Monday, April 4, 2011

What Ron Paul Should Do About the Kid Glove Treatment the U.S. is Giving Gadaffi's Bank

There' some pretty odd goings on with Arab Banking Corp. and the United States government.

The Federal Reserve pumped in huge money amounts of money into the bank during the financial crisis and the Treasury is falling all over itself giving ABC exemptions from the all encompassing freeze the President  has placed on Gaddaffi assets. It certainly suggests that there is more going on behind the curtain. Perhaps it is time to find out.


Libya's central bank now owns 59% of ABC. Despite the fact that it is therefore controlled by Colonel Gaddafi and that the Treasury has frozen all of Gaddafi's assets, the Treasury has given an exemption to ABC.

Here's how the bank reported the exemption:
Arab Banking Corporation (B.S.C.) (“ABC”) confirms that neither ABC nor any of its subsidiaries are subject to the asset freezes specified in the US Executive Order or UN Resolution 1970 and that all members of the ABC Group are able to transact freely in the United States and elsewhere.
Here's how the bank in an email statement to Bloomberg explained the exemption:
ABC’s New York branch conducts wholesale business and plays an important role in helping U.S. companies conduct business in the Middle East. The New York branch of ABC also participates in enhancing the liquidity of U.S. markets and virtually all of its employees are U.S. citizens.
ABC may have U.S. citizens that are employees of its New York branch, but one look at the members of the Board of Directors, or the management team, clearly indicates that no way should this be considered a bank where decisions are made by U.S. citizens (at least regular non-covert banking decisions).

Then there is the unusual bailout of ABC by the Federal Reserve. During the financial crisis, ABC, then only 29% owned by the central bank of Libya,  used its New York branch to get 73 loans from the  Federal Reserve in the 18 months after Lehman Brothers Holdings Inc. collapsed. Aggregate numbers show a total of $73 billion was borrowed. Some of this could have been borrowings rolled over. Net borrowings, according to Bloomberg, could be as low as $5 billion, but still, the last time I looked, $5 billion was not pocket change.

Congressman Ron Paul plans to hold hearings on the loans made by the Federal Reserve to foreign banks. He should certainly ask the Fed how it justifies the loans made to ABC. And since the loans were made at the request of the New York branch, Congressman Paul should haul Davis Siegel, the treasurer of the New York branch, into the hearing and ask him three initial questions: Why did ABC want the money? Who in the government did he talk to about getting the loans? and Where did the money go to that was lent to ABC?

That would be a good start in understanding the relationship between ABC and the United States government.


  1. Those Libyan rebels know their corporate ABC's.

  2. Interesting story. Mr. Wenzel, have you emailed this to Ron Paul? If you haven't, I think it would help if you did.