to toe by Wall Street, wears a bank ankle bracelet that keeps him from moving away from their wishes, and has been codependent in extending the housing crisis and thwarting any meaningful effort at modifications in home valuation or foreclosures. For Obama to finally concede the disaster of Geithner his advisers would argue would be to show weakness, so we have to suffer through and Obama may lose this election and hopes for a second term with Geithner hanging around his neck. Add to this horror that Geithner has already conceded he will be gone if there is a second term, so he’s a lame duck when we need a stud duck at Treasury.
Now we even have a building consensus shared by both the editorial pages of the Wall Street Journal and the New York Times that Geithner must go. They come to the conclusion perhaps for different reasons but nonetheless with the same result. The LIBOR scandal has brought them together and should rally all of us. LIBOR, as most know now, is the London Inter Bank Offer Rate, which was supposed to be a benchmark standard for interest rates in trillions of transactions because it was really a plaything for both big bank trading desks and executive suites at Barclays and other huge banks who wanted to conceal their weaknesses from the world and their investors.
Geithner as head of the New York Federal Reserve knew there was monkey business before Obama became President when he was still one of the small, but significant, wrenches in the Bush Administration toolbox. He sent a letter to the equivalent of the British federal reserve making some suggestions for things they might do if they felt like it and when they got around to it. Clearly all of them thought that this chicanery was small potatoes give the level of criminal conspiracies they were watching threaten the entire global economic system with subprimes and credit defaults. It wasn’t and everyone (see above!) admits that now. Obama under a different calculation could cashier Geithner for what he did as a Bush boy and fib about his contribution to the current disasters while sending him away for the earlier crimes in sort of a Penn State/NCAA maneuver.
But he won’t, because we’ve learned that’s just not how he rolls.
At the least we should start seeing a new “star” at Treasury who becomes the de facto secretary and heralds the kinds of changes we should be able to expect if there is a second Obama Administration. Even his advisors should be on the right page with me on this. There needs to be some fancy footwork that sends the signals that change in some different directions is on the way.
You remember that whole “Hope” thing? We need some of that now!