The New York Times devoted a lot of ink to the BushAdministration’s practice of secretly rummaging through internationalbanking transactions in pursuit of terrorists. But, frankly, I had ahard time grasping the scandal.

After all, the Treasury announced it was going to do something likethis after 9/ll — a legitimate, legal method of discovering thenetworks financing terrorist cells.

So I called an old friend and source for elucidation. Jack Blum is alegendary investigator and lawyer in Washington, who for decades hastenaciously uncovered the global flows of dirty money. Jack confirmedmy hunch. He was outraged, but not by the Times revelations.

The scandal here is not government over-reach, he tells me. Thescandal is the pitiful reluctance of this administration (and othersbefore it) to get serious about the problem.

Bankers, Blum explained, “have fended off every conceivable rule thatwould really be effective. Why are we pandering to them if we say weare in such a desperate situation?”

The political influence of bankers tops all other sectors, I learned asa young reporter. Regardless of party or ideology, politicians seektheir friendship. So the United States has created a truly bizarrebanking code that legalizes–and keeps secret–vast flows ofill-gotten gains. For what purpose? Terrorist financing, yes, butthat business is dwarfed by the drug trade profits, insider looting ofcorporations, offshore tax evasion, securities fraud, plain-vanillafraud and other uses.

The American dollar is lingua fria for illegal commerce andCongress protects the sanctity of its privacy, even allows it thecriminal proceeds to flow freely through government-chartered andregulated financial institutions. This shady business is not aninconsequential profit center for banks (a bit like pornography forMicrosoft).

The monitoring system described by the Times seems unexceptional toBlum. Indeed, his complaint is that it’s so narrowly focused that itmostly harvests empty information. “Meanwhile, the biggest purveyorof terrorist money, as everyone knows, are accounts in Saudi Arabia,”Blum observes. “Nobody will deal with it because the Saudis own half ofAmerica.” An exaggeration, but you get his point.

Blum knows the offshore outposts where US corporations and wealthyAmericans dodge taxes or US regulatory laws. Congress could shut themtomorrow if it chose. Instead, it keeps elaborating new loopholes thatenable the invention of exotic new tax shelters for tainted fortunes. The latest to flourish, he says, are shell corporations– freelychartered by states.

“The GAO says this device is being used for money laundering byeveryone else in the world,” Blum says. “Congress ought to startthere.” He is not holding his breath.

My point is, individual privacy deserves vigorous defense against thegovernment. But who is the victim when the government itself shieldsthe criminals and their bankerly accomplices from exposure?.