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Profile: US Department of the Treasury

US Department of the Treasury was a participant or observer in the following events:

Donald Segretti.Donald Segretti. [Source: Spartacus Educational]Three attorneys—one the assistant attorney general of Tennessee, Alex Shipley—are asked to work as so-called “agent provocateur” for the Campaign to Re-elect the President (CREEP), an organization working to re-elect President Nixon (see October 10, 1972). The three tell their story to Washington Post reporter Carl Bernstein in late September 1972, and Bernstein’s colleague Bob Woodward learns more from his FBI source, “Deep Throat,” days later (see October 7, 1972 and October 9, 1972). They all say they were asked to work to undermine the primary campaigns of Democratic presidential candidates by the same man, Donald Segretti, a former Treasury Department lawyer who lives in California. Segretti will later be identified as a CREEP official. Segretti, the attorneys will say, promises them “big jobs” in Washington after Nixon’s re-election (see November 7, 1972). All three says they rejected Segretti’s offers (see June 27-October 23, 1971). Segretti himself will deny the allegations, calling them “ridiculous.”
Part of a Larger Pattern? - Bernstein and Woodward connect the Segretti story to other Nixon campaign “dirty tricks” they are already aware of, including efforts by Watergate burglar James McCord (see June 19, 1972) to “investigate” reporter Jack Anderson, attempts by Watergate surveillance man Alfred Baldwin (see June 17, 1972) to infiltrate Vietnam Veterans Against the War, Watergate burglar E. Howard Hunt’s successful attempts to electronically “bug” Democratic campaign headquarters (see May 27-28, 1972) and his investigation of Democratic presidential candidate Edward Kennedy (see June 19, 1972), and McCord’s rental of an office next to the offices of Democratic presidential candidate Edmund Muskie. To the reporters, the Segretti story opens up speculation that the Nixon campaign had undertaken political espionage efforts long before the Watergate burglary. In their book All the President’s Men, Bernstein and Woodward write, “Watergate could have been scheduled before the president’s re-election chances looked so good and perhaps someone had neglected to pull the plug.” Bernstein has heard of CIA operations such as this mounted against foreign governments, called “black operations,” but sometimes more colloquially called “mindf_cking.” [Bernstein and Woodward, 1974, pp. 114-115]
Segretti a 'Small Fish in a Big Pond' - An FBI official investigating CREEP’s illegal activities will call Segretti “a small fish in a big pond,” and will say that at least 50 undercover Nixon operatives have worked around the country to disrupt and spy on Democratic campaigns. The political intelligence and sabotage operation is called the “offensive security” program both by White House and CREEP officials. FBI investigators will find that many of the acts of political espionage and sabotage conducted by Segretti and his colleagues are traced to this “offensive security” program, which was conceived and directed in the White House and by senior CREEP officials, and funded by the secret “slush fund” directed by CREEP finance manager Maurice Stans (see September 29, 1972). FBI officials will refuse to directly discuss Segretti’s actions, saying that he is part of the Watergate investigation (see 2:30 a.m.June 17, 1972), but one FBI official angrily calls Segretti’s actions “indescribable.”
White House Connections Confirmed - In mid-October 1972, the Washington Post will identify Dwight Chapin, President Nixon’s appointments secretary, as the person who hired Segretti and received reports of his campaign activities. Segretti’s other contact is Hunt. Segretti also received at least $35,000 in pay for his activities by Nixon’s personal lawyer, Herbert Kalmbach. [Washington Post, 1/31/1973]

Entity Tags: Donald Segretti, Alex Shipley, Bob Woodward, Carl Bernstein, Herbert Kalmbach, Richard M. Nixon, E. Howard Hunt, US Department of the Treasury, Dwight Chapin, Campaign to Re-elect the President

Timeline Tags: Nixon and Watergate, Elections Before 2000

Nixon aide John Ehrlichman reports that he has successfully created the special investigations unit ordered by the president (see Late June-July 1971). His first choice to head the unit, speechwriter Pat Buchanan, refused the position. Ehrlichman rejected fellow aide Charles Colson’s own choice, retired CIA agent E. Howard Hunt, who has recently joined the White House staff (see July 7, 1971). Ehrlichman turned to his own protege, Egil “Bud” Krogh, and David Young, a former assistant to National Security Adviser Henry Kissinger, to head the unit. Young gives the unit its nickname of “Plumbers” after he hangs a sign on his office door reading, “D. YOUNG—PLUMBER.” Their first hire is former FBI agent and county prosecutor G. Gordon Liddy, a reputed “wild man” currently being pushed out of the Treasury Department for his strident opposition to the administration’s gun control policies. [Reeves, 2001, pp. 348-349]

Entity Tags: Egil Krogh, Charles Colson, David Young, G. Gordon Liddy, E. Howard Hunt, Patrick Buchanan, John Ehrlichman, US Department of the Treasury

Timeline Tags: Nixon and Watergate

Representatives William Moorhead (D-PA) and Frank Horton (R-NY) cosponsor a series of amendments designed to improve the effectiveness of the 1966 Freedom of Information Act (FOIA). The law is designed to make it easier for journalists, researchers, and citizens to see government records, but in practice the law is cumbersome: agencies have little impetus to produce documents in a timely manner, charge exorbitant fees for searching and copying documents, and too often battle FOIA requests in court. With Watergate fresh in legislators’ minds, the amendments to FOIA are welcome changes. The amendments expand the federal agencies covered, and mandate expediting of document and record requests. But as the bill nears final passage, senior officials of the Ford White House are mobilizing to challenge it. The CIA, Defense and Treasury Departments, Civil Service, and many on President Ford’s staff, including Deputy Chief of Staff Dick Cheney, all urge a veto. Most bothersome is the provision that a court can review a federal decision not to release a document requested under FOIA. Ford will veto the bill, but Congress will override the vetoes (see November 20, 1974). [Dubose and Bernstein, 2006, pp. 29-30]

Entity Tags: William Moorhead, US Department of the Treasury, US Civil Service, Frank Horton, Ford administration, Central Intelligence Agency, US Department of Defense, Freedom of Information Act, Richard (“Dick”) Cheney, Gerald Rudolph Ford, Jr

Timeline Tags: Civil Liberties

Kamal Adham.Kamal Adham. [Source: Adham Center]Beginning in 1978, a group of foreign investors attempt to buy First American Bankshares, the biggest bank in the Washington, D.C., area. This group is fronted by Kamal Adham, the longtime Saudi intelligence minister until 1979. In 1981, the Federal Reserve asks the CIA for information about the investors, but the CIA holds back everything they know, including the obvious fact that Adham was intelligence minister. As a result, the sale goes through in 1982. It turns outs that Adham and his group were secretly acting on behalf of the criminal Bank of Credit and Commerce International (BCCI), and BCCI takes over the bank. [Washington Post, 7/30/1991; US Congress, Senate, Committee on Foreign Relations, 12/1992] Time magazine will later report that “the CIA kept some accounts in First American Bank, BCCI’s Washington arm.” But additionally, “Government investigators now have proof that First American had long been the CIA’s principal banker. Some of the more than 50 agency accounts uncovered at the bank date back to the 1950s. BCCI owned the CIA’s bank for a decade.” [Time, 3/9/1992] The CIA soon learns that BCCI secretly controls the bank, if the CIA didn’t already know this from the very beginning. By 1985, the CIA will secretly inform the Treasury Department on the bank’s control by BCCI, which would be illegal. But no action is taken then or later, until BCCI is shut down. Sen. John Kerry’s BCCI investigation will later conclude, “even when the CIA knew that BCCI was as an institution a fundamentally corrupt criminal enterprise, it used both BCCI and First American, BCCI’s secretly held US subsidiary, for CIA operations. In the latter case, some First American officials actually knew of this use.” [US Congress, Senate, Committee on Foreign Relations, 12/1992]

Entity Tags: US Federal Reserve, First American Bankshares, Central Intelligence Agency, Bank of Credit and Commerce International, Kamal Adham, US Department of the Treasury

Timeline Tags: Complete 911 Timeline

The PROMIS database application is used for a program called “Follow the Money” to track loans made by Western banks to the Soviet Union and its allies. The top-secret program is run for the National Security Council (NSC) by Norman Bailey, who uses NSA signals intelligence to track the loans. Bailey will later say that the PROMIS application is “the principal software element” used by the NSA and the Treasury Department in their electronic surveillance programs that track financial flows to the Soviet bloc, organized crime, and terrorist groups. According to Bailey, this program marks a significant shift in resources from human spying to electronic surveillance, as a way to track money flows to suspected criminals and American enemies. [Salon, 7/23/2008]

Entity Tags: National Security Agency, US Department of the Treasury, National Security Council, Norman Bailey

Timeline Tags: Inslaw and PROMIS

The CIA sends a report on the Bank of Credit and Commerce International (BCCI) and its drug-related activities to other US government departments. It follows up with a report about BCCI’s links to notorious terrorists such as Abu Nidal, the most wanted man in the world at the time. Similar reports follow in 1986. However, the Justice Department, Treasury Department, and other departments keep silent about what they know and no action is taken against the bank. [US Congress, Senate, Committee on Foreign Relations, 12/1992; Cooley, 2002, pp. 93]

Entity Tags: US Department of the Treasury, US Department of Justice, Bank of Credit and Commerce International, Central Intelligence Agency

Timeline Tags: Complete 911 Timeline

In January 1985, the CIA delivers a secret report about the criminal BCCI back to the Treasury Department. In an extraordinary departure from standard procedure, the report is hand-delivered by a CIA agent and printed on plain paper with no markings to indicate it came from the CIA. The report is given to Douglas Mulholland, a Treasury official serving as the CIA’s main link to that department. Mulholland then hand-delivers the report to Treasury Secretary Donald Regan, and calls its contents “dynamite.” It is not known what is in the report, but the Treasury Department sends back word that it wants to know more. However, as Time magazine reporters Jonathan Beaty and S. C. Gwynne will later relate: “Suddenly, and for no apparent reason, Treasury lost all interest in BCCI.… Someone had… gotten to Regan and Mulholland, and the message had been unambiguous: back off.” The Treasury Department takes no action against BCCI, even though the evidence of the bank’s involvement in money laundering by this time is overwhelming. [Beaty and Gwynne, 1993, pp. 325-328]

Entity Tags: Central Intelligence Agency, Douglas Mulholland, US Department of the Treasury, Donald Regan

Timeline Tags: Complete 911 Timeline

President Ronald Reagan signs Executive Order 12656, assigning a wide range of emergency responsibilities to a number of executive departments. The order calls for establishing emergency procedures that go far beyond the nation’s standard disaster relief plans. It offers a rare glimpse of the government’s plans for maintaining “continuity of government” in times of extreme national emergency. The order declares the national security of the country to be “dependent upon our ability to assure continuity of government, at every level, in any national security emergency situation,” which is defined as “any occurrence, including natural disaster, military attack, technological emergency, or other emergency, that seriously degrades or seriously threatens the national security of the United States.” The order instructs department leaders to establish various protocols for crisis situations, including rules for delegating authorities to emergency officials, establishing emergency operating facilities, protecting and allocating the nation’s essential resources, and managing terrorist attacks and civil disturbances. The plans are to be coordinated and managed by the National Security Council and the Federal Emergency Management Agency (FEMA). The presidential order suggests certain laws may have to be altered or expanded to carry out the plans. Although it encourages federal agencies to base the emergency protocols on “existing authorities, organizations, resources, and systems,” it also calls on government leaders to identify “areas where additional legal authorities may be needed to assist management and, consistent with applicable executive orders, take appropriate measures toward acquiring those authorities.” According to the executive order, the plans “will be designed and developed to provide maximum flexibility to the president.” Executive Order 12656 gives specific instructions to numerous federal departments:
bullet The Department of Justice is ordered to coordinate emergency “domestic law enforcement activities” and plan for situations “beyond the capabilities of state and local agencies.” The Justice Department is to establish plans for responding to “civil disturbances” and “terrorism incidents” within the US that “may result in a national security emergency or that occur during such an emergency.” The attorney general is to establish emergency “plans and procedures for the custody and protection of prisoners and the use of Federal penal and correctional institutions and resources.” The Department of Justice is also instructed to develop “national security emergency plans for regulation of immigration, regulation of nationals of enemy countries, and plans to implement laws for the control of persons entering or leaving the United States.” The attorney general is additionally instructed to assist the “heads of federal departments and agencies, state and local governments, and the private sector in the development of plans to physically protect essential resources and facilities.”
bullet The Department of Defense, acting through the Army, is to develop “overall plans for the management, control, and allocation of all usable waters from all sources within the jurisdiction of the United States.” The secretary of defense is to arrange, “through agreements with the heads of other federal departments and agencies, for the transfer of certain federal resources to the jurisdiction and/or operational control of the Department of Defense in national security emergencies.” The secretary of defense is also instructed to work with industry, government, and the private sector, to ensure “reliable capabilities for the rapid increase of defense production.”
bullet The Department of Commerce is ordered to develop “control systems for priorities, allocation, production, and distribution of materials and other resources that will be available to support both national defense and essential civilian programs.” The secretary of commerce is instructed to cooperate with the secretary of defense to “perform industry analyses to assess capabilities of the commercial industrial base to support the national defense, and develop policy alternatives to improve the international competitiveness of specific domestic industries and their abilities to meet defense program needs.” The Commerce Department is also instructed to develop plans to “regulate and control exports and imports in national security emergencies.”
bullet The Department of Agriculture is ordered to create plans to “provide for the continuation of agricultural production, food processing, storage, and distribution through the wholesale level in national security emergencies, and to provide for the domestic distribution of seed, feed, fertilizer, and farm equipment to agricultural producers.” The secretary of agriculture is also instructed to “assist the secretary of defense in formulating and carrying out plans for stockpiling strategic and critical agricultural materials.”
bullet The Department of Labor is ordered to develop plans to “ensure effective use of civilian workforce resources during national security emergencies.” The Labor Department is to support “planning by the secretary of defense and the private sector for the provision of human resources to critical defense industries.” The Selective Service System is ordered to develop plans to “provide by induction, as authorized by law, personnel that would be required by the armed forces during national security emergencies.” The agency is also vaguely instructed to establish plans for “implementing an alternative service program.”
bullet The Transportation Department is to create emergency plans to manage and control “civil transportation resources and systems, including privately owned automobiles, urban mass transit, intermodal transportation systems, the National Railroad Passenger Corporation, and the St. Lawrence Seaway Development Corporation.” The Transportation Department is also to establish plans for a “smooth transition” of the Coast Guard to the Navy during a national security emergency. The Transportation Department is additionally instructed to establish plans for “emergency management and control of the National Airspace System, including provision of war risk insurance and for transfer of the Federal Aviation Administration, in the event of war, to the Department of Defense.”
bullet The Department of the Treasury is ordered to develop plans to “maintain stable economic conditions and a market economy during national security emergencies.” The Treasury Department is to provide for the “preservation of, and facilitate emergency operations of, public and private financial institution systems, and provide for their restoration during or after national security emergencies.”
bullet The Department of Energy is to identify “energy facilities essential to the mobilization, deployment, and sustainment of resources to support the national security and national welfare, and develop energy supply and demand strategies to ensure continued provision of minimum essential services in national security emergencies.”
bullet The Department of Health and Human Services is instructed to develop programs to “reduce or eliminate adverse health and mental health effects produced by hazardous agents (biological, chemical, or radiological), and, in coordination with appropriate federal agencies, develop programs to minimize property and environmental damage associated with national security emergencies.” The health secretary is also to assist state and local governments in the “provision of emergency human services, including lodging, feeding, clothing, registration and inquiry, social services, family reunification, and mortuary services and interment.” [US President, 11/18/1988]

Entity Tags: US Department of Agriculture, Selective Service System, US Department of Labor, US Department of Defense, US Department of Commerce, Ronald Reagan, National Security Council, US Department of Health and Human Services, US Department of Transportation, US Department of the Treasury, Federal Emergency Management Agency, US Department of Justice, US Department of Energy

Timeline Tags: Civil Liberties

BATF agents train for a raid.BATF agents train for a raid. [Source: Time]The Bureau of Alcohol, Tobacco and Firearms (BATF, sometimes known as the ATF) begins preparing for a large-scale raid on the Waco, Texas, compound, Mt. Carmel, owned by the Branch Davidian sect. The BATF has evidence that the Davidians and their leader, David Koresh, own a large amount of possibly illegal weapons, are committing statutory rape and child abuse against the female children of the group, and are possibly beating the children as a means of discipline (see November 1992 - January 1993). The raid is approved by BATF Director Stephen Higgins, after a recommendation from Philip Chojnacki, the senior BATF agent in the Houston office. Undercover BATF agents who have infiltrated the Davidian community recommend that the assault take place on a Sunday morning, because during Sunday morning prayer services the men are separated from the women and children, and do not have easy access to the Davidians’ cache of weapons. [New York Times, 3/3/1993; Dick J. Reavis, 7/19/1995; PBS Frontline, 10/1995]
Significant Lack of Planning - Information compiled after the raid, in which the Davidians kill four BATF agents (see 5:00 A.M. - 9:30 A.M. February 28, 1993), is somewhat contradictory; a Treasury Department report issued after the April conflagration at the compound (see Late September - October 1993) will claim there is no written plan for the “dynamic entry” to be executed by BATF agents, and that the raid is code-named “Trojan Horse.” Agents who participate in the assault will later say the raid is code-named “Showtime.” [New York Times, 3/3/1993; Dick J. Reavis, 7/19/1995; PBS Frontline, 10/1995] According to the Treasury Department report, acting Special Agent in Charge Darrell Dyer, assigned as support coordinator for the operation, arrived in Waco from his Kansas City office on February 23, asked to see the documents for the plan of attack, and was told none had been drawn up. Dyer and agent William Krone draw up a plan on their own, though they have little knowledge about the work performed by the tactical planners. The two manage to generate a rough plan, but the plan remains on Krone’s desk and is never distributed or referred to during the actual raid. [New York Times, 10/1/1993]
Element of Surprise Key - According to later testimony before a House investigative committee (see August 2, 1996), the element of surprise is so integral to the raid that if it is lost, the raid is to be aborted. Ronald Noble, assistant secretary-designate of the treasury for law enforcement, will testify that on-site BATF commanders knew of the provision. Noble will say in 1995, and will be quoted in the 1996 House investigative report, “What was absolutely clear in Washington at Treasury and in Washington and ATF was that no raid should proceed once the element of surprise was lost.” However, Dan Hartnett, deputy director of the BATF for enforcement, will contradict Noble’s assertion, saying that while “secrecy and safety” were “discussed over and over again,” the provision that the raid should be called off if the Davidians were alerted to it beforehand was not in place; Hartnett will accuse Noble of trying to deflect blame away from the Treasury Department and onto the BATF. The report will conclude that no such provision was in place. The BATF commanders will order the raid to go forward even after learning that the Davidians know it is coming. The House report will conclude that the lack of such a provision was a critical failure of the plan. [House Committee on Government Reform and Oversight, 8/2/1996]
No Alternatives Considered - BATF agents will also later claim that the raid was necessary because Koresh never left the compound. However, evidence will show that at least three times between January 17 and February 24, Koresh did exit the compound, where agents could have easily apprehended him; among other examples, Koresh is a regular patron of the Chelsea Bar and Grill in Waco, and leaves the compound regularly to jog. According to the Treasury Department report and a 1996 report by the House investigative committee, other options are considered but rejected. The first is to avoid violence and merely serve the warrants by visiting the compound. This is rejected because of Koresh’s history of antipathy towards law enforcement and his propensity towards violence (see November 3, 1987 and After). A second option, arresting Koresh while he is away from the compound, is rejected because, according to subsequent testimony by Chojnacki, Koresh supposedly never leaves the site. A third option, a plan to besiege Mt. Carmel, is rejected because of the possibility that the Davidians might destroy the illegal weapons, commit mass suicide, or both. [Dean M. Kelley, 5/1995; Dick J. Reavis, 7/19/1995; PBS Frontline, 10/1995; House Committee on Government Reform and Oversight, 8/2/1996]
Warnings of Violent Response Ignored - The Congressional report will find, “The [B]ATF chose the dynamic entry raid, the most hazardous of the options, despite its recognition that a violent confrontation was predictable.” Before the raid, BATF agents discussed the idea of launching a raid with Joyce Sparks, a Texas Department of Protective and Regulatory Services (DPRS) caseworker who has spent a considerable amount of time with Koresh and the Davidians (see April 1992). Sparks is familiar with the Davidians’ apocalyptic religious beliefs, and warned the agents that to launch a raid on the compound would invite a violent response. “They will get their guns and kill you,” she told the agents. [House Committee on Government Reform and Oversight, 8/2/1996]
Plans, Execution Botched - The Congressional investigation will find that the BATF plan for attacking the Davidian compound was “significantly flawed… poorly conceived, utilized a high risk tactical approach when other tactics could have been successfully used… drafted and commanded by [B]ATF agents who were less qualified than other available agents, and used agents who were not sufficiently trained for the operation.” [House Committee on Government Reform and Oversight, 8/2/1996; House Committee on Government Reform and Oversight, 8/2/1996] Reflecting on the planning 10 years later, Robert White, a senior BATF agent wounded in the raid, will recall: “The people actually calling the shots, whether to go or not, did not have the tactical training necessary to make those kind of decisions. They had the authority to make those decisions simply because of their rank.” White will say that because of the botched raid, the agency will revise its tactical procedures: “Now, before any decision is made, a leader of one of the tactical teams, someone who has been trained specifically for that purpose, will make the call.” [Waco Tribune-Herald, 3/16/2003]
Top Treasury Officials Not Informed - The report also expresses surprise at BATF Director Higgins’s failure to appraise either Secretary of the Treasury Lloyd Bentsen or Deputy Secretary Roger Altman of the raid. The report will state, “Neither [Bentsen] nor his deputy knew anything about an imminent law enforcement raid—one of the largest ever conducted in US history—being managed by his department, which would endanger the lives of dozens of law enforcement agents, women, and children.” [House Committee on Government Reform and Oversight, 8/2/1996]

Entity Tags: Branch Davidians, William Krone, Chelsea Bar and Grill, Darrell Dyer, Dan Hartnett, US Department of the Treasury, Joyce Sparks, Stephen Higgins, Lloyd Bentsen, US Bureau of Alcohol, Tobacco, Firearms and Explosives, Philip Chojnacki, David Koresh, Roger Altman, Robert White, Ronald Noble

Timeline Tags: 1993 Branch Davidian Crisis

The Treasury Department issues a 220-page report on the raid mounted by the Bureau of Alcohol, Tobacco and Firearms (BATF) against the Mt. Carmel compound of the Branch Davidians near Waco, Texas (see 5:00 A.M. - 9:30 A.M. February 28, 1993). The raid resulted in the deaths of four BATF agents, six Davidians, and a 51-day siege culminating in a fiery conflagration that killed most of the Davidians in their burning compound (see March 1, 1993 and April 19, 1993). The report finds that the BATF raid was poorly planned and needlessly aggressive. It criticizes the BATF agents for inadequate information on the Davidians and a plan for an assault dependant on surprise—“shock and awe”—that was carried out even after the Davidians learned of the imminent assault. “The decision to proceed was tragically wrong, not just in retrospect, but because of what the decision makers knew at the time,” the report concludes. The BATF, the report says, handled the situation badly, and then attempted to cover up its poor management with falsehoods and obfustations. “There may be occasions when pressing operational considerations—or legal constraints—prevent law-enforcement officials from being… completely candid in their public utterances,” the report states. “This was not one of them.” After the report is issued, Treasury Secretary Lloyd Bentsen announces the replacement of the BATF’s entire top management; BATF chief Stephen Higgins retires three days before the report is released. Bentsen says, “It is now clear that those in charge in Texas realized they had lost the element of surprise before the raid began.” The field commanders made “inaccurate and disingenuous statements” to cover up their missteps, attempting to blame the agents who actually carried out the raid for their poor planning. [Time, 10/11/1993] However, the report finds that while the BATF made errors during the February raid, the agency was correct in its effort to apprehend violators of federal firearms laws, and the decision to effect a “dynamic entry” was the correct one. The report finds the raid was justified because “[t]he extraordinary discipline that [Davidian leader David] Koresh imposed on his followers… made him far more threatening than a lone individual who had a liking for illegal weapons. The compound became a rural fortress, often patrolled by armed guards, in which Koresh’s word—or the word that [he] purported to extrapolate from the Scripture—was the only law.… Were [he] to decide to turn his weapons on society, he would have devotees to follow him, and they would be equipped with weapons that could inflict serious damage.” The report concurs with BATF claims that Koresh and the Davidians had illegal weapons (see May 26, 1993), though it includes analyses from two firearms experts that show the Davidians may not have had such illegal weapons. The Treasury report repeatedly asserts that Koresh and his followers “ambushed” the BATF agents, finding, “On February 28, [they] knew that [B]ATF agents were coming and decided to kill them.” [Dean M. Kelley, 5/1995] According to a 1996 House investigation, the Treasury report “criticized [B]ATF personnel, but it exonerated all [Justice] Department officials.” [House Committee on Government Reform and Oversight, 8/2/1996]
In Memorium - The Treasury report begins with a black-bordered page reading “In Memory Of” and listing the names of the four BATF officers killed in the raid. [Dean M. Kelley, 5/1995]
Lost the Element of Surprise - Acting Special Agent in Charge Darrell Dyer, the report finds, arrived days before the raid to find no plans had been drawn up; he and another agent drew up a plan that was never distributed. And the agents in charge of the raid, Charles Sarabyn and Philip Chojnacki, decided to stage the raid despite information that the Davidians knew of it and were making preparations to defend themselves. [Time, 10/11/1993]
Falsifications and Questionable Statements - Even before the Waco compound burned, BATF officials were already misrepresenting the situtation. On March 3, 1993, Daniel Hartnett, associate director of law enforcement, told the press that though their agent, informant Robert Rodriguez, knew Koresh had received a phone call, the agent “did not realize this was a tip at the time.” Twenty-six days later, Higgins said, “We would not have executed the plans if our supervisors had lost the element [of surprise].” Both statements are questionable at best. After the compound burned, Texas Rangers asked BATF officials Dyer, Sarabyn, and Chojnacki to show them the plans for the raid; Dyer realized that the rough written plan was not in a satisfactory form, and the three revised the plan “to make it more thorough and complete.” The document they provided to the Rangers did not indicate that it was an after-action revision. The report states: “The readiness of Chojnacki, Sarabyn, and Dyer to revise an official document that would likely be of great significance in any official inquiry into the raid without making clear what they had done is extremely troubling and itself reflects a lack of judgment. This conduct, however, does not necessarily reveal an intent to deceive. And, in the case of Dyer, there does not appear to have been any such intent. The behavior of Chojnacki and Sarabyn when the alteration was investigated does not lead to the same conclusion.” [New York Times, 10/1/1993; Time, 10/11/1993]
Repercussions - Vice President Al Gore recommends that the BATF be dissolved, with its firearms division merged into the FBI and the other two sections merged with the IRS. Bentsen is resistant to the idea. However, such large-scale reorgzanizations are unlikely. After the report is issued, Bentsen removes Chojnacki, Sarabyn, Deputy Director Edward Daniel Conroy, and intelligence chief David Troy from active service. A year later, Chojnacki and Sarabyn will be rehired with full back pay and benefits (see December 23, 1994). [Time, 10/11/1993] The Treasury report, according to author and church advocate Dean Kelley, “helped to diminish criticism of the federal role.” [Dean M. Kelley, 5/1995]

Entity Tags: US Department of the Treasury, Darrell Dyer, Branch Davidians, Albert Arnold (“Al”) Gore, Jr., Charles Sarabyn, US Bureau of Alcohol, Tobacco, Firearms and Explosives, Robert Rodriguez, Stephen Higgins, David Troy, Philip Chojnacki, Dean M. Kelley, Edward Daniel Conroy, Federal Bureau of Investigation, Lloyd Bentsen, David Koresh

Timeline Tags: 1993 Branch Davidian Crisis

In early 1994, investors pull money out of the Mexican economy in response to an increase in US interest rates and political instability. This causes the Mexican government to lose massive amounts of reserves and lead it to allow the peso to float in December of 1994. In January of 1995 it again asks the IMF for assistance and receives packages from both the IMF and US Treasury. This time, massive privatizations of “transportation, banking and finance, railways and the petrochemical industries” were recommended as a way of paying off the loans. A devaluation of the peso in 1995 along with an IMF-mandated rise in interest rates triggers the worst depression in Mexico in 60 years. GDP falls by 6.2 percent, wages fall by 25 percent, unemployment doubles, and 12,000 Mexican firms file for bankruptcy. [Global Exchange, 9/2001, pp. 4-5 pdf file; Hart-Landsberg, 12/2002]

Entity Tags: US Department of the Treasury, Mexico

Timeline Tags: Neoliberalism and Globalization

Beginning in 1995, evidence begins to appear in the media suggesting that a Saudi charity named the Muwafaq Foundation has ties to radical militants. The foundation is run by a Saudi multimillionaire named Yassin al-Qadi.
bullet In 1995, media reports claim that Muwafaq is being used to fund mujaheddin fighters in Bosnia (see 1991-1995).
bullet Also in 1995, Pakistani police raid the foundation’s Pakistan branch in the wake of the arrest of WTC bomber Ramzi Yousef (see February 7, 1995). The head of the branch is held for several months, and then the branch is closed down. [Chicago Tribune, 10/29/2001]
bullet A secret CIA report in January 1996 says that Muwafaq is has ties to the Al-Gama’a al-Islamiyya militant group and helps fund mujaheddin fighting in Bosnia and at least one training camp in Afghanistan (see January 1996).
bullet In February 1996, bin Laden says in an interview that he supports the Muwafaq branch in Zagreb, Croatia (which is close to the fighting in neighboring Bosnia). [Guardian, 10/16/2001]
bullet A senior US official will later claim that in 1998, the National Commercial Bank, one of the largest banks in Saudi Arabia, ran an audit and determined that the Muwafaq Foundation gave $3 million to al-Qaeda. Both al-Qadi and the bank later claim that the audit never existed. Al-Qadi asserts he has no ties to any terrorist group. [Chicago Tribune, 10/29/2001] In 2003, former counterterrorism “tsar” Richard Clarke will elaborate on this allegation, saying to a Senate committee, “Al-Qadi was the head of Muwafaq, a Saudi ‘relief organization’ that reportedly transferred at least $3 million, on behalf of Khalid bin Mahfouz, to Osama bin Laden and assisted al-Qaeda fighters in Bosnia.” [US Congress, 10/22/2003] (Note that bin Mahfouz, a Saudi billionaire, denies that he ever had any sort of tie to bin Laden or al-Qaeda and has not been officially charged of such ties anywhere.) [Bin Mahfouz Info, 11/22/2005]
bullet Al-Qadi will claim that he shut down Muwafaq in 1996, but it is referred to in UN and German charity documents as doing work in Sudan and Bosnia through 1998. [Guardian, 10/16/2001; BBC, 10/20/2001]
bullet Shortly after 9/11, the US Treasury Department will claim that Muwafaq funded Maktab al-Khidamat (MAK)/Al-Kifah (the predecessor of al-Qaeda), al-Qaeda, Hamas, and Abu Sayyaf (a Philippines militant group with ties to al-Qaeda), and other militant Islamic groups. [FrontPage Magazine, 6/17/2005]
However, despite all of these alleged connections, and the fact that the US will officially label al-Qadi a terrorism financier shortly after 9/11 (see October 12, 2001), the Muwafaq Foundation has never been officially declared a terrorist supporting entity. An October 2001 New York Times article will say that the reason, “administration officials said, was the inability of United States officials to locate the charity or determine whether it is still in operation.” But the same article will also quote a news editor, who calls Muwafaq’s board of directors “the creme de la creme of Saudi society.” [New York Times, 10/13/2001]

Entity Tags: Yassin al-Qadi, United Nations, US Department of the Treasury, Osama bin Laden, Hamas, Muwafaq Foundation, National Commercial Bank, Abu Sayyaf, Khalid bin Mahfouz, Switzerland, Al-Qaeda

Timeline Tags: Complete 911 Timeline

As President Clinton issues an executive order making it a felony to raise or transfer funds to designated terrorist groups or their front organizations (see January 1995), counterterrorism “tsar” Richard Clarke and Treasury official Richard Newcomb look for opportunities to use the new power. They review files to see if there are any clear cut cases to use it on. They decide that the Holy Land Foundation is in violation of the new order. Customs officials prepare to raid Holy Land’s headquarters in Arlington, Texas, and seize all their assets. However, FBI Director Louis Freeh and Treasury Secretary Bob Rubin object. Both claim the executive order might not hold up to legal challenges. Freeh additionally says he is concerned with alienating Arabs in the US, and Rubin is afraid the raid might discourage investment in the US. The raid is cancelled. [New York Times, 1/26/1995; Clarke, 2004, pp. 98] The FBI is also aware of a public event held in January where the leader of Hamas’ political wing is the keynote speaker. He urges the crowd, “I am going to speak the truth to you. It’s simple. Finish off the Israelis. Kill them all! Exterminate them! No peace ever!” Holy Land raises over $200,000 for Hamas from the event. The same speaker helps Holy Land raise money with many other events in the US. [Los Angeles Times, 12/6/2001; Associated Press, 3/15/2002] After Hamas leader Mousa Abu Marzouk is arrested trying to enter the US in July 1995 (see July 5, 1995-May 1997), agents who search his belongings find financial records showing that he invested $250,000 in Holy Land in 1992. Holy Land continues to pay him monthly profits on his investment even after Hamas was declared a terrorist organization and news of his arrest made the front pages of US newspapers (in fact, Holy Land will continue to pay him through 2001). Although Holy Land is in clear violation of the law, the raid still does not occur. [Dallas Morning News, 12/19/2002] In 1996, Congress will pass a law that confirms it is illegal to financially support officially designated terrorism groups such as Hamas. (see April 25, 1996). Clarke has never explained why Holy Land is not raided after the passage of this law, or in subsequent years when yet more evidence of terrorist ties are uncovered (see 1997; September 16, 1998-September 5, 2001). Holy Land will finally be raided after 9/11 (see December 4, 2001), largely on the basis of evidence collected in 1993 (see October 1993). In 2004, the US government will claim that Holy Land raised over $12 million for Hamas between January 1995, when funding Hamas became illegal in the US, and December 2001, when Holy Land was shut down. [Immigration and Customs Enforcement, 7/27/2004]

Entity Tags: Richard A. Clarke, William Jefferson (“Bill”) Clinton, Richard Newcomb, US Department of the Treasury, Louis J. Freeh, Mousa Abu Marzouk, Hamas, Federal Bureau of Investigation, Bob Rubin, Holy Land Foundation for Relief and Development

Timeline Tags: Complete 911 Timeline

President Clinton signs a classified presidential order “directing the Departments of Justice, State and Treasury, the National Security Council, the CIA, and other intelligence agencies to increase and integrate their efforts against international money laundering by terrorists and criminals.” The New York Times will later call this the first serious effort by the US government to track bin Laden’s businesses. However, according to the Times, “They failed.” William Wechsler, a National Security Council staff member during the Clinton administration, will say that the government agencies given the task suffered from “a lack of institutional knowledge, a lack of expertise… We could have been doing much more earlier. It didn’t happen.” [New York Times, 9/20/2001]

Entity Tags: National Security Council, William Wechsler, Osama bin Laden, US Department of Justice, US Department of the Treasury, Central Intelligence Agency, William Jefferson (“Bill”) Clinton, US Department of State

Timeline Tags: Complete 911 Timeline

House Oversight Committee holds public hearings on the Waco debacle.House Oversight Committee holds public hearings on the Waco debacle. [Source: C-SPAN]The House Oversight Committee releases its report on the FBI’s siege and final assault on the Branch Davidian compound in Waco, Texas (see 5:00 A.M. - 9:30 A.M. February 28, 1993, March 1, 1993, and April 19, 1993). The report was prepared in conjunction with the House Judiciary Committee. The report spans investigative activities undertaken on behalf of the committees by Congressional investigators from April 1995 through May 1996; the committees took almost three months to write the final report. As part of that investigation, the Oversight Committee held 10 days of public hearings (see August 4, 1995). [House Committee on Government Reform and Oversight, 8/2/1996]
Findings - The report makes the following conclusions:
Branch Davidians Responsible for Situation, Deaths - “But for the criminal conduct and aberrational behavior of David Koresh and other Branch Davidians, the tragedies that occurred in Waco would not have occurred,” the report finds. “The ultimate responsibility for the deaths of the Davidians and the four federal law enforcement agents [referring to the federal agents slain in the February 1993 raid] lies with Koresh.” The Davidians set the fires themselves, the report finds. Moreover, the Davidians had time to leave the premises after their cohorts set the fires, and most either chose to stay or were prevented from leaving by their fellows. The 19 Davidians killed by gunfire either shot themselves, the report finds, were shot by their fellows, or were killed by “the remote possibility of accidental discharge from rounds exploding in the fire.”
Treasury Department 'Derelict' in Duties - Treasury Secretary Lloyd Bentsen and Deputy Secretary Roger Altman were “irresponsible” and “derelict in their duties” refusing to meet with the director of the BATF [Bureau of Alcohol, Tobacco and Firearms, sometimes abbreviated ATF] in the month before the February raid, and failing to ask for briefings. Senior Treasury officials “routinely failed” to monitor BATF officials, knew little to nothing of the plans for the raid, and therefore failed to uncover the significant flaws in the plan. When the raid failed, Assistant Treasury Secretary Ronald Noble tried to blame the BATF for the failure, even though Noble and his fellow Treasury officials failed to supervise the BATF’s plans and activities.
BATF 'Grossly Incompetent' - Some of the worst criticism of the report are leveled at the BATF. The report calls the agency’s investigation of the Davidians (see June-July 1992, November 1992 - January 1993, and January 11, 1993 and After) “grossly incompetent” and lacking in “the minimum professionalism expected of a major federal law enforcement agency.” The agents in charge of planning decided to use a “military-style raid” two months before beginning surveillance, undercover, and infiltration efforts. The agency did have probable cause for a search warrant against Koresh and the Davidians (see February 25, 1993), but the affidavit applying for the warrant “contained an incredible number of false statements.” The BATF agents responsible for the affidavit either knew, or should have known, the affidavit was so inaccurate and false. Koresh could easily have been arrested outside the compound, the report finds; the BATF planners “were determined to use a dynamic entry approach,” and thusly “exercised extremely poor judgment, made erroneous assumptions, and ignored the foreseeable perils of their course of action.” BATF agents lied to Defense Department officials about the Davidians’ supposed involvement in drug manufacturing, and by those lies secured Defense Department training without having to reimburse the department, as they should have. The raid plan itself “was poorly conceived, utilized a high risk tactical approach when other tactics could have been successfully used, was drafted and commanded by ATF agents who were less qualified than other available agents, and used agents who were not sufficiently trained for the operation.” Plan security was lax, making it easy for the Davidians to learn about the plan and take precautions. The report singles out BATF raid commanders Philip Chojnacki and Chuck Sarabyn for criticism, noting that they endangered BATF agents’ lives by choosing to go ahead with the raid even though they knew, or should have known, the Davidians had found out about it and were taking defensive action. “This, more than any other factor, led to the deaths of the four ATF agents killed on February 28.” The report is highly critical of Chojnacki’s and Sarabyn’s rehiring after they were fired (see December 23, 1994). The report also cites former BATF Director Stephen Higgins (see July 2, 1995) and former Deputy Director Daniel Hartnett for failing to become involved in the planning.
Justice Department Decision to Approve Final Assault 'Highly Irresponsible' - The report charactizes Attorney General Janet Reno’s approval of the FBI’s plan to end the standoff “premature, wrong… highly irresponsible… [and] seriously negligent” (see April 17-18, 1993). Reno should have known that the plan would put the Davidians’s lives at extreme risk, especially the children inside, and should have been doubly reluctant because of the lack of a serious threat posed by the Davidians to the FBI or to the surrounding community. Reno should have been skeptical of the FBI’s reasons for ending the standoff: negotiations were continuing, the Davidians were not threatening to break out in force, the FBI’s Hostage Rescue Team (HRT) could have gone longer without mandatory rest and retraining, the Davidians’ living conditions had not significantly deteriorated, and there was no reason to believe that children were being abused or mistreated any more than they may have been before the February raid. “The final assault put the children at the greatest risk.” The report calls the plan to use CS riot control gas “fatally flawed.” CS gas is a dangerous substance, and particularly threatening to children, pregnant women, elderly people, and those with respiratory conditions, all of which were represented in the compound. Some of those who died in the fires may have died from exposure to CS gas before the fires consumed them, the report speculates. The Davidians were likely to react violently and not submissively, as the FBI insisted, and the likelihood of armed resistance and mass suicide in response to the CS gas insertion was high. Moreover, the plan had no contingency provisions in case the initial insertion did not provide the desired result. Reno offered her resignation after the April 19 assault; the report says that President Clinton “should have accepted it.” [House Committee on Government Reform and Oversight, 8/2/1996; House Committee on Government Reform and Oversight, 8/2/1996]
FBI Pushed for Violent Confrontation Instead of Allowing Negotiations to Continue - The FBI was riven by the conflict between two teams with “incompatible methodologies,” the report finds: the HRT, which ultimately controlled the situation, and the negotiators. Senior FBI agent Jeffrey Jamar almost always sided with the HRT’s aggressive approach, but often “allowed the proposals of each team to be implemented simultaneously, working against each other.” The FBI’s chief negotiator on-site, Gary Noesner, told the committee that the dichotomy between the “action-oriented” HRT and the “nonviolent” negotiators is a problem that the FBI routinely experiences; it was not unique to the Davidian standoff. The two teams battled with increasing hostility and anger towards one another as the siege progressed, with the negotiators becoming less and less influential. The negotiators later testified that the pressure tactics used by the HRT against the Davidians undermined their efforts at winning the Davidians’ trust and rendered their efforts ineffective. FBI profiler Peter Smerick (see March 3-4, 1993, March 7-8, 1993, March 9, 1993, March 9, 1993, March 17-18, 1993, August 1993, and 1995) was particularly harsh in his assessment of the tactics of the HRT during the siege; during his interviews with investigators, Smerick said “the FBI commanders were moving too rapidly toward a tactical solution and were not allowing adequate time for negotiations to work.” Smerick told investigators that while the “negotiators were building bonds… the tactical group was undermining everything.… Every time the negotiators were making progress the tactical people would undo it.” The report concludes, “FBI leadership engaged these two strategies in a way that bonded the Davidians together and perpetuated the standoff.” [House Committee on Government Reform and Oversight, 8/2/1996] After March 2, when Koresh and the Davidians broke what some considered to be a promise to come out (see March 2, 1993), Jamar believed nothing Koresh or the others said, and essentially gave up on the idea of a negotiated surrender. Chief negotiator Byron Sage did not share that view, but Jamar and the HRT officials began thinking, and planning, exclusively on a forced end to the standoff, even ignoring evidence that Koresh intended to lead his people out after completing his work on an interpretation of the Biblical Seven Seals (see April 14-15, 1993). Many FBI officials, particularly Jamar, Noesner, and the HRT leadership, became frustrated and impatient with what the report calls “endless dissertations of Branch Davidian beliefs” (see March 15, 1993), to the point where they ignored the assertions from religious experts that the Davidians could be productively negotiated with on a religiously theoretical level (see March 16, 1993). The FBI, the report says, “should have sought and accepted more expert advice on the Branch Davidians and their religious views and been more open-minded to the advice of the FBI’s own experts.” Jamar and the senior FBI officials advising Reno should have known that the reasons they gave to end negotiations and force an ending were groundless; their advice to Reno was, the report says, “wrong and highly irresponsible.” [House Committee on Government Reform and Oversight, 8/2/1996; House Committee on Government Reform and Oversight, 8/2/1996] However, some charges against the FBI are baseless, the report finds. CS gas would not have built up in any areas of the residence to anything approaching lethal levels. No FBI agents shot at the Davidians or the compound. No agent set any fires, either deliberately or inadvertently. [House Committee on Government Reform and Oversight, 8/2/1996]
Defense Department Bears No Responsibility - The report finds no reason to fault the Defense Department or National Guard, as no DoD nor Guard personnel took an active part in the assault; the Posse Comitatus Act was therefore not violated. No foreign military personnel or foreign nationals took any part in the assault, though “[s]ome foreign military personnel were present near the Davidian residence as observers at the invitation of the FBI.”
Recommendations - The report recommends that:
bullet the Justice Department consider assuming control of the BATF from the Treasury Department;
bullet Waco residents who made the false statements to law enforcement officials included in the original search warrants should be charged with crimes;
bullet federal agents should use caution in using such statements to obtain warrants; the BATF should review and revise its planning to ensure that “its best qualified agents are placed in command and control positions in all operations”;
bullet senior BATF officials “should assert greater command and control over significant operations”;
bullet the BATF should no longer have sole jurisdiction over any drug-related crimes;
bullet Congress should consider enhancing the Posse Comitatus Act to restrain the National Guard from being involved with federal law enforcement actions;
bullet the Defense Department should clarify the grounds upon which law enforcement agencies can apply for its assistance;
bullet the General Accounting Office (GAO) should ensure that the BATF reimburses the Defense Department for the training and assistance it improperly received;
bullet the GAO should investigate Operation Alliance, the organization that acts as a liaison between the military and other federal agencies;
bullet the FBI should revamp its negotiation policies and training to minimize the effects of physical and emotional fatigue on negotiators;
bullet the FBI should take steps to ensure greater understanding of the targets under investigation (the report notes that had the FBI and BATF agents understood more about the Davidians’ religious philosophies, they “could have made better choices in planning to deal with the Branch Davidians” (see March 15, 1993);
bullet the FBI should ensure better training for its lead negotiators;
bullet FBI agents should rely more on outside experts (the reports notes that several religious experts offered their services in helping the agents understand the Davidians, but were either rebuffed or ignored—see March 3, 1993, March 7, 1993, and March 16, 1993);
bullet federal law enforcement agencies should welcome the assistance of other law enforcement agencies, particularly state and local agencies;
bullet the FBI should expand the size of the Hostage Rescue Team (HRT) “so that there are sufficient numbers of team members to participate in an operation and to relieve those involved when necessary”;
bullet the FBI should conduct further examinations on the use of CS gas against children, those with respiratory problems, pregnant women, and the elderly. [House Committee on Government Reform and Oversight, 8/2/1996]
'Perhaps the Greatest Law Enforcement Tragedy in American History' - In a statement appended to the final report, Representative Steven Schiff (R-NM) calls the Davidian raid, standoff, and final assault “perhaps the greatest law enforcement tragedy in American history.” He writes: “It would not be a significant overstatement to describe the Waco operation from the government’s standpoint, as one in which if something could go wrong, it did. The true tragedy is, virtually all of those mistakes could have been avoided.” His statement decries what he calls the increasing “militarization of law enforcement,” recommends that the HRT be scaled back instead of expanded, expresses little confidence in the FLIR (forward-looking infrared radar) videotapes used to determine when and how the fires were started, calls for stringent limitations on the use of CS gas, and blames the FBI for not allowing many of the residents to escape. He accuses the Justice Department of a “breach of ethics” in what he says were its attempts to conceal and withhold evidence from the committee, and to shape its findings. [House Committee on Government Reform and Oversight, 8/2/1996]
Dissenting Views - The investigating committees’ 17 Democrats issue a “dissenting views” addendum that is highly critical of what it calls the Republican majority’s use of “false assumptions and unfounded allegations” to besmirch the reputations of Reno and Bentsen, and the use of those “assumptions and allegations” to press for Reno’s resignation. [House Committee on Government Reform and Oversight, 8/2/1996]

Entity Tags: Gary Noesner, US Department of the Treasury, US Department of Defense, Branch Davidians, Clinton administration, Dan Hartnett, Federal Bureau of Investigation, FBI Hostage Rescue Team, David Koresh, US Bureau of Alcohol, Tobacco, Firearms and Explosives, Steven Schiff, Charles Sarabyn, Ronald Noble, Janet Reno, Stephen Higgins, House Committee on Oversight and Government Reform, General Accounting Office, Lloyd Bentsen, Jeffrey Jamar, Operation Alliance, Peter Smerick, Roger Altman, Philip Chojnacki

Timeline Tags: 1993 Branch Davidian Crisis

The US government once again considers going after the Holy Land Foundation for its ties to Hamas. Israel freezes the foundation’s assets this year, and the Treasury Department proposes making a similar asset freeze in the US as well. [Wall Street Journal, 2/27/2002] In 2000, the New York Times will report, “Some government officials recommended that the group be prosecuted in 1997 for supporting Hamas, the militant Islamic group. But others opposed the effort, fearing that it would expose intelligence sources and spur public criticism of the administration as anti-Muslim.” [New York Times, 2/19/2000] Those pushing to prosecute the group would certainly include Vulgar Betrayal investigation FBI agents like Robert Wright. Wright had been aware of Holy Land’s ties to Hamas since 1993 (see After January 1993 and October 1993). However, Attorney General Janet Reno blocks the proposal and no action is taken. [Wall Street Journal, 2/27/2002] Counterterrorism “tsar” Richard Clarke claims that in 1995 he pushed for something to be done to Holy Land, but higher-ups overruled him (see January 1995-April 1996).

Entity Tags: Janet Reno, Hamas, Vulgar Betrayal, US Department of the Treasury, Holy Land Foundation for Relief and Development, Robert G. Wright, Jr.

Timeline Tags: Complete 911 Timeline

The Al Taqwa Bank had offices in this building in Lugano, Italy, on the border with Switzerland.The Al Taqwa Bank had offices in this building in Lugano, Italy, on the border with Switzerland. [Source: Keystone]Newsweek will later claim that US investigators “on bin Laden’s trail” had known about the Al Taqwa Bank in Switzerland and its support for al-Qaeda “for years. But the group’s mazelike structure made it hard to track, and the Feds considered it a low priority.” A senior Treasury official later will tell Congress that US investigators learned in 1997 that Hamas had transferred $60 million into accounts at the Al Taqwa Bank. Also in 1997, US investigators learn the names of many Al Taqwa shareholders. Many of them turn out to be rich and powerful Arabs, including members of the bin Laden family and members of the Kuwaiti royal family (see 1997-December 1999). Newsweek later will claim that, “The US took a harder look at Al Taqwa after the [1998 US] embassy bombings (see 10:35-10:39 a.m., August 7, 1998). Sources say US intelligence tracked telephone contacts between Al Taqwa and members of bin Laden’s inner circle. Al-Qaeda operatives would call Al Taqwa representatives in the Bahamas as they moved around the world. Still, the network’s complex structure made it difficult to prove how money changed hands, and the investigation stalled. Under US pressure, the Bahamian government revoked Al Taqwa’s license [in the spring of 2001]. Treasury officials say the network continued to do business anyway.” [Newsweek, 3/18/2002] The US will declare Al Taqwa a terrorist financier two months after 9/11 (see November 7, 2001).

Entity Tags: Hamas, US Department of the Treasury, Al Taqwa Bank, US Congress, Al-Qaeda

Timeline Tags: Complete 911 Timeline

William Wechsler.William Wechsler. [Source: CAP]Shortly after the US embassy bombings in 1998 (see 10:35-10:39 a.m., August 7, 1998), the US launches a new interagency effort to track bin Laden’s finances. There had been a previous interagency effort in 1995 but it had fizzled (see October 21, 1995). Counterterrorism “tsar” Richard Clarke sets up a task force. He orders it to find out how much money bin Laden has, where it comes from, how it is distributed, and to stop it. Clarke appoints William Wechsler, a National Security Council staff member, to head the task force. The task force begins an investigation of bin Laden’s finances (see Late 1998). Clarke later writes that he and Wechsler “quickly [come] to the conclusion that the [US government] departments [are] generally doing a lousy job of tracking and disrupting international criminals’ financial networks and had done little or nothing against terrorist financing.” [New York Times, 9/20/2001; Clarke, 2004, pp. 190-191] Clarke will later claim there was only limited effort from within the US government to fight bin Laden’s financial network. He will assert that within weeks of setting up the interagency effort, it was determined that only one person in the US government, a lowly Treasury Department official, appeared to have any expertise about the hawala system, an informal and paperless money transfer system used by al-Qaeda that is popular with Muslim populations worldwide (see 1993-September 11, 2001). Clarke will later write that the “CIA knew little about the [hawala] system, but set about learning. FBI knew even less, and set about doing nothing.” The FBI claims there are no hawalas in the US, but Wechsler finds several in New York City using a simple Internet search. Clarke will say, “Despite our repeated requests over the following years, nobody from the FBI ever could answer even our most basic questions about the number, location, and activities of major hawalas in the US—much less taken action.” The efforts of other departments are not much better. The one Treasury official with some expertise about hawalas is eventually let go before 9/11. [Clarke, 2004, pp. 192-193] Efforts to pressure governments overseas also meet with little success (see August 20, 1998-1999).

Entity Tags: William Wechsler, Richard A. Clarke, Federal Bureau of Investigation, Osama bin Laden, Al-Qaeda, Central Intelligence Agency, US Department of the Treasury

Timeline Tags: Complete 911 Timeline

The Islamic Cultural Institute in Milan, Italy.The Islamic Cultural Institute in Milan, Italy. [Source: Public domain]By late 1998, US and Italian intelligence are already aware of the importance of a mosque in Milan, Italy, called the Islamic Cultural Institute. After 9/11, the Treasury Department will call the mosque “the main al-Qaeda station house in Europe. It is used to facilitate the movement of weapons, men and money across the world.” Additionally, they are aware that Ahmed Idris Nasreddin, a founder and director of Al Taqwa Bank, is also a founder and financier of the mosque. The mosque is also less than 50 miles away from Al Taqwa’s headquarters on the Swiss border.(see 1995-1997). [Newsweek, 3/18/2002] US officials will later say that al-Qaeda operatives involved in the 1998 US embassy bombings stayed at the Milan mosque. This causes US and Italian intelligence to watch the mosque more closely, and it also causes the US to look closer at Al Taqwa Bank (see 1997-September 11, 2001). [Newsweek, 3/18/2002] One member of the al-Qaeda cell in Milan lives in Hamburg with 9/11 plotter Ramzi bin al-Shibh for most of 1998 (see December 1997-November 1998). In 2000, Abderazek Mahdjoub, the head of the Milan cell, lives in Hamburg, attends the Al-Quds mosque that the Hamburg al-Qaeda cell attends, and has ties with some of the 9/11 hijackers (see 2000). Al-Qaeda operatives involved in the failed millennium bombing plot in Jordan also stay at the Milan mosque (see November 30, 1999). The Jordanian government later will claim that Al Taqwa helped fund these millennium bombers. [Newsweek, 3/18/2002; Newsweek, 4/12/2004] Starting in late 2000, Italian intelligence, wiretapping people associated with the Milan mosque and/or the Milan al-Qaeda cell, record conversations suggesting foreknowledge of the 9/11 plot (see August 12, 2000; January 24, 2001). This information is shared with the US in early 2001 (see March 2001). Additional evidence will come out after 9/11 suggesting some people in Milan had foreknowledge of the 9/11 attacks (see September 4, 2001; September 7, 2001). Given the closeness of the Al Taqwa Bank to the mosque, especially through Nasreddin, this raises the possibility of Al Taqwa involvement and knowledge of specific al-Qaeda plots, including the 9/11 attacks, though there is no known evidence of such direct ties except for the attempted millennium bombing mentioned above.

Entity Tags: Islamic Cultural Institute, Abderazek Mahdjoub, Italy, Ramzi bin al-Shibh, US Department of the Treasury, Ahmed Idris Nasreddin, Al-Qaeda, Al Taqwa Bank

Timeline Tags: Complete 911 Timeline

Treasury Department official Richard Newcomb has been to Saudi Arabia with other US officials in an attempt to pressure the Saudis to crack down on financing al-Qaeda, but no action has resulted (see June 1999). He had threatened to freeze the assets of certain individuals and groups funding al-Qaeda if not action is taken, and now he starts to act on that threat. As head of the Treasury Department’s Office of Foreign Assets Control, he submits names for sanctions. But imposing sanctions requires approval from an interagency committee, and the permission to go ahead is never given. CIA and FBI officials are “lukewarm to the idea, worried that sanctions would chill what little cooperation they had with their Saudi counterparts.” But the State Department puts up the most opposition. One official will later recall, “The State Department always thought we had much bigger fish to fry.” [US News and World Report, 12/15/2003]

Entity Tags: US Department of State, Al-Qaeda, Central Intelligence Agency, Federal Bureau of Investigation, US Department of the Treasury, Richard Newcomb, Saudi Arabia

Timeline Tags: Complete 911 Timeline

In a January 2002 letter to Swiss authorities, a senior Treasury Department official will claim that the Al Taqwa Bank in Switzerland had set up a highly secretive line of credit for al-Qaeda, and that it is still in use in October 2000. (Apparently its status is unknown after this time.) It states that Al Taqwa “appeared to be providing a clandestine line of credit for a close associate of bin Laden.… This bin Laden lieutenant had a line of credit with a Middle East financial institution that drew on an identical account number at Bank Al Taqwa. Unlike other accounts—even accounts of private banking customers—this account was blocked by the computer system and special privileges were required to access it.” The letter calls the circumstances surrounding the account “highly unusual” and suggests that they were created “to conceal the association of the bin Laden organization with Bank Al Taqwa.” Another document reveals that the account was originally set up for Mamdouh Mahmoud Salim, an al-Qaeda leader who was arrested in Germany in late 1998 (see September 16, 1998). It is believed that other al-Qaeda figures continued to access the account after Salim’s arrest. [US Department of the Treasury, 8/29/2002; Newsweek, 4/12/2004] The US will declare Al Taqwa Bank a terrorist financier in November 2001 (see November 7, 2001).

Entity Tags: Al-Qaeda, US Department of the Treasury, Al Taqwa Bank, Mamdouh Mahmud Salim

Timeline Tags: Complete 911 Timeline

In October 2000, Congress authorizes a new unit within the Treasury Department called the Foreign Terrorist Asset Tracking Center. Its task is to blend the expertise of the Treasury Department, CIA, FBI, and NSA in tracking and disrupting the finances of US-designated terrorist groups. Similar efforts had been tried twice before and fizzled out (see October 21, 1995; Late 1998). However, the unit is still getting organized at the time of the 9/11 attacks. Spurred by the attacks, the unit gets up and running on September 14, 2001. A Treasury spokesperson cites the logistical difficulties of bringing together representatives from different agencies in explaining the delay. [Los Angeles Times, 10/15/2001]

Entity Tags: US Congress, Foreign Terrorist Asset Tracking Center, Central Intelligence Agency, National Security Agency, Federal Bureau of Investigation, US Department of the Treasury

Timeline Tags: Complete 911 Timeline

According to Time magazine, “The US was all set to join a global crackdown on criminal and terrorist money havens [in early 2001]. Thirty industrial nations were ready to tighten the screws on offshore financial centers like Liechtenstein and Antigua, whose banks have the potential to hide and often help launder billions of dollars for drug cartels, global crime syndicates—and groups like Osama bin Laden’s al-Qaeda organization. Then the Bush administration took office.” [Time, 10/15/2001] After pressure from the powerful banking lobby, the Treasury Department under Paul O’Neill halts US cooperation with these international efforts begun in 2000 by the Clinton administration. Clinton had created a Foreign Terrorist Asset Tracking Center in his last budget, but under O’Neill no funding for the center is provided and the tracking of terrorist financing slows down. Spurred by the 9/11, attacks, the center will finally get started three days after 9/11 (see October 2000-September 14, 2001). [Foreign Affairs, 7/2001; Time, 10/15/2001] Counterterrorism “tsar” Richard Clarke will later claim that efforts to track al-Qaeda’s finances began to make significant headway in 2000, after Treasury Secretary Robert Rubin stepped down and was replaced by Larry Summers. But, Clarke will claim, “When the Bush administration came into office, I wanted to raise the profile of our efforts to combat terrorist financing, but found little interest. The new President’s economic advisor, Larry Lindsey, had long argued for weakening US anti-money laundering laws in a way that would undercut international standards. The new Secretary of the Treasury, Paul O’Neill, was lukewarm at best toward the multilateral effort to ‘name and shame’ foreign money laundering havens, and allowed the process to shut down before the status of Saudi Arabian cooperation was ever assessed.” [Clarke, 2004, pp. 195-196]

Entity Tags: Clinton administration, Paul O’Neill, Richard A. Clarke, Bush administration (43), US Department of the Treasury, Larry Summers, Lawrence Lindsey, Al-Qaeda, Osama bin Laden

Timeline Tags: Complete 911 Timeline

In December 2000, the US and Russia cosponsored a United Nations Security Council resolution requiring member states to “freeze without delay” the funds of those on a list of designated terrorists. The resolution passed, and the UN and European Union (EU) release the list on this day. It contains the names of five alleged al-Qaeda leaders, including bin Laden’s security coordinator, brother-in-law, and financial handler. Yet strangely, the US itself does not freeze the assets of these five leaders, and will only so one month after 9/11 (see October 12, 2001). [United Nations, 3/8/2001; Los Angeles Times, 10/15/2001] The Guardian will report after 9/11, “Members of Congress want to know why treasury officials charged with disrupting the finances of terrorists did not follow” the UN and EU. [Guardian, 10/13/2001]

Entity Tags: European Union, United States, United Nations, Russia, US Department of the Treasury, Al-Qaeda

Timeline Tags: Complete 911 Timeline

A CIA report says that a man named “Khaled” is actively recruiting people to travel to various countries, including the US, to stage attacks. CIA headquarters presume from the details of this report that Khaled is Khalid Shaikh Mohammed (KSM). On July 11, the individual source for this report is shown a series of photographs and identifies KSM as the person he called “Khaled.” [USA Today, 12/12/2002; 9/11 Commission, 7/24/2004, pp. 277, 533] This report also reveals that:
bullet Al-Qaeda operatives heading to the US would be “expected to establish contact with colleagues already living there.”
bullet KSM himself had traveled to the US frequently, and as recently as May 2001.
bullet KSM is a relative of bomber Ramzi Yousef.
bullet He appears to be one of bin Laden’s most trusted leaders.
bullet He routinely tells others that he can arrange their entry into the US as well. However, the CIA doesn’t find this report credible because they think it is unlikely that he would come to the US (in fact, it appears he had (see Summer 1998)). Nevertheless, they consider it worth pursuing. One agent replies, “If it is KSM, we have both a significant threat and an opportunity to pick him up.” In July, the source clarifies that the last time he can definitely place KSM in the US was in the summer of 1998 (see Summer 1998). The CIA disseminates the report to all other US intelligence agencies, military commanders, and parts of the Treasury and Justice Departments. The 9/11 Congressional Inquiry will later request that the CIA inform them how CIA agents and other agencies reacted to this information, but the CIA does not respond to this. [US Congress, 7/24/2003] It appears that KSM will send at least one and probably two operatives to the US after this time and before 9/11 (see August 4, 2001 and September 10, 2001). On July 23, 2001, the US consulate in Jeddah, Saudi Arabia will give KSM a US visa (he uses an alias but his actual photo appears on his application) (see July 23, 2001). Also, during this summer and as late as September 10, 2001, the NSA will intercept phone calls between KSM and Mohamed Atta, but the NSA will not share this information with any other agencies (see Summer 2001).

Entity Tags: Central Intelligence Agency, US Department of Justice, US Department of the Treasury, Khalid Shaikh Mohammed

Timeline Tags: Complete 911 Timeline, 9/11 Timeline

The photograph of Khalid Shaikh Mohammed on his 2001 US visa application.The photograph of Khalid Shaikh Mohammed on his 2001 US visa application. [Source: 9/11 Commission]Khalid Shaikh Mohammed (KSM) is granted a visa to enter the US, despite being under a federal terrorism indictment, having a $2 million reward on his head, and being one of only a dozen people in the world on a US domestic no-fly list (see April 24, 2000). There is no evidence that he actually uses his visa to travel to the US. Investigators speculate that he may have considered a trip to shepherd some aspect of the 9/11 plot. He applied for the visa using a Saudi passport and an alias (Abdulrahman al Ghamdi), but the photo he submitted is really of him. He uses the new, controversial Visa Express program that allows Saudis to apply for US visas without having to appear in person at any point during the application process (see May 2001). [Los Angeles Times, 1/27/2004] Just a month earlier, the CIA passed a warning to all US intelligence agencies, certain military commanders, and parts of the Justice and Treasury Departments saying that Mohammed may be attempting to enter the US (see June 12, 2001). However, either this warning isn’t given to immigration officials or else they fail to notice his application. [Los Angeles Times, 1/27/2004]

Entity Tags: US Department of Justice, US Department of the Treasury, Khalid Shaikh Mohammed

Timeline Tags: Complete 911 Timeline, 9/11 Timeline

Government buildings in Washington, DC, are not evacuated prior to the attack on the Pentagon at 9:37 a.m. As CNN will describe, even after the attacks on the World Trade Center and the FAA’s warning to the military of a hijacked aircraft apparently heading toward Washington (see 9:21 a.m. September 11, 2001 and (9:24 a.m.) September 11, 2001), “the federal government failed to make any move to evacuate the White House, Capitol, State Department, or the Pentagon.” [CNN, 9/16/2001] Although a slow evacuation of the White House begins around 9:20 a.m. (see (9:20 a.m.) September 11, 2001), it is not until 9:45 that the Secret Service orders people to run from there (see (9:45 a.m.) September 11, 2001). [CNN, 9/11/2001; CNN, 9/12/2001; ABC News, 9/11/2002] Other government buildings, including the Capitol (see 9:48 a.m. September 11, 2001), the Justice Department, the State Department, and the Supreme Court, will not be evacuated until between 9:45 and 10:45 a.m. [US News and World Report, 9/14/2001; US Department of State, 8/15/2002] Robert Bonner, who was recently nominated as Commissioner of Customs, will later estimate that he was evacuated from the Treasury Department at “about 9:35 a.m.” [9/11 Commission, 1/26/2004; US Department of Homeland Security, 9/20/2004] But other accounts say the Treasury Department is not evacuated until after the Pentagon attack. [Associated Press, 9/11/2001; Reuters, 9/11/2001; US Department of State, 9/11/2002] Furthermore, journalist and author Robert Draper will describe that, even after the State and Treasury departments have been evacuated: “no agents thought to take charge of the Commerce Department, which housed 5,000 employees. Eventually, Secretary [of Commerce] Don Evans got tired of waiting for orders and had someone drive him to his home in McLean, where he sat for hours until he finally made contact with the Secret Service.” [Draper, 2007, pp. 143] According to CNN, prior to the Pentagon attack, “neither the FAA, NORAD, nor any other federal government organ made any effort to evacuate the buildings in Washington. Officials at the Pentagon said that no mechanism existed within the US government to notify various departments and agencies under such circumstances [as occur on 9/11].” [CNN, 9/16/2001]

Entity Tags: Pentagon, US Supreme Court, Robert Bonner, US Department of Commerce, US Department of Justice, Federal Aviation Administration, US Department of the Treasury, US Department of State, White House, US Capitol building, Donald L. Evans

Timeline Tags: Complete 911 Timeline, 9/11 Timeline

The US freezes the bank accounts of 27 individuals and organizations, alleging that they had channeled money to al-Qaeda.
bullet The list includes the names of nine Middle Eastern groups that are members of bin Laden’s International Islamic Front for Jihad Against Jews and Crusaders alliance announced in 1998 (see February 22, 1998). Such groups include the Islamic Army of Aden (based in Yemen), the GIA (Algeria), and Abu Sayyaf (the Philippines).
bullet Individuals named include obvious al-Qaeda figures such as Osama bin Laden, Ayman al-Zawahiri, al-Qaeda’s second-in-command, and Muhammad Atef. [New York Times, 9/25/2001]
bullet Makhtab Al-Khidamat/Al-Kifah, a charity based in Pakistan. A Brooklyn, New York, branch was called the Al-Kifah Refugee Center and had ties to both the 1993 WTC bombing and the CIA (see 1986-1993). It appears it was shut down in Pakistan in late 1995 (see Shortly After November 19, 1995). The Wall Street Journal notes that it “may be defunct or at least operating in a much-diminished capacity only in Afghanistan.” [Wall Street Journal, 9/25/2001]
bullet The Al-Rashid Trust. This is primarily a humanitarian organization that aims to eject western charities from Afghanistan by taking over their activities. The trust is also so closely linked to the Kashmiri-focused jihidist organization Jaish-e-Mohammed that the Asia Times will comment, “It is often difficult to distinguish between the two outfits, as they share offices and cadres.” The Jaish-e-Mohammed was founded by Maulana Masood Azhar, an associate of 9/11 financier Saeed Sheikh, with the support of the ISI (see December 24-31, 1999). In addition, the trust also provides support to the Taliban, and, occasionally, al-Qaeda. The trust works closely with the Arab-run Wafa Humanitarian Organization. It will continue its social and humanitarian projects, as well as its support for militant Islamic activities, under various names and partnerships despite this ban.
bullet The Wafa Humanitarian Organization, an Arab-run charity. It is closely tied to the Al-Rashid Trust. [Asia Times, 10/26/2001; Washington Post, 12/14/2003]
bullet A company belonging to one of the hijackers’ associates, the Mamoun Darkazanli Import-Export Company. It is not clear where the Mamoun Darkazanli Import-Export Company is or was based, as it was never incorporated in Hamburg, where Darkazanli lived and associated with some of the 9/11 hijackers. Darkazanli’s personal assets are frozen in October (see September 24-October 2, 2001). [Chicago Tribune, 11/17/2002] However, according to some reports, some of the money transferred to the hijackers in the US in 2001 came through the Al-Rashid Trust (see Early August 2001) and possibly another account, and some of the money the hijackers received in 2000 may have come through Mamoun Darkazanli’s accounts (see June 2000-August 2001).
The move is largely symbolic, since none of the entities have any identifiable assets in the US. [New York Times, 9/25/2001] Reporter Greg Palast will later note that US investigators likely knew much about the finances of those organizations before 9/11, but took no action. [Santa Fe New Mexican, 3/20/2003]

Entity Tags: Osama bin Laden, Maktab al-Khidamat, Mamoun Darkazanli, Mohammed Atef, Jaish-e-Mohammed, Ayman al-Zawahiri, Greg Palast, Abu Sayyaf, Groupe Islamique Armé, Al Rashid Trust, US Department of the Treasury, Al-Qaeda, Wafa Humanitarian Organization

Timeline Tags: Complete 911 Timeline, 9/11 Timeline

In January 2002, the US Treasury Department will send a letter to Swiss authorities stating that Youssef Nada and Ali bin Mussalim, two leaders of the Al Taqwa Bank in Switzerland, provided “indirect investment services for al-Qaeda, investing funds for bin Laden, and making cash deliveries on request to the al-Qaeda organization.” Furthermore, the letter will claim that such assistance continued until “late September 2001,” and that Mussalim carries a Saudi diplomatic passport. Mussalim had been known for controversial financial dealings since the early 1980s, when US prosecutors accused him of taking part in attempts to corner the world silver market. In 1994 he was an intermediary in a multi-billion dollar deal between the Saudi and French governments. He will die of cancer in June 2004, one month after reports of the US Treasury letter first publicly emerged. The Financial Times will call Al-Qaeda Will Conquer, the 2005 book which will be the first to reveal documentation of these claims about Mussalim, “uncomfortable reading for the Saudi government.” [Newsweek, 4/12/2004; Financial Times, 4/27/2005] For many years up to and past 9/11, he held Saudi ministerial status as an “advisor at the Royal Court” and was a close confidant of Saudi King Fahd. The Los Angeles Times will comment, “One is left wondering how the Sept. 11 commission could report that ‘we have found no evidence that the Saudi government as an institution or senior Saudi officials individually funded [al-Qaeda].’” [Los Angeles Times, 6/26/2005] The US will declare the Al Taqwa Bank a terrorist financier in November 2001 (see November 7, 2001).

Entity Tags: US Department of the Treasury, Youssef Nada, Ali bin Mussalim, Al-Qaeda, Al Taqwa Bank, Osama bin Laden, Switzerland

Timeline Tags: Complete 911 Timeline

Aafia Siddiqui.Aafia Siddiqui. [Source: FBI]In 1993, the Al-Kifah Refugee Center in Brooklyn, New York, disbanded after media reports revealed that it had ties to all of the 1993 WTC bombers as well as the CIA (see 1986-1993), but it quickly reappeared in Boston under the new name Care International. Counterterrorism expert Steven Emerson had warned the government of the name change since 1993 (see April 1993-Mid-2003). But apparently US investigators only start looking closely at Care International shortly after 9/11, when the FBI interviews several current and former employees. [Wall Street Journal, 11/21/2001] Around the same time, the Fleet National Bank in Boston files a “suspicious-activity report” (SARS) with the US Treasury Department about wire transfers from the Saudi Embassy in Washington to Aafia Siddiqui, a long-time member of the Al-Kifah Refugee Center and then Care International, and her husband Dr. Mohammed Amjad Khan. Fleet National Bank investigators discover that one account used by the Boston-area couple shows repeated on-line credit card purchases from stores that “specialize in high-tech military equipment and apparel.” Khan purchased body armor, night-vision goggles, and military manuals, and then sent them to Pakistan. The bank also investigates two transfers totaling $70,000 sent on the same day from the Saudi Armed Forces Account used by the Saudi Embassy at the Riggs Bank in Washington to two Saudi nationals living in Boston. One of the Saudis involved in the transfers lists the same Boston apartment number as Siddiqui’s. The bank then notices that Siddiqui regularly gives money to the Benevolence International Foundation, which will soon be shut down for al-alleged Qaeda ties. They also discover her connection to Al-Kifah. The bank then notices Siddiqui making an $8,000 international wire transfer on December 21, 2001, to Habib Bank Ltd., “a big Pakistani financial institution that has long been scrutinized by US intelligence officials monitoring terrorist money flows.” [Newsweek, 4/7/2003] In April or May 2002, the FBI questions Siddiqui and Khan for the first time and asks them about their purchases. [Boston Globe, 9/22/2006] But the two don’t seem dangerous, as Siddiqui is a neuroscientist who received a PhD and studied at MIT, while Khan is a medical doctor. Plus they have two young children and Siddiqui is pregnant. There are no reports of US intelligence tracking them or watch listing them. Their whole family moves to Pakistan on June 26, 2002, but then Siddiqui and Khan get divorced soon thereafter. Siddiqui comes back to the US briefly by herself from December 25, 2002, to January 2, 2003. On March 1, 2003, Pakistan announces that 9/11 mastermind Khalid Shaikh Mohammed (KSM) has been captured (see February 29 or March 1, 2003). Some days later, Siddiqui drives away from a family house in Pakistan and disappears. Some later media reports will claim that she is soon arrested by Pakistani agents but other reports will deny it. Reportedly, KSM quickly confesses and mentions her name as an al-Qaeda sleeper agent, working as a “fixer” for other operatives coming to the US. On March 18, the FBI puts out a worldwide alert for Siddiqui and her ex-husband Khan, but Khan has completely disappeared as well. Siddiqui will be arrested in Afghanistan in 2008 (see July 17, 2008). [Vanity Fair, 3/2005] The CIA will later report that Ali Abdul Aziz Ali (a.k.a. Ammar al-Baluchi), a nephew of KSM and a reputed financier of the 9/11 attacks, married Siddiqui not long before her disappearance. Furthermore, in 2002 he ordered Siddiqui to help get travel documents for Majid Kahn (no relation to Siddiqui’s first husband), who intended to blow up gas stations and bridges or poison reservoirs in the US. It will also be alleged that Siddiqui bought diamonds in Africa for al-Qaeda in the months before 9/11. [Boston Globe, 9/22/2006] The Saudi Embassy will later claim that the wire transfers connected to Siddiqui were for medical assistance only and the embassy had no reason to believe at the time that anyone involved had any connection to militant activity. [Newsweek, 4/7/2003] Although Siddiqui seems to have ties with two key figures in the 9/11 plot and was living in Boston the entire time some 9/11 hijackers stayed there, there are no known links between her and any of the hijackers.

Entity Tags: Mohammed Amjad Khan, US Department of the Treasury, Steven Emerson, Riggs Bank, Majid Khan, Habib Bank Ltd., Fleet National Bank, Aafia Siddiqui, Al-Kifah Refugee Center, Ali Abdul Aziz Ali, Benevolence International Foundation, Care International (Boston), Khalid Shaikh Mohammed, Saudi Embassy (US)

Timeline Tags: Complete 911 Timeline

Yassin al-Qadi.Yassin al-Qadi. [Source: Arab News]Yassin al-Qadi is included in a new US list of 39 individuals and organizations designated by the US as connected to terrorism (see October 12, 2001). The US officially declares him a “Specially Designated Global Terrorist” and his US assets are frozen. [Chicago Tribune, 10/14/2001; Chicago Tribune, 10/29/2001] Al-Qadi says he is “horrified and shocked” by the allegations. [Chicago Tribune, 10/16/2001] There have been several accusations that al-Qadi laundered money to fund Hamas and al-Qaeda. He headed the Muwafaq (Blessed Relief) Foundation, a Saudi-based charity. Treasury officials allege it has funneled millions of dollars to al-Qaeda (see 1995-1998). [Chicago Tribune, 10/16/2001; Chicago Tribune, 10/29/2001] An investigation into his al-Qaeda connections was canceled by higher-ups in the FBI in October 1998 (see October 1998). In late 2002, Saudi Arabia will freeze al-Qadi’s accounts, an action the Saudis have taken against only three people. However, he has yet to be charged or arrested by the Saudis or the US. [Washington Post, 12/7/2002]

Entity Tags: Yassin al-Qadi, United States, US Department of the Treasury

Timeline Tags: Complete 911 Timeline

November 7, 2001: Al Taqwa Bank Shut Down

Italian police raid Youssef Nada’s villa in Lugano, Italy.Italian police raid Youssef Nada’s villa in Lugano, Italy. [Source: Keystone]The US and other countries announce the closure of the Al Taqwa Bank and the Al Barakaat financial network. President Bush says, “Al Taqwa and Al Barakaat raise funds for al-Qaeda. They manage, invest and distribute those funds.” US officials claim that both entities skimmed a part of the fees charged on each financial transaction it conducted and paid it to al-Qaeda. This would provide al-Qaeda with tens of millions of dollars annually. Additionally, Al Taqwa would provide investment advice and transfer cash for al-Qaeda. Al Taqwa is based in Switzerland while Al Barakaat is based in Dubai, United Arab Emirates. Over 100 nations are said to be cooperating with efforts to block the funds of these two groups. [New York Times, 11/8/2001] Swiss authorities raid Al Taqwa-related businesses and the homes of bank leaders Youssef Nada, Ali Himmat, and Ahmad Huber, but no arrests are made. In January 2002, Nada will announce that the Al Taqwa Bank is shutting down, due to bad publicity after the raids. He will maintain that he and his organization are completely innocent. [Newsweek, 11/7/2001; Reuters, 1/10/2002] Days after 9/11, Huber called the 9/11 attacks “counterterror against American-Israeli terror,” the World Trade Center a “the Twin Towers of the godless,” and the Pentagon “a symbol of Satan,” yet he will claim to have no ties to the attackers. [Playboy, 2/1/2002; Newsweek, 3/18/2002] In searching Nada’s house, Swiss authorities discover a document entitled “The Project,” which is a strategic plan for the Muslim Brotherhood to infiltrate and defeat Western countries (see December 1982). By late 2002, both the US and UN will declare Al Taqwa Bank, Nada, and Ahmed Idris Nasreddin, another founder and director of the bank, supporters of terrorism. All of their accounts will be declared frozen worldwide. [US Department of the Treasury, 8/29/2002] However, while Al Taqwa itself will be shut down, later reports will indicate that other financial entities operated by the directors will continue to operate freely (see June-October 2005).

Entity Tags: Al-Qaeda, US Department of the Treasury, Muslim Brotherhood, Ali Himmat, Al Taqwa Bank, George W. Bush, Youssef Nada, Ahmad Huber, Al Barakaat

Timeline Tags: Complete 911 Timeline, 9/11 Timeline

The Holy Land Foundation is shut down and its assets are seized. Holy Land claimed to be the largest Muslim charity in the US. It claimed to raise millions for Palestinian refugees and denied any support for terrorism. In justifying the move, the US government presents evidence of ties between the Holy Land and Hamas. Much of this evidence dates back to 1993; the Associated Press titles a story on the closure, “Money Freeze A Long Time Coming.” [Associated Press, 12/5/2001] Holy Land offices in San Diego, California; Paterson, New Jersey; and Bridgeview, Illinois, are also raided. [CNN, 12/4/2001] The indictment says Holy Land has been “deeply involved with a network of Muslim Brotherhood organizations dedicated to furthering the Islamic fundamentalist agenda espoused by Hamas.” [Washington Post, 9/11/2004] Holy Land is represented by the powerful law firm of Akin, Gump, Strauss, Hauer & Feld. Three partners at Akin, Gump are very close to President Bush: George Salem chaired Bush’s 2000 campaign outreach to Arab-Americans; Barnett “Sandy” Kress was appointed by Bush as an “unpaid consultant” on education reform and has an office in the White House; and James Langdon is one of Bush’s closest Texas friends. [Boston Herald, 12/11/2001; Washington Post, 12/17/2001] The leaders of Holy Land will be charged with a variety of crimes in 2002 and 2004 (see December 18, 2002-April 2005).

Entity Tags: Hamas, Muslim Brotherhood, Akin, Gump, Strauss, Hauer & Feld, US Department of the Treasury, Holy Land Foundation for Relief and Development

Timeline Tags: Complete 911 Timeline

A sign on top of the Al Haramains Islamic Foundation’s four-story office building in Dhaka, Bangladesh, in June 2004.A sign on top of the Al Haramains Islamic Foundation’s four-story office building in Dhaka, Bangladesh, in June 2004. [Source: Rafiqur Rahman / Reuters / Corbis]The Al Haramain Islamic Foundation was founded in 1988 as a branch of the Muslim World League charity, and just like the Muslim World League it is closely linked to the Saudi government. It develops branches in about 50 countries, including a US branch based in Oregon. It has an annual budget of $40 million to $60 million, paid by the Saudi government, and about 3,000 employees. It gives considerable aid to religious causes such as building mosques. But by the early 1990s evidence began to grow that it was funding Islamist militants in Somalia and Bosnia, and a 1996 CIA report detailed its Bosnian militant ties (see January 1996). In 1998, several links were discovered between the charity and the African embassy bombings that year (see Autumn 1997 and 10:35-10:39 a.m., August 7, 1998).
bullet In March 2002, the US and Saudi governments jointly announce the closing of Al Haramain’s branches in Somalia and Bosnia, but Al Haramain defiantly keeps its Bosnian branch open and it is shut down again after police raids in December 2003. [Washington Post, 8/19/2004; Burr and Collins, 2006, pp. 38-41] In December 2002, it is reported that the Somali branch is still open as well. [Christian Science Monitor, 12/18/2002]
bullet In late 2002, Al Haramain is linked to the October 2002 Bali bombing and al-Qaeda operations in Southeast Asia in general (see September-October 2002).
bullet In May 2003, Al Haramain announces the closing of its branches in Albania, Croatia, and Ethiopia, soon followed by branches in Kenya, Tanzania, Pakistan, and Indonesia. But this is because of pressure due to suspected militant links, and at least the Indonesian branch secretly changes locations and stays open. [Burr and Collins, 2006, pp. 38-41]
bullet In late 2003, Al Haramain Director-General Aqeel al-Aqeel indiscreetly mentions that Saudi Crown Prince Abdullah recently donated money to his charity. Al-Aqeel, Deputy General Mansour al-Kadi, and two other senior officials are fired from the charity by the Saudi minister of religious affairs in January 2004. Interestingly, the Saudi minister is also the chairman of Al-Haramain’s board. In 1997, US intelligence found al-Kadi’s business card in the possession of Wadih el-Hage, Osama bin Laden’s former personal secretary (see Shortly After August 21, 1997). [Netherlands Interior Ministry, 1/6/2005 pdf file; Burr and Collins, 2006, pp. 38-41]
bullet In February 2004, the US Treasury Department freezes the organization’s US financial assets pending an investigation.
bullet In June 2004, The charity is disbanded by the Saudi Arabian government and folded into an “umbrella” private Saudi charitable organization, the Saudi National Commission for Relief and Charity Work Abroad.
bullet In September 2004, the US designates Al-Haramain a terrorist organization, citing ties to al-Qaeda. [US Treasury Department, 9/9/2004; Washington Post, 3/2/2006] The United Nations also bans the organization, saying it has ties to the Taliban. [United Nations, 7/27/2007]

Entity Tags: United Nations, US Department of the Treasury, Saudi National Commission for Relief and Charity Work Abroad, Muslim World League, Al-Qaeda, Aqeel al-Aqeel, Abdullah bin Abdulaziz al-Saud, Al Haramain Islamic Foundation, Al Haramain Islamic Foundation (Oregon branch), Taliban, Mansour al-Kadi

Timeline Tags: Complete 911 Timeline

Appearing on NBC’s Dateline, former CIA agent Robert Baer says the US collects virtually no intelligence about Saudi Arabia nor are they given any intelligence collected by the Saudis. He says this is because there are implicit orders from the White House that say: “Do not collect information on Saudi Arabia because we’re going to risk annoying the royal family.” On the same television program, despite being on a US list of suspected terrorist financiers since October 2001, Saudi millionaire Yassin al-Qadi says, “I’m living my life here in Saudi Arabia without any problem” because he is being protected by the Saudi government. Al-Qadi admits to giving bin Laden money for his “humanitarian” work, but says this is different from bin Laden’s militant activities. Presented with this information, the US Treasury Department only says that the US “is pleased with and appreciates the actions taken by the Saudis” in the war on terror. The Saudi government still has not given US intelligence permission to talk to any family members of the hijackers, even though some US journalists have had limited contact with a few. [MSNBC, 8/25/2002]

Entity Tags: Osama bin Laden, United States, Saudi Arabia, Robert Baer, Yassin al-Qadi, US Department of the Treasury

Timeline Tags: Complete 911 Timeline

Stuart Levey.Stuart Levey. [Source: US Treasury Department]On the first anniversary of the 9/11 attacks, the Saudi government announces that it is setting up a supervisory body to control Islamic charities accused of financing terrorism. The US government had been strongly pressuring them to do so. Saudi Interior Minister Prince Nayef bin Abdul-Aziz states, “We have established the Saudi Higher Authority for Relief and Charity Work… so all relief and charity work comes under its umbrella.” He says this will help “ensure the aid goes to the right people and for the right purposes,” adding, “We are also creating accurate systems and means… to guarantee a continuous followup of charities.” [Agence France-Presse, 9/11/2002] However, no such body is actually created, then or later. In July 2007, Stuart Levey, the top counterterrorism official at the Treasury Department, will say the Saudi government has failed to keep its promise to create such a body. “They are also not holding people responsible for sending money abroad for jihad. It just doesn’t happen.” The White House will respond with a generic statement saying that “the Saudis continue to be a strong partner in the War on Terror.” [Wall Street Journal, 7/26/2007]

Entity Tags: Stuart Levey, Nayef bin Abdul-Aziz, Saudi Arabia, US Department of the Treasury

Timeline Tags: Complete 911 Timeline

In early 2003, the Treasury Department draws up a list of 300 individuals, charities, and corporations in Southeast Asia believed to be funding al-Qaeda and its suspected Indonesian affiliate Jemaah Islamiya. “Due to inter-agency politics, the list [is] winnowed down to 18 individuals and 10 companies.” [Contemporary Southeast Asia, 8/1/2003] Later, the number of suspected financiers is narrowed down even further, and on September 5, 2003, only 10 individuals, all connected to Jemaah Islamiya, have their assets frozen. [Associated Press, 9/5/2003] The assets of Jemaah Islamiya itself were frozen shortly after the October 2002 Bali bombings was blamed on the group (see October 12, 2002), though ties between the group and al-Qaeda were first publicly reported in January 2002. [Associated Press, 1/18/2002; United Press International, 1/25/2003] Hambali, a notorious leader of both al-Qaeda’s Southeast Asia operations and Jemaah Islamiya, only had his assets frozen in January 2003, even though he was publicly mentioned as a major figure as far back as January 2001. [New Straits Times, 1/25/2001; Associated Press, 1/18/2002]

Entity Tags: Hambali, Al-Qaeda, US Department of the Treasury, Jemaah Islamiyah

Timeline Tags: Complete 911 Timeline

An article in the New Republic claims that “President Bush has repeatedly stifled efforts to strengthen domestic safeguards against further terrorist attacks. As a consequence, homeland security remains perilously deficient.” The article cites numerous examples to support this contention, and comments: “Bush’s record on homeland security ought to be considered a scandal. Yet, not only is it not a scandal, it’s not even a story, having largely failed to register with the public, the media, or even the political elite.” It points out numerous examples where the administration has opposed the spending of more money to protect against an attack and argues: “The White House appears to grasp that Bush’s standing on national security issues, especially after September 11, is so unassailable that he does not need to shore it up. Instead, the administration seems to view his wartime popularity as a massive bank of political capital from which they can withdraw and spend on other, unrelated causes. In the short run, this strategy is a political boon for Bush and his party. But, in the long run, it divides and weakens the nation against its external threats.” [New Republic, 3/3/2003] Here are some of the examples of evidence supporting this article’s arguments pointed out in this and subsequent articles:
bullet Airports are said to be unacceptably vulnerable to terrorism. [Associated Press, 6/8/2004]
bullet Terrorist watch lists remain unconsolidated. [United Press International, 4/30/2003]
bullet Basic background checks on air security personnel remain undone. [Time, 7/8/2003]
bullet The Treasury Department has assigned five times as many agents to investigate Cuban embargo violations as it has to track al-Qaeda’s finances. [Associated Press, 4/30/2004]
bullet The White House has spurned a request for 80 more investigators to track and disrupt the global financial networks of US-designated terrorist groups. [New York Times, 4/4/2004]
bullet Cases involving “international terrorism” have been fizzling out in US courts. [Los Angeles Times, 12/9/2003]
bullet Experts have concluded that the Iraq War has diverted resources from the war on terrorism and made the US less secure. [MSNBC, 7/29/2003; Salon, 7/31/2003]
bullet Investigations have shown that most chemical plants across the US remain dangerously vulnerable to a guerilla-style attack. Some plants have virtually no security at all, often not even locked gates. Explosions at some of these plants could kill more than a million people. Yet the Bush administration has so far successfully opposed strengthening security regulations, apparently at the behest of chemical industry lobbyists. [New Republic, 3/3/2003; New Jersey Star-Ledger, 1/28/2005]
bullet There has been a huge increase in government spending to train and respond to terrorist attacks, but Time magazine reports that the geographical spread of “funding appears to be almost inversely proportional to risk.” [Time, 3/21/2004]
bullet Several high-profile studies have concluded that despite its frequent “bear any burden” rhetoric, the Bush administration has grossly underfunded domestic security. [New Republic, 3/3/2003; New York Times, 7/25/2003]
bullet Community-based “first responders” lack basic equipment, including protective clothing and radios. [New Republic, 3/3/2003; New York Times, 7/25/2003]
bullet Spending on computer upgrades, airport security, more customs agents, port security, border controls, chemical plant security, bioweapon vaccinations, and much more, is far below needed levels and often below Promised levels. [New Republic, 3/3/2003]

Entity Tags: Al-Qaeda, Bush administration (43), Central Intelligence Agency, US Department of the Treasury, George W. Bush

Timeline Tags: Complete 911 Timeline

US intelligence has long suspected the Al-Rajhi Bank for supporting radical militant causes. However, the US has not acted overtly against the Saudi bank because it is so large and influential, with an estimated $26 billion in assets and yearly profits of almost $2 billion in 2006. In mid-2003, a new CIA report details linkages between the bank and militants (see Before September 11, 2001), and suggests that the owners of the bank are aware of these links and have an extremist agenda (see Mid-2003). The US begins to rethink the quiet diplomacy approach. Deputies from the CIA, National Security Council, Treasury and State departments meet to discuss the problem. They debate officially listing the bank as a supporter of terrorism. They also consider the possibility of covert operations against the bank, such as interfering with the bank’s internal operations. Another possibility is working with other countries for more scrutiny and regulatory action against the bank. But ultimately, the Bush administration decides against all these options and chooses merely to continue privately exerting pressure on the Saudi government in hopes that the Saudis will do something. [Wall Street Journal, 7/26/2007] In late 2004, Homeland Security Adviser Frances Townsend will make a secret visit to Saudi Arabia to put more pressure on the government to do something about the bank. [Wall Street Journal, 10/1/2004] What the US has done regarding the bank since that time is unknown. The bank denies any ties to Islamic militancy.

Entity Tags: National Security Council, Bush administration (43), Central Intelligence Agency, Frances Townsend, US Department of the Treasury, US Department of State

Timeline Tags: Complete 911 Timeline

Riggs Bank in Washington, DC.Riggs Bank in Washington, DC. [Source: Washington Post]In late 2002, US federal banking investigators began looking into transactions at Riggs Bank because of news reports that some money may have passed from the Saudi Arabian embassy in Washington through Riggs Bank to the associates of two 9/11 hijackers in San Diego (see December 4, 1999). But in July 2003, the probe expands as investigators discover irregularities involving tens of millions of dollars also connected to the Saudi embassy. The Wall Street Journal will later report, “Riggs repeatedly failed in 2001 and 2002 to file suspicious-activity reports related to cash transactions in the low tens of millions of dollars in Saudi accounts, said people familiar with the matter.” Riggs Bank “handles the bulk of [Washington’s] diplomatic accounts, a niche market that revolves around relationships and discretion.” [Wall Street Journal, 1/14/2004] Newsweek will later report that “investigators say the embassy accounts show a large commingling of funds with Islamic charities that have been the prime target of US probes.” In one instance, on July 10, 2001 the Saudi embassy sent $70,000 to two Saudis in Massachusetts. One of the Saudis wrote a $20,000 check that same day to a third Saudi who had listed the same address as Aafia Siddiqui, a microbiologist who is believed to have been a US-based operative for 9/11 mastermind Khalid Shaikh Mohammed (see Late September 2001-March 2003). [Newsweek, 4/12/2004] The Wall Street Journal will later discover that Riggs Bank “has had a longstanding relationship with the Central Intelligence Agency, according to people familiar with Riggs operations and US government officials” (see December 31, 2004). The relationship included top Riggs executives receiving US government security clearances. Riggs also overlooked tens of millions of dollars in suspicious transactions by right wing dictators from Africa and South America such as former Chilean dictator Augusto Pinochet. [Wall Street Journal, 12/31/2004] A connection between the CIA and Riggs Bank goes back to at least the early 1960s. And in 1977, journalist Bob Woodward tied Riggs Bank to payments in a CIA operation in Iran. [Slate, 1/10/2005] The CIA tie leads to suspicions that the bank’s failure to disclose financial activity by Saudi diplomats and other foreign officials may have been implicitly authorized by parts of the US government. Some of the suspicious Saudi accounts belong to Saudi diplomats, including Prince Bandar bin Sultan, the Saudi ambassador to the US. Shortly after these irregularities are discovered, Prince Bandar meets with Treasury Secretary John Snow and details his work for the CIA. For instance, during the 1980s, Prince Bandar helped fund the anticommunist Nicaraguan Contra rebels at the request of the White House and CIA as part of what became known as the Iran-Contra affair, and he also helped the CIA support Afghan rebels fighting the Soviet Union. It is not known what was discussed but US intelligence officials suggest Prince Bandar disclosed his CIA connections “as an explanation for the prince’s large unexplained cash transactions at Riggs.” [Wall Street Journal, 12/31/2004] It will later come to light that for many years $30 million a month were being secretly deposited into a Riggs Bank account controlled by Prince Bandar. It has been alleged that major British arms contractor BAE Systems funneled up to $2 billion in bribes through this account over the years as part of an $80 billion weapons deal between Britain and Saudi Arabia. Riggs Bank never knew the source of the funds. After the probe uncovers these suspicious transactions, the bank cuts off all business with the Saudis. [Newsweek, 6/11/2007] The US Treasury will later impose unusually strict controls on Riggs Bank and fine the bank $25 million. [Wall Street Journal, 1/14/2004] The bank will also plead guilty to one felony count of failing to file suspicious activity reports and pay an additional fine of $16 million. [Washington Post, 1/28/2005]

Entity Tags: Saudi Arabia, Riggs Bank, John W. Snow, BAE Systems, Bandar bin Sultan, Central Intelligence Agency, Aafia Siddiqui, US Department of the Treasury, Khalid Shaikh Mohammed

Timeline Tags: Complete 911 Timeline

Representative Porter Goss and Senator Bob Graham co-chair the Congressional Inquiry.Representative Porter Goss and Senator Bob Graham co-chair the Congressional Inquiry. [Source: Ken Lambert/ Associated Press]The 9/11 Congressional Inquiry’s final report comes out. [US Congress, 7/24/2003 pdf file; US Congress, 7/24/2003] Officially, the report was written by the 37 members of the House and Senate Intelligence Committees, but in practice, co-chairmen Bob Graham (D-FL) and Porter Goss (R-FL) exercised “near total control over the panel, forbidding the inquiry’s staff to speak to other lawmakers.” [St. Petersburg Times, 9/29/2002] Both Republican and Democrats in the panel complained how the two co-chairmen withheld information and controlled the process. [Palm Beach Post, 9/21/2002] The report was finished in December 2002 and some findings were released then, but the next seven months were spent in negotiation with the Bush administration over what material had to remain censored. The Inquiry had a very limited mandate, focusing just on the handling of intelligence before 9/11. It also completely ignores or censors out all mentions of intelligence from foreign governments. Thomas Kean, the chairman of 9/11 Commission says the Inquiry’s mandate covered only “one-seventh or one-eighth” of what his newer investigation will hopefully cover. [Washington Post, 7/27/2003] The report blames virtually every government agency for failures:
bullet Newsweek’s main conclusion is: “The investigation turned up no damning single piece of evidence that would have led agents directly to the impending attacks. Still, the report makes it chillingly clear that law-enforcement and intelligence agencies might very well have uncovered the plot had it not been for blown signals, sheer bungling—and a general failure to understand the nature of the threat.” [Newsweek, 7/28/2003]
bullet According to the New York Times, the report also concludes, “the FBI and CIA had known for years that al-Qaeda sought to strike inside the United States, but focused their attention on the possibility of attacks overseas.” [New York Times, 7/26/2003]
bullet CIA Director George Tenet was “either unwilling or unable to marshal the full range of Intelligence Community resources necessary to combat the growing threat.” [Washington Post, 7/25/2003]
bullet US military leaders were “reluctant to use… assets to conduct offensive counterterrorism efforts in Afghanistan” or to “support or participate in CIA operations directed against al-Qaeda.” [Washington Post, 7/25/2003]
bullet “There was no coordinated… strategy to track terrorist funding and close down their financial support networks” and the Treasury Department even showed “reluctance” to do so. [Washington Post, 7/25/2003]
bullet According to the Washington Post, the NSA took “an overly cautious approach to collecting intelligence in the United States and offered ‘insufficient collaboration’ with the FBI’s efforts.” [Washington Post, 7/25/2003] Many sections remain censored, especially an entire chapter detailing possible Saudi support for the 9/11 attackers. The Bush administration insisted on censoring even information that was already in the public domain. [Newsweek, 5/25/2003] The Inquiry attempted to determine “to what extent the president received threat-specific warnings” but received very little information. There was a focus on learning what was in Bush’s briefing on August 6, 2001 (see August 6, 2001), but the White House refused to release this information, citing “executive privilege.” [Washington Post, 7/25/2003; Newsday, 8/7/2003]

Entity Tags: Al-Qaeda, 9/11 Congressional Inquiry, Daniel Robert (“Bob”) Graham, Bush administration (43), Central Intelligence Agency, 9/11 Commission, Saudi Arabia, National Security Agency, Porter J. Goss, Federal Bureau of Investigation, George J. Tenet, Thomas Kean, US Department of the Treasury

Timeline Tags: Complete 911 Timeline, 9/11 Timeline

On order of US Secretary of State Colin Powell, the Treasury’s Office of Foreign Assets Control freezes the financial assets of the National Council of Resistance of Iran (NCRI), which a State Department official says functions “as a part of the MEK [Mujahedeen-e Khalq].” Powell’s order also calls for the closure of the organization’s two offices in Washington. NCRI has hitherto enjoyed the support of several US legislators. [Voice of America, 8/15/2003; Associated Press, 8/15/2003] Powell’s order amends Executive Order 13224 on terrorist financing [US Department of State, 8/15/2003] , issued on September 23, 2001, which blocked the assets of organizations and individuals that US authorities believe are linked to terrorism. [US President, 9/23/2002]

Entity Tags: National Council of Resistance of Iran, US Department of the Treasury, Colin Powell, People’s Mujahedin of Iran

Timeline Tags: US confrontation with Iran

National Security Adviser Condoleezza Rice, frustrated with Coalition Provisional Authority (CPA) administrator L. Paul Bremer’s lack of cooperation and coordination with her office (see September 8, 2003 and December 2003 and After), forms the Iraq Stabilization Group (ISG) to oversee Bremer and settle disputes between the Defense and State Departments in governing Iraq. [Roberts, 2008, pp. 130] According to unnamed White House officials, the ISG originated with President Bush’s frustration at the lack of progress in both Iraq and Afghanistan. “The president knows his legacy, and maybe his re-election, depends on getting this right,” says an administration official. “This is as close as anyone will come to acknowledging that it’s not working.” Defense Department officials deny that the ISG is designed to take power away from Defense Secretary Donald Rumsfeld: “Don recognizes this is not what the Pentagon does best, and he is, in some ways, relieved to give up some of the authority here,” says one senior Pentagon official. In reality, both Rumsfeld and Secretary of State Colin Powell are giving up some control over the reconstruction efforts to the White House, specifically to the National Security Council. Rice will oversee four coordinating committees, on counterterrorism efforts, economic development, political affairs in Iraq and media messaging. One of her deputies will run each committee, assisted by undersecretaries from State, Defense, and the Treasury Department, as well as representatives from the CIA. The counterterrorism committee will be run by Frances Fragos Townsend; the economic committee by Gary Edson; the political affairs committee by Robert Blackwill; and the communications committee by Anna Perez. [New York Times, 10/6/2003] In May 2004, the Washington Post will report that the ISG is dysfunctional and ineffective almost from the outset; within months, all but Blackwill have been reassigned (Perez will leave Washington for a job with NBC), and a search of the White House Web site will find no mention of the ISG later than October 2003. [Washington Post, 5/18/2004]

Entity Tags: Iraq Stabilization Group, Donald Rumsfeld, Condoleezza Rice, Colin Powell, Coalition Provisional Authority, Anna Perez, Frances Townsend, George W. Bush, US Department of Defense, US Department of State, Robert Blackwill, National Security Council, L. Paul Bremer, US Department of the Treasury, Gary Edson

Timeline Tags: Iraq under US Occupation

The US Treasury Department freezes the assets of the Iranian-American Community of Northern Virginia after the organization holds a fundraising event (see January 24, 2004), the stated purpose of which was to provide support to Iranian earthquake victims. The FBI believes that some of the money raised was also meant to fund the Mujahedeen-e Khalq (MEK), a US-designated terrorist organization whose mission is to overthrow the government of Iran. [Washington Post, 1/29/2004]

Entity Tags: US Department of the Treasury, Iranian-American Community of Northern Virginia, People’s Mujahedin of Iran

Timeline Tags: US confrontation with Iran

Thomas Tamm.Thomas Tamm. [Source: Newsweek]Thomas Tamm, a veteran Justice Department prosecutor with a high-level security clearance, is finishing up a yearlong post with the Office of Intelligence Policy and Review (OIPR), a Justice Department unit handling wiretaps of suspected terrorists and spies. As his stint is coming to a close, Tamm learns of the existence of a highly classified National Security Agency (NSA) program that is electronically eavesdropping on American citizens—domestic wiretapping. He later learns that “the program,” as it is referred to by those few who know of it at all, is called “Stellar Wind.”
Concealment from FISA Judges - Tamm learns that the NSA program is being hidden from the Foreign Intelligence Surveillance Act (FISA) Court, a panel of federal judges who by law must approve and supervise such surveillance for intelligence purposes. OIPR lawyers ask the FISA Court for permission to implement national-security wiretaps. But, Tamm learns, some wiretaps—signed only by Attorney General John Ashcroft—are going to the chief FISA Court judge and not the other ten judges on the FISA panel. The “AG-only” requests are extraordinarily secretive, and involve information gleaned from what is only referred to as “the program”—Stellar Wind. Only a very few White House and US intelligence officials know the name and the nature of “the program.” Stellar Wind involves domestic wiretaps on telephones and computer e-mail accounts derived from, but not necessarily linked to, information secured from captured al-Qaeda computers and cell phones overseas. With the voluntary cooperation of American telecommunications companies (see 1997-August 2007 and After, February 2001, February 2001, and February 2001 and Beyond), the NSA program also collects vast amounts of personal data about US citizens’ phone and e-mail communications. The program also collects an enormous amount of financial information from the Treasury Department (see February 28, 2006), all collected as part of the NSA’s “data mining” efforts (see Late 1999 and After September 11, 2001).
Program Is 'Probably Illegal,' Says DOJ Official - Tamm, suspicious about the unusual requests, asks his supervisors about the program, and is told to drop the subject. “[N]o one wanted to talk about it,” he will recall. Tamm asks one of his supervisors, Lisa Farabee, “Do you know what the program is?” Farabee replies: “Don’t even go there.… I assume what they are doing is illegal.” Tamm is horrified. His first thought, he will later recall, is, “I’m a law enforcement officer and I’m participating in something that is illegal?” Tamm soon finds out from deputy OIPR counsel Mark Bradley that the chief FISA judge, Colleen Kollar-Kotelly, is raising unwanted questions about the warrant requests (see 2004 and 2005), and “the AG-only cases are being shut down.” Bradley adds, “This may be [a time] the attorney general gets indicted.”
Request for Guidance Turned Down - For weeks, Tamm agonizes over what to do. He seeks guidance from a former colleague, Sandra Wilkinson, who now works on the Senate Judiciary Committee. The two have coffee in the Senate cafeteria, and Tamm asks Wilkinson to ask if anyone on the committee knows anything about “the program.” Weeks go by without a response, and Tamm sends Wilkinson an e-mail from his OIPR computer—an e-mail that will later alert the FBI to Tamm’s interest in Stellar Wind. During a second conversation, Wilkinson refuses to give Tamm any information. “Well, you know, then,” he replies, “I think my only option is to go to the press.”
Contacting the New York Times - Tamm finally decides to contact the New York Times’s Eric Lichtblau, who has written several stories on the Justice Department that impressed Tamm. By this point he has transferred out of OIPR and back into a Justice Department office that would allow him to return to the courtroom. Tamm calls Lichtblau from a pay phone near the US District Courthouse in Washington. “My whole body was shaking,” he will recall. He identifies himself only as “Mark” (his middle name), and arranges to meet Lichtblau at a bookstore near the Justice Department. (In his 2008 book Bush’s Law: The Remaking of American Justice, Lichtblau describes Tamm as “a walk-in” source who was “agitated about something going on in the intelligence community.” Lichtblau will describe Tamm as wary and “maddeningly vague,” but as they continue to meet—usually in bookstores and coffee shops in the Capitol District—Tamm’s “credibility and his bona fides became clear and his angst appears sincere. Eighteen months later, after finally overriding a request and warning from President Bush not to print the story (see December 6, 2005), the Times reports on the existence of the NSA program (see December 15, 2005). [Ars Technica, 12/16/2008; Newsweek, 12/22/2008]

Entity Tags: Mark Bradley, Federal Bureau of Investigation, Eric Lichtblau, Colleen Kollar-Kotelly, Bush administration (43), ’Stellar Wind’, Foreign Intelligence Surveillance Court, Lisa Farabee, Senate Judiciary Committee, Thomas Tamm, Sandra Wilkinson, Office of Intelligence Policy and Review, New York Times, US Department of the Treasury, National Security Agency, US Department of Justice, John Ashcroft

Timeline Tags: Civil Liberties

David Ottaway.David Ottaway. [Source: AAAS.org]According to the Oregon branch of the Islamic charitable organization the Al-Haramain Islamic Foundation, Washington Post reporter David Ottaway receives a classified document that is evidence of illegal surveillance by the National Security Agency. The document shows that the NSA illegally intercepted telephone conversations and e-mails between Al Haramain officials in Oregon and Washington, DC. The document, dated May 24, 2004 and marked “Top Secret,” is accidentally provided to Al Haramain by Treasury Department officials that same month; Al Haramain quickly turns the document over to Ottoway, who is researching Islamic groups and individuals labeled as terrorists by the US government and are attempting to prove their innocence. Instead of reporting on the document, Ottaway will return it to the FBI when that organization demands it back in November 2004. In February 2006, Al Haramain will sue the Bush administration for illegally spying on it (see February 28, 2006) as part of its warrantless wiretapping program (see After September 11, 2001 and December 15, 2005). The Treasury Department has been investigating the charitable organization for possible ties to terrorism, and designated the group as a terrorist organization. The FBI will approach the organization and then Ottaway himself, demanding that all copies of the document be returned and threatening them with prosecution if the contents are revealed. Ottaway will consult with Post editors and lawyers, who will conclude, according to Ottaway, “that it was not relevant to what I was working on at the time.” Post executive editor Leonard Downie, Jr., will defend the decision, saying, “At the time we had this document, it was before we had any knowledge of the eavesdropping program. Without that knowledge, the document provided no useful information. At the time, all we knew was that this document was not relevant to David’s reporting.” [Washington Post, 3/3/2006]

Entity Tags: US Department of the Treasury, Washington Post, Leonard Downie, Jr., Al Haramain Islamic Foundation (Oregon branch), Bush administration (43), National Security Agency, David Ottaway, Federal Bureau of Investigation

Timeline Tags: Civil Liberties, Domestic Propaganda

The US Treasury Department and UN designate Adel Batterjee a global terrorist. Batterjee is connected to the Benevolence International Foundation (BIF). The Treasury Department says that Batterjee “has ranked as one of the world’s foremost terrorist financiers” by helping to fund al-Qaeda. It is not explained why the US waited until this time to list him, but counterterrorism expert Rita Katz suggests that the Saudi government may have changed their stance due to increased al-Qaeda activity in Saudi Arabia. “I think they needed Saudi support, and now it seems to be in place.” However, there is no report of Batterjee being arrested or having his funds frozen in Saudi Arabia. [US Department of the Treasury, 12/21/2004; Chicago Tribune, 12/22/2004]

Entity Tags: Benevolence International Foundation, Adel Abdul Jalil Batterjee, US Department of the Treasury, United Nations, Rita Katz

Timeline Tags: Complete 911 Timeline

Saad al-Fagih.Saad al-Fagih. [Source: PBS]The US and UN designate Saad al-Fagih a global terrorist, but Britain, where he lives, takes no effective action against him. Al-Fagih helped supply bin Laden with a satellite telephone used in the 1998 embassy bombings (see November 1996-Late August 1998). Britain seizes the assets of al-Fagih and his organization, the Movement for Islamic Reform in Arabia. [US Department of the Treasury, 12/21/2004; BBC, 12/24/2004] However, Saudi ambassador to Britain Prince Turki al-Faisal will later complain that the total seized is only ”£20 or something” (note: equivalent of about $39) and that the British government allows al-Fagih to continue to operate openly from London, despite being a specially designated global terrorist (see August 10, 2005). [London Times, 8/10/2005] Britain has long been suspected of harboring Islamic militants in return for them promising not to attack Britain (see August 22, 1998).

Entity Tags: Turki al-Faisal, Saad al-Fagih, Movement for Islamic Reform in Arabia, US Department of the Treasury, United Nations

Timeline Tags: Complete 911 Timeline

The US freezes the assets of Abdul Latif Saleh, who is a citizen of both Jordan and Albania. Bin Laden allegedly gave Saleh $600,000 to create “extremist groups” in Albania, and Saleh is also said to be tied to the Islamic Jihad (which merged into al-Qaeda before 9/11). Saleh is also said to be associated with Saudi multimillionaire Yassin al-Qadi (see October 12, 2001). The Treasury Department claims, “Saleh and Qadi had entered into several business partnerships with one another, including a sugar importing business, a medical enterprise and a construction business. Saleh served as the general manager of all of Qadi’s businesses in Albania and reportedly holds 10 percent of the Qadi Group’s investments in Albania.” [Associated Press, 9/19/2005; US Department of the Treasury, 9/19/2005] In the middle of 2004, the Swiss government also froze bank accounts worth $20 million of an unnamed Saudi businessman who is the former president of the Muwafaq Foundation over alleged al-Qaeda ties (see June 25, 2004). Al-Qadi was the founder and main investor of Muwafaq (see 1995-1998). [New York Times, 6/25/2004]

Entity Tags: Osama bin Laden, Abdul Latif Saleh, US Department of the Treasury, Yassin al-Qadi

Timeline Tags: Complete 911 Timeline

The six-way talks over North Korea’s nuclear program (see August 2003 and Spring and Summer 2005) finally bear fruit: all participants, including North Korea and the US, agree to “the verifiable denuclearization of the Korean Peninsula in a peaceful manner.” The North Koreans had insisted that they were entitled to receive light-water nuclear reactors in return for disarming, a central provision of the 1994 Agreed Framework (see October 21, 1994). The US refused to agree, and the Chinese brokered a compromise statement in which North Korea “stated that it has the right to peaceful uses of nuclear energy” and that the “other parties expressed their respect” and will discuss the reactor demand “at an appropriate time.” But Bush administration conservatives, furious at the agreement, prevail on President Bush to modify the US’s position. The White House forces US negotiator Christopher Hill to read a hard-line statement written by Bush conservatives that defines the “appropriate time” for the reactor discussions as being after North Korea has unilaterally disarmed. Simultaneously, the Treasury Department announces its imposition of sanctions on an Asian bank for allegedly laundering North Korean funds. The North Koreans respond by walking out of the negotiations, leaving the agreement unsigned. They will not return to negotiations for 15 months. [BBC, 12/2007; Scoblic, 2008, pp. 244]

Entity Tags: Bush administration (43), George W. Bush, US Department of the Treasury, Christopher Hill

Timeline Tags: US International Relations

A new report by the Government Accountability Office (GAO), an impartial investigative arm of Congress, claims the US effort to help foreign nations cut off terrorism funding has been frustrated by infighting among US agencies, a lack of funding, and leadership problems. The report says “the US government lacks an integrated strategy” to train foreign countries and give them technical assistance. Officials at the State and Treasury Departments cannot even agree on who is supposed to be in charge of the effort. In at least one case, the State Department refused to even allow a Treasury official to enter a certain foreign country. “Investigators found clear tensions between officials at State, Treasury, Justice, and other US government departments.” Remarkably, private contractors have sometimes been allowed to draft proposed laws for foreign countries to curb terrorist financing. The contractors’ work at times resulted in proposals with “substantial deficiencies.” Generally speaking, the New York Times notes that experts say that the Bush administration’s efforts with terrorist financing has been “spotty, with few clear dents in al-Qaeda’s ability to move money and finance terrorist attacks.” [New York Times, 11/29/2005]

Entity Tags: US Department of State, US Department of the Treasury, Government Accountability Office, Al-Qaeda, Bush administration (43), US Department of Justice

Timeline Tags: Complete 911 Timeline

The Senate learns that the Internal Revenue Service (IRS) collected information on the political party affiliations of taxpayers in 20 states during extensive investigations into tax dodgers. Senator Patty Murray (D-WA), a member of an appropriations subcommittee that oversees the IRS, calls the practice “an outrageous violation of the public trust.” The IRS blames the information collection on a third-party vendor who has been told to screen out the information, and claims that it never used the party information it did collect. IRS spokesman John Lipold says, “The bottom line is that we have never used this information. There are strict laws in place that forbid it.” Murray says she learned of the practice from the National Treasury Employees Union (NTEU). The IRS is part of the US Treasury Department. Colleen Kelly of the NTEU says that several IRS employees had complained to the NTEU about the collection of party identification, but that the IRS officials she informed about the practice claimed not to know anything about it. Deputy IRS Commissioner John Dalrymple told Kelly that the party identification information was automatically collected through a “database platform” supplied by an outside contractor that used voter registration rolls, among other information sources, to find tax dodgers. “This information is appropriately used to locate information on taxpayers whose accounts are delinquent,” Dalrymple claimed. But Murray and Kelly are skeptical. “This agency should not have that type of information,” Murray says. “No one should question whether they are being audited because of party affiliation.” Kelly worries that such improper information collection will continue, especially in light of the fact that the IRS will soon begin using private collection agencies to go after US citizens delinquent on their tax bills. “We think Congress should suspend IRS plans to use private collections agencies until these questions have been resolved,” Kelly says. Murray says that the twenty states in which the IRS collected party affiliation information were Alaska, Arkansas, Colorado, Connecticut, Delaware, Florida, Louisiana, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Rhode Island, South Carolina, Texas, Utah, and Wisconsin. [Tacoma NewsTribune, 1/6/2006]

Entity Tags: Internal Revenue Service, Colleen Kelly, John Dalrymple, John Lipold, National Treasury Employees Union, Patty Murray, US Department of the Treasury

Timeline Tags: Civil Liberties, Elections Before 2000

The Al Haramain Islamic Foundation, a now-defunct Saudi Arabian charitable organization that once operated in Oregon, sues the Bush administration [Associated Press, 2/28/2006] over what it calls illegal surveillance of its telephone and e-mail communications by the National Security Agency, the so-called Terrorist Surveillance Program. The lawsuit may provide the first direct evidence of US residents and citizens being spied upon by the Bush administration’s secret eavesdropping program, according to the lawsuit (see December 15, 2005). According to a source familiar with the case, the NSA monitored telephone conversations between Al Haramain’s director, then in Saudi Arabia, and two US citizens working as lawyers for the organization and operating out of Washington, DC. The lawsuit alleges that the NSA violated the Foreign Intelligence Surveillance Act (see 1978), the US citizens’ Fourth Amendment rights, and the attorney-client privilege. FISA experts say that while they are unfamiliar with the specifics of this lawsuit, they question whether a FISA judge would have allowed surveillance of conversations between US lawyers and their client under the circumstances described in the lawsuit. Other lawsuits have been filed against the Bush administration over suspicions of illegal government wiretapping, but this is the first lawsuit to present classified government documents as evidence to support its contentions. The lawsuit alleges that the NSA illegally intercepted communications between Al Haramain officer Suliman al-Buthe in Saudi Arabia, and its lawyers Wendell Belew and Asim Ghafoor in Washington. One of its most effective pieces of evidence is a document accidentally turned over to the group by the Treasury Department, dated May 24, 2004, that shows the NSA did indeed monitor conversations between Al Haramain officials and lawyers. When Al Haramain officials received the document in late May, 2004, they gave a copy to the Washington Post, whose editors and lawyers decided, under threat of government prosecution, to return the document to the government rather than report on it (see Late May, 2004). [Washington Post, 3/2/2006; Washington Post, 3/3/2006] Lawyer Thomas Nelson, who represents Al Haramain and Belew, later recalls he didn’t realize what the organization had until he read the New York Times’s December 2005 story of the NSA’s secret wiretapping program (see December 15, 2005). “I got up in the morning and read the story, and I thought, ‘My god, we had a log of a wiretap and it may or may not have been the NSA and on further reflection it was NSA,’” Nelson will recall. “So we decided to file a lawsuit.” Nelson and other lawyers were able to retrieve one of the remaining copies of the document, most likely from Saudi Arabia, and turned it over to the court as part of their lawsuit. [Wired News, 3/5/2007]
Al Haramain Designated a Terrorist Organization - In February 2004, the Treasury Department froze the organization’s US financial assets pending an investigation, and in September 2004, designated it a terrorist organization, citing ties to al-Qaeda and alleging financial ties between Al Haramain and the 1998 bombings of two US embassies in Africa (see 10:35-10:39 a.m., August 7, 1998). The organization was disbanded by the Saudi Arabian government in June 2004 and folded into an “umbrella” private Saudi charitable organization, the Saudi National Commission for Relief and Charity Work Abroad (see March 2002-September 2004). In February 2005, the organization was indicted for conspiring to funnel money to Islamist fighters in Chechnya. The charges were later dropped. [US Treasury Department, 9/9/2004; Washington Post, 3/2/2006] The United Nations has banned the organization, saying it has ties to the Taliban. [United Nations, 7/27/2007]
Challenging Designation - In its lawsuit, Al Haramain is also demanding that its designation as a terrorist organization be reversed. It says it can prove that its financial support for Chechen Muslims was entirely humanitarian, with no connections to terrorism or violence, and that the Treasury Department has never provided any evidence for its claims that Al Haramain is linked to al-Qaeda or has funded terrorist activities. [Associated Press, 8/6/2007] The lawsuit also asks for $1 million in damages, and the unfreezing of Al Haramain’s US assets. [Associated Press, 8/5/2007]
Administration Seeks to Have Lawsuit Dismissed - The Bush administration will seek to have the lawsuit thrown out on grounds of national security and executive privilege (see Late 2006-July 2007, Mid-2007).

Entity Tags: Wendell Belew, Suliman al-Buthe, Taliban, Washington Post, United Nations, Saudi National Commission for Relief and Charity Work Abroad, US Department of the Treasury, National Security Agency, Thomas Nelson, Foreign Intelligence Surveillance Act, Al Haramain Islamic Foundation, Al-Qaeda, Al Haramain Islamic Foundation (Oregon branch), Foreign Intelligence Surveillance Court, Asim Ghafoor, Bush administration (43)

Timeline Tags: Civil Liberties

The US and UN finally officially designates the Philippines and Indonesian branches of the International Islamic Relief Organization (IIRO) as a financier of terrorism. Abdul Al-Hamid Sulaiman Al-Mujil, executive director of the IRRO’s far east division, is similarly designated as well. The IIRO is a major charity connected to the Saudi government that has long been suspected of financing Islamic militant groups (see January 1996). It was reported shortly after 9/11 that the US left the IIRO off a list of designated terrorism financiers so as to not embarrass the Saudi government (see October 12, 2001). The Philippine IIRO branch in particular has been publicly accused of funding al-Qaeda since the mid-1990s, due to the activities of Mohammed Jamal Khalifa, bin Laden’s brother-in-law who headed that branch when he funded the Bojinka plot in the early 1990s (see 1987-1991). [Associated Press, 8/3/2006; Manila Times, 12/12/2006] A US Treasury Department press release says Al-Mujil has been nicknamed the “million dollar man” for his “long history of providing support to terrorist organizations.” He is accused of funding the Abu Sayyaf group in the Philippines and Jemaah Islamiyah in Indonesia. He is said to have had relationships with bin Laden and Khalid Shaikh Mohammed. The press release also calls “a senior al-Qaeda member” and accuses the current director of the IIRO’s Philippine branch, Abd al-Hadi Daguit, “a trusted associate of Khalifa.” But curiously, Khalifa himself is still not officially listed, nor is Daguit. He will die in mysterious circumstances several months later. [Treasury Department, 8/3/2006]

Entity Tags: Abu Sayyaf, US Department of the Treasury, Osama bin Laden, Khalid Shaikh Mohammed, Al-Qaeda, International Islamic Relief Organization, Abd al-Hadi Daguit, Abdul Al-Hamid Sulaiman Al-Mujil, Jemaah Islamiyah

Timeline Tags: Complete 911 Timeline

Ahmed Idris Nasreddin is quietly removed from the US and UN terrorist financier lists. Neither the US nor the UN publicly announces the decision or explains why his name is no longer on an updated list of financiers. Nasreddin, a 78-year old businessman based in Italy and Switzerland, was formally listed in 2002 due to his ties with the banned Al Taqwa Bank (see November 7, 2001). That bank was considered one of the top funders for al-Qaeda and other militant groups until it was banned in late 2001. When asked by the Los Angeles Times about the delisting, the Treasury Department says the original listing was appropriate but Nasreddin was delisted because he submitted signed statements certifying he had terminated all business relationships with Al Taqwa and related entities and individuals. Former State Department official Victor Comras complains: “They seem to be saying that he was a bad guy but that he has renounced being a bad guy. If that’s the criteria, wow, a lot of people will try to get off the list. All they have to do is say, We’re not doing it anymore.” [Los Angeles Times, 11/28/2007]

Entity Tags: Al Taqwa Bank, Ahmed Idris Nasreddin, Victor Comras, US Department of the Treasury, United Nations

Timeline Tags: Complete 911 Timeline

A front page article in the Los Angeles Times reports that the US effort to fight the financing of terrorism is “foundering.” Insiders complain that the Bush administration’s efforts are stumbling over legal difficulties, interagency fighting, and disagreements with allied nations. Michael Jacobson, a recently retired senior adviser in the Treasury Department’s Office of Terrorism and Financial Intelligence, says, “The international cooperation and focus is dropping, the farther we get from 9/11.” The Times notes that “Saudi Arabia, Pakistan and other key nations have not taken the necessary steps to crack down on terrorist financing or suspect money flowing across their borders.” Designations of terrorist financiers has slowed to a “trickle.” Militant groups are also using methods that are harder to trace, including sending money by donkey or mule. Robert Grenier, recently retired director of the CIA’s Counterterrorist Center, says the US has exaggerated the successes of financial enforcement: “There’s been a lot of work done on it, a lot of focus. But as a method for identifying and capturing terrorists, it has not been significant.” [Los Angeles Times, 3/24/2008]

Entity Tags: Robert Grenier, US Department of the Treasury, Counterterrorist Center, Michael Jacobson

Timeline Tags: Complete 911 Timeline

Former national security official Norman Bailey admits publicly and on the record that the PROMIS database and search application has been given to the NSA. As Salon magazine points out: “His admission is the first public acknowledgement by a former US intelligence official that the NSA used the PROMIS software.” Bailey also says that the application was given to the Treasury Department for a financial tracking project in the early 1980s that also involved the National Security Council (see 1982-1984). Bailey worked for US governments from the Ronald Reagan era until the George W. Bush administration and, in addition to the 1980s tracking program, he headed a special unit within the Office of the Director of National Intelligence focused on financial intelligence on Cuba and Venezuela in 2006 and 2007. [Salon, 7/23/2008]

Entity Tags: US Department of the Treasury, National Security Agency, Norman Bailey

Timeline Tags: Inslaw and PROMIS

After President Bush and US Treasury Secretary Henry Paulson push through a long-sought change in how bank mergers are taxed, Bloomberg News sues the Federal Reserve for failing to reveal loan recipients. The change will deprive US taxpayers of as much as $140 billion in tax revenue. As the economy continues its downward spiral into what is called the worse economic crisis since the Great Depression, sources say that a late September $700 billion bailout is “a quiet windfall for US banks.” [Washington Post, 11/10/2008] The legality of Treasury-negotiated equity deals for many US banks is questioned by tax attorneys, as well as nearly $2 trillion that Ben Bernanke of the Federal Reserve handed out in emergency loans before the $700 billion Troubled Asset Relief Program, or TARP, was enacted (see October 3, 2008). The Fed refuses to reveal which corporations received loans, or what collateral has been presented. Sources say that this secrecy is a legal violation. The Federal Reserve’s lending is significant because the central bank has stepped into a rescue role that was also the purpose of the TARP bailout plan, although without safeguards put into the TARP legislation by Congress. Total Fed lending topped $2 trillion for the first time and has risen by 140 percent, or $1.172 trillion, in the weeks since Fed governors relaxed the collateral standards on September 14. The difference includes a $788 billion increase in loans to banks through the Fed and $474 billion in other lending, mostly through the central bank’s purchase of Fannie Mae and Freddie Mac bonds. [Bloomberg News, 11/10/2008; AlterNet, 11/14/2008]

Entity Tags: Henry Paulson, Troubled Asset Relief Program, Bloomberg News, Ben Bernanke, US Department of the Treasury, US Federal Reserve, George W. Bush

Timeline Tags: Global Economic Crises

The US Treasury Department freezes the assets of four alleged al-Qaeda operatives. The men are:
bullet Saad bin Laden, son of Osama bin Laden, who has just escaped from house arrest in Iran (see (Between December 2008 and January 2009)). The US seems to think he is linked to terrorist activities, although his family denies it;
bullet Mustafa Hamid, who the Treasury says is a key intermediary between al-Qaeda and the Iranian government;
bullet Muhammad Raba al-Sayid al-Bahtiyti, an Egyptian thought to be a trusted aide to al-Qaeda’s second in command Ayman al-Zawahiri;
bullet Ali Saleh Husain, a logistics operative for al-Qaeda.
In addition to freezing their assets, the Treasury Department prohibits Americans from having financial transactions with the men. [Wall Street Journal, 1/16/2009]

Entity Tags: Al-Qaeda, Mustafa Hamid, Ali Saleh Husain, US Department of the Treasury, Saad bin Laden, Muhammad Raba al-Sayid al-Bahtiyti

Timeline Tags: Complete 911 Timeline

Henry Paulson, the former secretary of the treasury, explains how the recession and market destruction came about on his watch. Part of his problem was his admitted lack of knowledge about regulation and regulatory authorities. “I easily could imagine and expected there to be financial turmoil,” he says. “But the extent of it, okay, I was naive in terms of—I knew a lot about regulation but not nearly as much as I needed to know, and I knew very little about regulatory powers and authorities. I just had not gone into it in that kind of detail. This’ll be the longest we’ve gone in recent history without there being turmoil, and given all the innovation in the private pools of capital and the over-the-counter derivatives and the excesses around the world, we figured that when there was turmoil, and these things were tested for the first time by stress, it would be more significant than anything else. I said at the time, I have a concern that every rally we’re going to have in the financial markets will be a false rally until we break the back of the price correction in real estate. And these things are never over until you have a couple of institutions go that surprise everyone. Bear Stearns can hardly be a shock (see March 15, 2008). But having said that, it’s one thing to see it intellectually and it’s another to see where we are.” [Vanity Fair, 2/2009]

Entity Tags: Bear Stearns, Henry Paulson, US Department of the Treasury, Bush administration (43)

Timeline Tags: Global Economic Crises

US Treasury Secretary Timothy Geithner announces a much bigger plan to rescue the US financial system than previously predicted or envisioned, including a much greater government role in markets and banks since the 1930s (see March 15, 2008). Although the administration provides few details, one central portion of the plan that investors most desired to learn about creates bad banks that rely on taxpayer and private investor funds to purchase and hold bad assets racked up by the banks from subprime mortgages, derivatives, and credit defaults. An additional focal point of the plan stretches the final $350 billion that the Treasury may use for the bailout, relying on the Fed’s capability to create money. This last tranche of funding allows the government to be involved in the management of markets and banks. For example, with the credit markets, the administration and the Fed propose to expand a lending program that spends as much as $1 trillion as a replacement for the $1.2 trillion decline between 2006 and 2008 for the issuance of securities backed primarily by consumer loans. The third component of the plan gives banks new capital to lend, but banks that receive new government assistance will have to cut the salaries and perks of their executives and limit dividends and corporate acquisitions. Banks must also publicly declare more information about their lending practices. With the newly proposed Treasury requirements, banks will have to give monthly statements on how many new loans they make, yet the plan stops short of ordering banks to issue new loans or requiring them to account in detail for the federal money. The Obama administration’s commitment to flood the banking system with funds will combine the $350 billion left in the bailout fund; the rest of the money will be from private investors and the Federal Reserve. Some market observers, along with some federal legislators and economists, criticize the plan for its lack of details. [New York Times, 2/10/2009]

Entity Tags: Obama administration, US Federal Reserve, US Department of the Treasury, Timothy Geithner

Timeline Tags: Global Economic Crises

Citigroup CEO Vikram Pandit is in talks with the US government to increase the amount of public ownership of the bank in a move both politicians and bank bosses hope will avert the need for the ailing corporation to be taken into FDIC receivership (see March 15, 2008). Talks commenced after Citigroup shares dropped more than 20 percent in late trading on Friday, leaving the business with a share value of $10.6 billion, with balance sheet assets of $1.95 trillion. Government receivership of Citigroup is seen as politically unpalatable, and US taxpayers could conceivably own up to 40 percent of Citigroup. Economists see government takeover of the corporation as evidence of other major banks struggling with insolvency. The failure of major banks will have calamitous repercussions. The US treasury says it remains committed to helping the banking industry recover without taking complete control. “Because our economy functions better when financial institutions are well managed in the private ­sector, the strong presumption… is that banks should remain in private hands,” the Treasury Department said in a joint statement with the Federal Reserve. Speculation that a major Wall Street institution could be taken into public ownership toppled the market on Friday, February 20; likely targets were heavily rumored to be Citigroup and Bank of America. Bank of America lost nearly half its share value in three days before rallying late Friday afternoon. The latest talks center on a Treasury Department proposal to convert preference shares in Citigroup into new ordinary shares. This move would not involve additional taxpayer funds, but taxpayers would surrender the guaranteed dividends that come with preference stock, as well as some degree of protection in the event of a corporate collapse. Serious questions remain, such as the price at which new shares are issued. Estimates of the size of the government’s eventual stake range from 25 percent to 40 percent. With this move, Barack Obama’s administration would become a major presence on Citigroup’s ordinary share register, thus diluting the interests of existing investors, and heightening fears of political pressure being brought on US banks. Some analysts suggest that banks relying on taxpayer bail-outs are being encouraged to focus lending and liquidity on the national US market. [Guardian, 2/23/2009]

Entity Tags: Obama administration, Citigroup, Vikram Pandit, US Department of the Treasury, US Federal Reserve

Timeline Tags: Global Economic Crises

Citigroup logo.Citigroup logo. [Source: Citigroup]The latest government bailout gives Citigroup bond holders excellent terms and doesn’t provide the bank with new money. Instead, Citigroup cut expenses with the elimination of preferred stock dividends, and also converted shares into common equity at an above-market-value of $3.25, positioning itself to take the first hit if it encounters additional losses. Analysts are predicting that the company’s losses will continue to increase. Since the beginning of 2009, Citigroup’s stock has fallen 78 percent. “Debt holders could eventually be required to participate in further government-led restructuring actions,” Standard and Poor’s says. [Bloomberg, 3/2/2009] Citigroup CEO Vikram Pandit tells investors that increasing the bank’s “tangible” common equity from $29.7 billion to as much as $81 billion should “take confidence issues off the table,” about the bank’s loss absorption ability. The bank lost $27.7 billion in 2008, and is predicted to lose $1.24 billion during the first six months of 2009. “There’s no difference here,” says Christopher Whalen, co-founder of Institutional Risk Analytics, a Torrance, California risk-advisory firm. “It won’t fix revenue, and you’re still going to see loss rates.” Whalen says that the government’s efforts are mainly protecting other financial institutions and foreign goverments that are Citigroup bonds holders. “The taxpayer is funding the operating loss and protecting the bondholders,” Whalen notes. “The subsidy for the banks will become one of the biggest lines in Washington’s budget.”
Government Should Organize Citigroup, AIG Bondholders - Whalen also says it would be better if the government organized Citigroup and insurer American International Group Inc. bondholders, since the insurer received a $150 billion US bailout, and also made a deal with the government to convert some of its debt to equity. US government investment fell by more than 50 percent, and the government plans to convert up to $25 billion of its preferred stock to common shares, gaining a 36 percent stake in the bank. At Friday’s closing price of $1.50, government investment is worth approximately $11.5 billion. The bank itself has a stock market value of $8.2 billion as of market closing on February 27.
Analyst: Investors Should Avoid Citigroup Shares - Richard Ramsden, head of a group of analysts at Goldman Sachs Group, recommends that investors avoid investing in Citigroup shares: “It is unclear whether this is the last round of capital restructuring, which means that existing equity may be further diluted in the future.” The bank’s move to convert preferred shares to common equity led Moody’s Investors Service to adjust its senior debt rating for the bank from A3 to A2. Standard and Poor’s also changed its outlook on the bank’s debt from negative to stable. “Citi will face a tough credit cycle in the next two years, which will likely result in weak and volatile earnings,” S&P analyst Scott Sprinzen says. “We cannot rule out the possibility that further government support may prove necessary.” With the first two Citigroup rescue bailouts, the US Treasury bought $45 billion of preferred stock, and the Federal Reserve and FDIC guaranteed the bank against all but $29 billion of losses on a $301 billion portfolio of assets. With the third bailout, the Treasury, the Government of Singapore Investment Corporation, Saudi Prince Alwaleed bin Talal, and other preferred stockholders, agreed to take common stock at $3.25 a share, giving up dividends. The chairman of the House Ways and Means Committee, Charles Rangel (D-NY), says: “The administration and the past administration have tried so many different ways that we can only hope and pray that this time they get it right. It seems like with the banks it is a never-ending thing.” [Bloomberg, 2/28/2009]
Third US Rescue Forces Citigroup Board Changes - The Obama administration demonstrated its willingness to force changes on executives at top banks that receive taxpayer-funded rescue packages by pressing Citigroup to reorganize its 15-member board with new, more independent members. The move sends a message to Wall Street that there are consequences when taxpayer dollars are used to save them. “The government is the new boss, and the new executive committee is no longer on Park Avenue,” says Michael Holland who, as chairman and founder of New York’s Holland & Co., manages nearly $4 billion in investments. [Bloomberg, 3/2/2009]

Entity Tags: Government of Singapore Investment Corporation, Christopher Whalen, Charles Rangel, Alwaleed bin Talal, AIG (American International Group, Inc.), Federal Deposit Insurance Corporation, Vikram Pandit, US Department of the Treasury, Citigroup, Richard Ramsden, Moody’s Investors Service, Standard & Poor’s, Michael Holland, Institutional Risk Analytics, Scott Sprinzen, US Federal Reserve

Timeline Tags: Global Economic Crises

On the same day AIG announces the biggest loss ever in corporate history (see October-November 2008), the bailout of the troubled insurer is again increased and its terms eased. First, the US Treasury and Federal Reserve announce a plan to spend up to $30 billion more on preferred shares. However, the Treasury says the dividend on preferred stock, previously 10 percent, might fall. In addition, the bailout’s terms and conditions are altered to give the insurer a billion-dollar-a-year break on interest and dividend payments. [Bloomberg, 3/5/2009; Reuters, 4/17/2009] The size of the bailout, initially $85 billion, has now more than doubled, and the terms have been eased repeatedly (see September 16, 2008, October 8, 2008, and November 10, 2008).

Entity Tags: US Federal Reserve, AIG (American International Group, Inc.), US Department of the Treasury

Timeline Tags: Global Economic Crises

Having received over $170 billion in taxpayer bailout funds in the last five months, troubled insurance giant American International Group (AIG) pays executives nearly $200 million in bonuses. The largest are bonus payouts that cover AIG Financial Products executives who sold risky credit default swap contracts that caused huge losses for the insurer (see September 16, 2008). Despite a request by US Treasury Secretary Timothy Geithner for the insurance conglomerate to curtail future bonus pay—and AIG’s agreement to do so—the global insurer cuts bonus checks on Sunday, March 15, 2009, in order to meet a bonus payment agreement deadline. The Treasury Department has publicly acknowledged that the government does not have the legal authority to block current bonus payments, although AIG stated in early March that it suffered its largest corporate loss in history, when it reported fourth quarter 2008 losses of $61.7 billion.
Treasury Tried to Prevent Payments - An anonymous Obama administration official says that on March 11 Geithner called AIG Chairman Edward Liddy demanding that the CEO renegotiate the insurer’s present bonus structure. In a letter, Liddy informed Geithner that outside lawyers had advised AIG that the company could face lawsuits, should they not make the contractually obligated payments. “AIG’s hands are tied,” Liddy wrote, although acknowledging that, with the company’s fiduciary situation, he found it “distasteful and difficult” to approve and pay the bonuses. He wrote that the early 2008 bonus payments agreement was entered into prior to the company being forced last fall to obtain the first taxpayer bailout because of the company’s severe financial distress.
Some Monies Already Paid Out - A white paper generated by AIG asserted that the firm had already distributed $55 million in “retention pay” to nearly 400 AIG Financial Products employees. According to the white paper, the global entity “will labor to reduce 2009 bonus payment amounts,” trimming payouts by at least 30 percent this year. [Associated Press, 3/15/2009]

Entity Tags: Edward Liddy, AIG (American International Group, Inc.), Timothy Geithner, US Department of the Treasury

Timeline Tags: Global Economic Crises

In a speech to the Tulsa Chamber of Commerce, Federal Reserve Bank of Kansas City President Thomas Hoenig declares that US banks’ ability to remain viable during a deeper recession—while undergoing federal government stress tests—demonstrates that most don’t need more taxpayer money. “Although the United States has several thousand banks, only 19 have more than $100 billion of assets,” Hoenig says. “After supervising authorities evaluate their condition, it is likely that few would require further government intervention.” Designed to demonstrate how much extra capital banks may need to survive a deeper economic downturn, the stress tests are to conclude by April 30, 2009, with the 19 biggest banks’ test results to be disseminated to President Barack Obama in meetings with his economic team. Hoenig reiterates his view that the government shouldn’t prop up failing financial institutions but take them over temporarily and wind them down, as with the 1984 takeover of Continental Illinois National Bank & Trust Co. “I encourage Congress to enact a new resolution process for systematically important firms,” he says. “There has been much talk lately about a new resolution process for systemically important firms that Congress could enact, and implement it as quickly as possible, but we do not have to wait for new authority. We can act immediately, using essentially the same steps we used for Continental. An extremely large firm that has failed would have to be temporarily operated as a conservatorship or a bridge organization and then reprivatized as quickly as is economically feasible. We cannot simply add more capital without a change in the firm’s ownership and management and expect different outcomes.” Hoenig declares that calling a firm “too big to fail” is a “misstatement” because a bank deemed insolvent “has failed.” “I believe that failure is an option,” he says. After the government’s fourth rescue of American International Group Inc. (AIG), Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke called for new powers to take over and sell off failing financial companies, and also called for stronger regulation to constrict risks that might endanger the financial system. The Federal Deposit Insurance Corporation has the authority to take over failing firms, and dispose of their assets, but no such authority exists for non-banking financial firms such as a hedge fund or AIG, which have extensive links throughout the banking system. During a Q&A after his speech, Hoenig tells the audience that the Fed must be prepared to make a timely removal of its stimulus to deter a period of high inflation that could be likened to that of the early 1980s. “You cannot wait until you know for sure the economy is recovering,” Hoenig says, adding that “employment growth tends to lag” and may not be the best indicator of recovery. “We will watch every indicator of data that suggests we have a recovery under way.” He also says that if the US manages its economy well, the US dollar should remain the world’s reserve currency. “It is a matter of running your economy properly,” he says. “When the US does that, and I think we will, I think we will remain the largest, most successful reserve currency on the face of the earth.” [Bloomberg, 4/9/2009]

Entity Tags: Federal Deposit Insurance Corporation, AIG (American International Group, Inc.), Ben Bernanke, US Federal Reserve, Thomas Hoenig, Timothy Geithner, US Department of the Treasury

Timeline Tags: Global Economic Crises

President Barack Obama implements a home mortgage rescue plan that he says will prevent as many as 9 million Americans from losing their homes to foreclosure. Obama says that turning around the battered economy requires stemming the continuing tide of foreclosures. He says that the housing crisis that began last year set many other factors in motion and helped lead to the current, widening recession. “In the end, all of us are paying a price for this home mortgage crisis,” Obama says. “All of us will pay an even steeper price if we allow this crisis to deepen. The American dream is being tested by a home mortgage crisis that not only threatens the stability of our economy but also the stability of families and neighborhoods. While this crisis is vast, it begins just one house and one family at a time.” Of the nearly 52 million US homeowners with a mortgage, about 13.8 million, or nearly 27 percent, owe more on their mortgage than their home is currently worth. Obama’s plan contains three initiatives:
bullet Fannie Mae and Freddie Mac homeowners owing between 80 and 105 percent of what their homes are worth can refinance their mortgage. Prior to implementation of the rescue plan, only those borrowers with at least 20 percent home equity could refinance. Refinancing at a lower rate may save borrowers thousands of dollars yearly on their mortgage payments.
bullet Banks will be encouraged to work with homeowners to modify existing mortgages, which is different from refinancing. The Bush administration plan, “Hope for Homeowners,” passed late in 2008, tried to do what Obama has now accomplished, but, since banks were not eager to modify terms to help people stay in their houses, the Bush plan is considered a failure. Under Obama’s plan, banks who received TARP funding will have to participate and, if they do not, Obama may request that the Congress allow bankruptcy judges to modify mortgage terms. Before Obama’s new plan, judges already had the power to modify mortgage terms on a homeowner’s second and third homes, although not on their primary residences.
bullet Interest rates will be kept low by having the Treasury Department buy up mortgage-backed securities from Fannie Mae and Freddie Mac, in the hope of re-inflating the market for mortgage-related products, even if Treasury may be overpaying for toxic assets in a market with few, if any, other buyers. [Mother Jones, 2/18/2009; CNN, 4/16/2009]

Entity Tags: US Department of the Treasury, Barack Obama, Fannie Mae, Freddie Mac, George W. Bush, Troubled Asset Relief Program

Timeline Tags: Global Economic Crises

Wells Fargo & Co. confirms that it is not one of the 10 megabanks that will repay TARP capital and also says it is not hastening to repay the money. There had been rumors, perhaps because it had objected to the TARP funding in 2008, that Wells was prepared to write a check to repay its $25-billion TARP infusion—at any given moment—to escape government restrictions on executive pay, dividends, etc., but these rumors are now found to be false. The San Francisco-based bank bought Wachovia Corporation last year when it was on the verge of collapse and in its statement Wells cites its need to focus on assimilating loss-ridden Wachovia. “We want to pay back the government’s investment on behalf of the US taxpayer at the earliest practical date, but we haven’t applied yet to our regulators to repay the investment,” the statement says. From the beginning, Wells Chairman Richard Kovacevich stoked anti-TARP sentiment and opposed his bank’s inclusion in the program. Mr. Kovacevich said then-Treasury Secretary Henry Paulson “forced” the money on the bank because Mr. Paulson believed that all of the nation’s largest banks should have been TARP participants so that none appeared to be singled out for federal involvement. Mr. Kovacevich also attacked the government’s “stress test” of the 19 major banks to determine whether they had enough capital to survive a worse-than-expected economy over the next two years. “We do stress tests all the time on all of our portfolios,” Kovacevich said, according to Bloomberg News. “We share those stress tests with our regulators. It is absolutely asinine that somebody would announce we’re going to do stress tests for banks and we’ll give you the answer in 12 weeks.” On May 7, the Federal Reserve judged Wells and nine other major banks short of capital and Wells was ordered to raise $13.7 billion in additional capital by November 2009. The following day, Wells quickly raised $8.6 billion in a stock sale. Wells says it will “work closely with our regulators to determine the appropriate time to repay the TARP funds while maintaining strong capital levels.” [Los Angeles Times, 6/9/2009]

Entity Tags: US Department of the Treasury, Richard Kovacevich, Wells Fargo Bank, N.A., US Federal Reserve, Wachovia Bank, N.A.

Timeline Tags: Global Economic Crises

The Congressional Oversight Panel, charged with monitoring the $700 billion TARP, says that as long as banks keep large amounts of toxic assets on their books, regulators should conduct stress tests on them. Noting that the worst-case unemployment rate used in recent bank stress tests will soon be surpassed, panel chair and Harvard law professor Elizabeth Warren tells Congress’s Joint Economic Committee, “We have not actually broken through the worst-case scenario, but the numbers are bad and they’re heading in the wrong direction.” The Congressional Oversight Panel, which includes a former senator and a current member of the House of Representatives, also advocates replicate periodic tests as long as banks hold “appreciable amounts” of illiquid mortgage securities. Warren says the “US unemployment rate average for 2009, now at 8.5 percent, will soon exceed the 8.9 percent as the worst-case scenario used in regulators’ capital evaluations of the 19 largest US bank holding companies.” Unemployment climbed to 9.4 percent in May; many analysts expect the rate to increase. “The worst-case scenario number for 2009 is in fact not the worst case. We’re going to see worse numbers,” Warren affirms. Ordered for the top 19 US bank holding companies by the US Treasury Department, the panel’s monthly report says the stress tests used a risk-modeling approach that, in its totality, was “reasonable and conservative.” However, the panel also says that an external party would find it impossible to imitate the loss projections forming the core of the tests. Warren adds that to ensure they are valued properly, the oversight panel will also review transactions in which banks repurchase stock warrants from the Treasury. Valuation of warrants, intended to provide taxpayers a potential for gains from government capital injections, will be a key focus of the panel’s July report. While the panel’s report acknowledges that the stress tests had a positive effect on market confidence, it cautions against assigning too much value to them. “They do not model bank holding company performance under ‘worst case’ scenarios and, as a result, they do not project the capital necessary to prevent banks from being stressed to near the breaking point,” the panel says. Warren notes her oversight board was rebuffed although it “pressed really hard on the Fed” for more stress test details. She adds that the Treasury under Secretary Timothy Geithner has been more open. She also tells lawmakers that giving the panel subpoena power would make it easier to acquire documents and testimony from officials at Treasury and the Federal Reserve. [Reuters, 6/9/2009]

Entity Tags: Timothy Geithner, US Department of the Treasury, Elizabeth Warren, US Federal Reserve

Timeline Tags: Global Economic Crises

The US Treasury Department concludes that financial firms American Express, Bank of New York Mellon, Branch Banking & Trust (BB&T), Capital One Financial, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Northern Trust, State Street, and US Bancorp can return $68.3 billion in emergency bailout funds to government coffers although some of the banks have assets that are still government-controlled, with warrants worth approximately $4.6 billion. Twenty-two smaller banks already returned $1.9 billion. Morgan Stanley receives Treasury permission to return its TARP funding despite bank stress test details released early last May ordering the bank to increase its capital cushion fund by raising $1.8 billion. In a Treasury release, Secretary Timothy Geithner explains, “These repayments are an encouraging sign of financial repair, but we still have work to do.” President Obama comments that the ability of companies to repay the government does not detract from the need for reform. “The return of these funds does not provide forgiveness for past excesses or permission for future misdeeds,” he says. “This is not a sign that our troubles are over. Far from it.” [United Press International, 6/9/2009; New York Times, 6/9/2009]

Entity Tags: Capital One Financial, Bank of New York Mellon, American Express, Branch Banking & Trust (BB&T), US Bancorp, US Department of the Treasury, State Street, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Northern Trust, Barack Obama, Timothy Geithner

Timeline Tags: Global Economic Crises

Since implementing a program to help millions of homeowners restructure their mortgages to prevent foreclosure, only 235,247 loans have actually been modified, according to the US Treasury Department in its first progress report. After the plan was announced in February, the first banking institutions began accepting applications in April. Between now and 2012, the Obama administration says it is on track to assist 4 million homeowners. The report occurs a week after the administration summoned institutions to Washington to discuss speeding up the program after large numbers of borrowers’ complaints that assistance was barely occurring. The Obama administration plans 500,000 modifications by November 1, and hopes to hold the institutions responsible for their performance with the release of monthly reports that allow consumers to see which banks are slow to implement the plan. So far, institutions have extended offers to 15 percent or 406,542 homeowners in danger of losing their homes, with uneven performances by 38 participating servicers. Morgan Stanley’s subsidiary, Saxon Mortgage Services, tops the list with 25 percent of its delinquent loans placed in trial modifications. Saxon is followed by Aurora Loan Services, a Lehman Brothers Bank subsidiary, with 21 percent. GMAC Mortgage, partially owned by the US government, has put 20 percent of its troubled loans into trial modifications, while major banks JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America have late loan trial modifications of 20 percent, 15 percent, 6 percent, and 5 percent respectively. The lenders acknowledge that they must improve their performance, and say that they are committed to President Obama’s foreclosure prevention plan, stressing that they were already performing modifications prior to the administration’s program. Wells Fargo says that it will soon have the ability to send eligible borrowers trial modification agreements within 48 hours. “We set a high bar for ourselves in terms of customer service, and we didn’t hit that bar in all cases in the first seven months of this year,” says Mike Heid, co-president of Wells Fargo Home Mortgage, “We have added 4,000 employees to our loan workout division this year. JPMorgan Chase says it has another 150,000 applications in need of processing and is currently training an extra 950 workout specialists hired earlier in 2009, bringing its modification staff to 3,500 people. “We know we’ve got more work to do,” says Chase spokesman Tom Kelly. “But the bank is pleased with its performance to date.” CitiGroup’s mortgage agency, CitiMortgage, added 1,400 staffers to its modification team, with 800 dedicated to loss mitigation at its recently opened Tucson, AZ call center. It began placing troubled borrowers in trial modifications in early June. “In the next quarter, one can expect the pace will be even higher,” Sanjiv Das, CitiMortgage head, says. Bank of America says it needs to improve its reach out efforts, while noting that it holds nearly one in four trial modifications offered under the Obama plan and has extended nearly 100,000 offers, although only 28,000 trial modifications are in process. Bank of America purchased mortgage giant Countrywide Financial last year, and has the largest number of eligible delinquent loans with almost 800,000. Borrowers have been pressuring the Obama administration as well as servicers and are complaining that servicers are not responding to applications and calls, are losing their paperwork, and are not making timely decisions. Servicers say they are increasing their staffing and upgrading their computer systems to handle the hefty increase in applications. Says Michael Barr, assistant US Treasury secretary for financial institutions, “We are working with servicers to ensure that they can adequately implement the program and servicers are increasing staff and training, but they must also treat borrowers more respectfully and respond in a much timelier manner.” [CNN News, 8/9/2009]

Entity Tags: Countrywide Financial, Wells Fargo Bank, N.A., Bank of America, Aurora Loan Services, US Department of the Treasury, Citigroup, Tom Kelly, Sanjiv Das, GMAC, JP Morgan Chase, CitiMortgage, Lehman Brothers, Morgan Stanley, Michael Barr, Saxon Mortgage Services

Timeline Tags: Global Economic Crises

Having received what the Obama administration calls “exceptional assistance,” American International Group (AIG), Citigroup, Bank of America, General Motors (GM), GMAC, Chrysler, and Chrysler Financial are now meeting with executive pay czar, Kenneth Feinberg, and must submit 2009 pay plans for their top 25 executives. In turn, Feinberg must perform a 60-day assessment while working with the seven companies on their salary configurations. Plans for the other 75 executives of the seven corporations are due later. Exorbitant executive pay and bonuses has its critics, with many outraged that the companies are collecting taxpayer money only to pay out expensive bonuses during a massive recession. Others fear that the feds have insinuated themselves too deeply into private business affairs. Feinberg himself admits that his job has built-in conflicts. “Historically, the American people frown on the notion of government insinuating itself into the private marketplace,” he says in an interview, one day after his appointment. “My answer to those critics is I understand that concern, I share that concern, and the question is how do you strike a balance between that legitimate concern and the populist outrage at prior industry compensation practices?” The Obama administration has already seen and experienced taxpayers’ fury; Feinberg hopes to avoid such outrage. Corporations must prove to him that they are rewarding good performance and discouraging undue risk-taking. “We are not going to provide a running commentary on that process, but it’s clear that Mr. Feinberg has broad authority to make sure that compensation at those firms strikes an appropriate balance,” say US Treasury Department spokespersons, while noting that Feinberg can’t force companies to renege on contract obligations executed prior to February 12, 2009. However, this hasn’t prevented cries of foul play by critics upset over excessive government interference in private businesses. “No matter which way I turn, you’re facing criticism either from those who are appalled at what these companies did versus those who question the value of the government getting involved,” Feinberg says. The recently appointed executive compensation czar is used to dealing with contentious sides having served as compensation fund chairman for the families of victims of the September 11 attacks. [ABC News, 8/12/2009]

Entity Tags: Chrysler Financial, AIG (American International Group, Inc.), Bank of America, Citigroup, Chrysler, General Motors, GMAC, US Department of the Treasury

Timeline Tags: Global Economic Crises

Following the furloughs of nearly 8,000 workers in May, Puerto Rico announces that it will lay off an additional 16,970 public workers to prevent a government shutdown as well as to prevent damage to the island’s credit. Government officials are hoping that the layoffs will assist in allaying a $32 billion deficit. Cuts in contract spending, a freeze on hiring, and temporary taxes have already been implemented. The island is in the third year of a recession and the unemployment rate is at 15 percent. Says Carlos Garcia, president of the Government Development Bank of Puerto Rico, “Today is an extremely difficult day for all Puerto Ricans.” Garcia adds that, as a result of the layoffs, the island’s unemployment rate will rise to 17 percent, higher than any US state. Some of the workers will be contracted by the US Treasury to assist in collecting outstanding debts of over $3.6 billion owed by residents, private companies, and other entities. Others will be hired for jobs in education. Most workers will be laid off on or around November 6. According to Garcia, the move could save the island $386 million. “The layoffs are unavoidable,” Governor Luis Fortuno tells Puerto Ricans in a recorded news media event. “Not doing anything would have been devastating to our economy, your pocketbook, your family, and our society,” he says. “It would have meant more increases, more taxes, and another government shutdown.” Organized labor leaders have announced an October 15 protest to be held all over the island. [Huliq News, 9/25/2009; Associated Press, 9/26/2009]

Entity Tags: Carlos Garcia, Luis Fortuno, US Department of the Treasury, Government Development Bank of Puerto Rico, Puerto Rico

Timeline Tags: Global Economic Crises

A US District Court judge awards damages in a lawsuit, finding the NSA illegally monitored the calls of the plaintiffs. The Al Haramain Islamic Foundation and two of its lawyers, Wendell Belew and Asim Ghafoor, sued the US government in 2006 based on evidence that their calls had been monitored; the US Treasury Department inadvertently provided them with an NSA log in August 2004 showing their calls had been monitored in May of that year (see February 28, 2006). In defending against the suit, the Justice Department argued, first under President Bush and then under President Obama, that the case should be dismissed based on the government’s invocation of the state secrets privilege (see March 9, 1953) concerning the NSA log, and that the plaintiffs could not otherwise demonstrate that surveillance had occurred, meaning the plaintiffs had no standing to bring suit. Judge Vaughn Walker rejected these arguments, noting that the plaintiffs had introduced into evidence a speech posted on FBI’s Web site by FBI Deputy Director John Pistole to the American Bankers Association (ABA), in which he said that surveillance had been used to develop a case by the Office of Foreign Assets Control (OFAC) against Al-Haramain, and Congressional testimony by Bush administration officials that disclosed the manner in which electronic surveillance was conducted. In the summary of his decision, Vaughn wrote, “[The Foreign Intelligence Surveillance Act] FISA takes precedence over the state secrets privilege in this case,” and “defendants have failed to meet their burden to [provide] evidence that a FISA warrant was obtained, that plaintiffs were not surveilled or that the surveillance was otherwise lawful.” [Al-Haramain v. Obama, 3/31/2010; Washington Post, 4/1/2010, pp. A04]

Entity Tags: George W. Bush, Asim Ghafoor, Anthony J. Coppolino, Alberto R. Gonzales, Al Haramain Islamic Foundation (Oregon branch), “Justice Department”, Barack Obama, Federal Bureau of Investigation, Robert S. Mueller III, Suliman al-Buthe, Keith Alexander, Eric Holder, US Department of the Treasury, Wendell Belew, Vaughn Walker, National Security Agency

Timeline Tags: Civil Liberties

Alan Binder.Alan Binder. [Source: PBS]TPMDC reporter Brian Beutler notes that many Congressional Republicans, led by but not limited to those who consider themselves “tea party” members (see April 30, 2011), are heeding the advice of a small number of unorthodox financial experts who go against the “common wisdom” that a possible credit default by the US would lead to potential catastrophe among national and global financial markets. The issue centers on Congressional Republicans’ insistence that they will not raise the US debt limit, or debt ceiling, unless the Obama administration gives them a wide array of draconian spending cuts; in the past, raising the US debt limit has been a routine matter, often handled with virtually no debate and little, if any, fanfare. Beutler says that the most influential of these advisors is Stanley Druckenmiller, who made billions managing hedge funds. Druckenmiller’s advice was that the US could weather several days of missed interest payments if the US debt ceiling were not immediately raised without serious consequences. House Budget Committee chairman Paul Ryan (R-WI), House Majority Leader Eric Cantor (R-VA), and Senator Pat Toomey (R-PA) are all echoing Druckenmiller’s claims in media interviews and in Congress. Beutler writes that the newfound popularity of Druckenmiller’s claims “alarms everyone from industry insiders to Treasury officials to economists, conservative and liberal, to non-partisan analysts who say the consequences of the US missing even a single interest payment to a debt-holder would be catastrophic—even if it was followed immediately by a legislative course correction.” Former Federal Reserve chairman Alan Binder, now a Princeton economist, warns that if the US were to default on its debt even for a few days, the US dollar would crash in value, interest rates would spike, and the US economy would find itself spiraling into a full-blown recession. Binder writes: “For as long as anyone can remember, the full faith and credit of the United States has been as good as gold—no one has better credit. But if investors start to see default as part of US political gamesmanship, they will demand compensation for this novel risk. How much? Again, no one can know. But even if it’s as little as 10-20 basis points on the US government’s average borrowing cost, that’s an additional $10 billion to $20 billion in interest expenses every year. Seems like an expensive way to score a political point.” JPMorgan CEO Jamie Dimon agrees, telling PBS viewers: “Every single company with treasuries, every insurance fund, every—every requirement that—it will start snowballing. Automatic, you don’t pay your debt, there will be default by ratings agencies. All short-term financing will disappear. I would have hundreds of work streams working around the world protecting our company for that kind of event.” JPMorgan issued a statement after Dimon’s comment saying that even a brief default would trigger “a run on money market funds… that would leave businesses unable to meet their short-term obligations and teetering on the bring of bankruptcy.” JPMorgan compares the money-market run to the aftermath of the 2008 Lehman Bros collapse, which sent the US into a recession. Analyses and reports by the Treasury Borrowing Advisory Committee and Government Accountability Office have warned of dire consequences following a default even of a day or two. Toomey and others insist that a credit default would simply make the Treasury Department find other ways to avoid missing interest payments, but, economists and financial leaders warn, the consequences of that would be enormous. Binder writes: “If we hit the borrowing wall traveling at full speed, the US government’s total outlays—a complex amalgam that includes everything from Social Security benefits to soldiers’ pay to interest on the national debt—will have to drop by about 40 percent immediately. That translates to roughly $1.5 trillion at annual rates, or about 10 percent of GDP. That’s an enormous fiscal contraction for any economy to withstand, never mind one in a sluggish recovery with 9 percent unemployment.” Druckenmiller and some Republicans believe that forcing a credit default would end up benefiting the country, as the Obama administration would give in to Republican demands for enormous spending cuts in return for Republicans’ agreement to raise the debt ceiling. Business Insider reporter Joe Weisenthal recently wrote: “Of course, a default by the world’s most stable nation would probably have impacts in ways nobody can imagine, but one thing seems to be clear. The notion—as some people suggest—that a default would somehow increase US credit-worthiness is absurd.” [Business Insider, 4/20/2011; New York Times, 4/26/2011; TPMDC, 5/20/2011]

Entity Tags: Government Accountability Office, Eric Cantor, US Department of the Treasury, Alan Binder, Treasury Borrowing Advisory Committee, Stanley Druckenmiller, US Congress, Brian Beutler, JP Morgan Chase, Jamie Dimon, Paul Ryan, Pat Toomey, Joe Weisenthal, Obama administration

Timeline Tags: Global Economic Crises

Representative Michele Bachmann (R-MN) tells a CBS News viewing audience that the Obama administration is lying when it says the US government would default on its loans if Congress refuses to raise the US debt ceiling. Bachmann accuses the Obama administration of using “scare tactics” to push for a debt-ceiling increase. Bachmann has said previously that Congress should not raise the debt ceiling (see April 30, 2011). Treasury Secretary Timothy Geithner and other Obama adminstration members, along with a bevy of economists and financial leaders including Federal Reserve Chairman Ben Bernanke and former Chairman Alan Greenspan, have urged Congress to raise the debt ceiling by August 2 to avoid the US defaulting on its outstanding loans and engendering what many call an economic catastrophe (see May 20, 2011). The US Treasury has used accounting steps, what it calls “extraordinary measures,” to avoid default since the nation reached its debt limit on May 16. The final deadline for the US to raise its debt limit is August 2. Bernanke and others have said that even a brief US default could cause an uproar in the global economy. But Bachmann says she has “no intention” of voting for a hike to the limit, saying instead: “It isn’t true that the government would default on its debt. Because, very simply, the Treasury secretary can pay the interest on the debt first, and then, from there, we have to just prioritize our spending.” Face the Nation host Bob Schieffer asks Bachman: “Experts inside and outside the government say that, if we don’t raise the debt ceiling, we face the United States having to default on its financial obligations. Are you saying these are scare tactics? Or are you saying that’s not true? How can you say that?” Bachmann replies: “It is scare tactics. Because, Bob, the interest on the debt isn’t any more than 10 percent of what we’re taking in. In fact, it’s less than that. And so the Treasury secretary can very simply pay the interest on the debt first, then we’re not in default.… What it means is we have to seriously prioritize. It would be very tough love. But, I have been here long enough in Washington, DC, that I’ve seen smoke and mirrors time and time again.” Bachmann says if elected president, she would end the nation’s deficit problem by making extreme cuts in spending. “I would begin very seriously by cutting spending,” she says. “President Obama, again, he spent a trillion dollar stimulus program that’s been an abject failure. We need to seriously cut back on spending first and foremost, and then prioritize.” Her only recommendation to handle the job crisis is to cut corporate tax rates; she explains: “We have one of the highest corporate tax rates in the world; we need to drop that significantly, so that we have a pro-business, pro-job creation environment. So if we cut back the corporate tax rate, if we would zero out the capital gains rates, allow for 100 percent expensing when a job creator buys equipment for their business, that would go a long way toward job creators recognizing that this is a pro-business environment.” She says that the administration’s health care package, which she calls “Obamacare,” will cost “800,000 jobs.” Schieffer says, “That is data that other people would question,” and she retorts by saying the Congressional Budget Office (CBO), not she herself, has made that claim. A recent analysis by the St. Petersburg Times’s PolitiFact showed that Bachmann’s claim of “Obamacare” costing 800,000 jobs is an “exaggeration” of the CBO’s figures, and is “misleading.” Bachmann dodges questions about the elimination of the minimum wage, which she has advocated since 2005, and the elimination of farm subsidies, from which she and her family have benefited. [CBS News, 6/26/2011]

Entity Tags: CBS News, Alan Greenspan, Barack Obama, Bob Schieffer, US Department of the Treasury, PolitiFact (.org ), Congressional Budget Office, Ben Bernanke, Obama administration, Michele Bachmann, Timothy Geithner

Timeline Tags: Global Economic Crises

The outside of the Standard & Poor’s office complex on Wall Street.The outside of the Standard & Poor’s office complex on Wall Street. [Source: Satellite Radio Playground (.com)]The US loses its top-rank AAA credit rating from the financial services company Standard & Poor’s; the firm drops the US credit rating one notch to AA-plus. The US has never had anything but top-tier credit ratings in its financial history, and has top credit ratings from S&P since 1941. S&P makes its decision based on the huge Congressional battle over raising the US’s debt ceiling, normally a routine procedural matter that was used by Congressional Republicans, who threatened to block the ceiling raise unless they were given dramatic spending cuts by the entire Congress and the White House. (House Speaker John Boehner (R-OH) boasted that he and his Republican colleagues got “98 percent” of what they wanted in the debt ceiling deal—see August 1, 2011.) Because of the dispute, the US was hours away from an unprecedented credit default until legislation was finally signed and the default avoided. S&P also cites the government’s budget deficit and rising debt burden as reasons for the rating reduction, saying in a statement, “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.” The drop in the US credit rating will result in a rise in US borrowing costs for American consumers, companies, and the government. US treasury bonds, once seen as the safest securities in the world, are now rated lower than bonds issued by countries such as Britain, France, Germany, and Canada. S&P says the outlook on the US’s credit rating is “negative,” implying another downgrade is possible in the next 12 to 18 months. A senior investment officer with a West Coast management company says such a downgrade was “once unthinkable,” and says the entire global economic system will be affected. After the fierce Congressional battle, President Obama signed legislation mandating $2.1 trillion in spending cuts over the next decade, but S&P officials had asked for $4 trillion in savings as a “down payment” for restoring the US’s financial stability. Part of S&P’s rationale for the downgrade is its assumption that Congressional Republicans will not allow tax cuts implemented by the Bush administration in 2001 and 2003 to expire as scheduled by the end of 2012. The Obama administration immediately notes that S&P’s made a $2 trillion error in calculating the US debt, an error that the firm acknowledges but says does not affect its decision to downgrade the US credit rating. A Treasury Department spokeswoman says, “A judgment flawed by a $2 trillion error speaks for itself.” [New York Times, 8/5/2011; Reuters, 8/6/2011] Credit rating agencies such as S&P have suffered tremendous damage to their credibility in recent years; a Congressional panel called the firms “essential cogs in the wheel of financial destruction” after what the New York Times calls “their wildly optimistic models [that] led them to give top-flight reviews to complex mortgage securities that later collapsed.” [New York Times, 8/5/2011]
S&P Explains Decision: 'Political Brinksmanship' - S&P explains its decision in a press release. The firm is “pessimistic about the capacity of Congress and the [Obama a]dministration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.” Fiscal policy decisions between Congress and the White House, the firm says, “will remain a contentious and fitful process.” The firm accuses Congressional Republicans in particular of “political brinksmanship” in threatening to allow a debt default if their conditions were not met, and says such tactics destabilize both the US and the global economy. “The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy,” the firm says. “[T]he majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the” legislation. “The outlook on the long-term rating is negative.” [Standard and Poor's, 8/5/2011] In an email before the debt ceiling was raised, S&P’s global head of sovereign ratings wrote: “What’s changed is the political gridlock. Even now, it’s an open question as to whether or when Congress and the administration can agree on fiscal measures that will stabilize the upward trajectory of the US government debt burden.” [New York Times, 8/5/2011]
GOP Presidential Candidates, Congressional Members Blame Obama - The day after the downgrade, Republicans in Congress and on the campaign trail blame the Obama administration for the downgrade (see August 6-9, 2011).
Economist Lambasts S&P, Blames Congressional Republicans - Nobel Prize-winning economist Paul Krugman lambasts S&P and blames Congressional Republicans for the downgrade (see August 5-6, 2011).

Entity Tags: US Congress, US House of Representatives, Timothy Geithner, Paul Krugman, Obama administration, Barack Obama, John Boehner, New York Times, Standard & Poor’s, US Department of the Treasury

Timeline Tags: Global Economic Crises

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