Topic: Credit Crunch

An investigation into Wachovia Bank, now owned by Wells Fargo, reveals the laundering of $378 billion for Mexican drug cartels through Casas de Cambio. The discussion posits that the 2007 global credit crunch was triggered when Wachovia was forced to cut ties with these entities, removing a massive source of liquid drug money from the banking system. The bank eventually paid a $110 million fine, which the hosts describe as a fraction of their profits.

Francois-Henri Pinault, the billionaire CEO of PPR and husband of actress Salma Hayek, was briefly held hostage in his car by employees protesting job cuts and wages in France. The hosts note that the story only gained significant traction in the US media due to the celebrity connection to Hayek.

Adam Curry identifies an October 6, 2008, Federal Reserve policy change as a "smoking gun" for the credit crunch. The Fed began paying interest on both required and excess bank reserves, which Curry argues incentivized banks to hoard TARP money rather than lending it. The hosts discuss how this policy shift correlates with the dramatic Dow Jones Industrial Average slide in late 2008.