Matthews failed to challenge Wallace's claim that unless NY Times was "talking to terrorists," they couldn't have known terrorists were already aware of U.S. finance-tracking

On the June 29 edition of MSNBC's Hardball, host Chris Matthews left unchallenged White House communications director Nicolle Wallace's claim that "there is no way" The New York Times could discuss "terrorists already knowing about" a Treasury Department finance-tracking program the Times and other newspapers reported on June 23, "unless they're talking to terrorists." But as Media Matters for America previously noted, the Treasury Department's efforts to track terrorist finances by obtaining international banking records were already a matter of public knowledge prior to June 23 and, according to a Bush administration official, terrorists had changed tactics as a result. Moreover, on the June 26 edition of Hardball, Matthews himself noted that terrorists already knew "[w]e were checking on their electronic financial transfers" and had "started ... carrying it [their money] by hand."

In the wake of the June 23 Times article -- which described the Treasury Department's efforts to track terrorist finances by obtaining records from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), an international banking consortium -- Bush administration officials claimed that the Times had informed terrorists that their international transactions were being monitored. Responding to these claims in a June 25 letter, New York Times executive editor Bill Keller noted that it had already been "widely reported -- indeed, trumpeted by the Treasury Department -- that the U.S. makes every effort to track international financing of terror."

As Media Matters noted, according to a Bush administration official, Al Qaeda terrorists have increasingly avoided using the international banking system, suggesting an awareness of efforts to monitor their transactions. In testimony before Congress in 2004, Treasury Department undersecretary for terrorism and financial intelligence Stuart A. Levey said, "As the formal and informal financial sectors become increasingly inhospitable to financiers of terrorism, we have witnessed an increasing reliance by Al Qaida and terrorist groups on cash couriers. The movement of money via cash couriers is now one of the principal methods that terrorists use to move funds." Additionally, in 2002 and 2003, the Congressional Research Service (CRS) documented terrorists' increased use of alternative money flows, including "informal value transfer [hawala] systems that leave virtually no paper trail."

Further, as Media Matters noted, a United Nations working group learned years ago of the Treasury Department's use of SWIFT, and noted the tactic in a December 2002 report. SWIFT's own website notes its "history of cooperating in good faith with authorities such as central banks, treasury departments, law enforcement agencies and appropriate international organizations, such as the Financial Action Task Force (FATF), in their efforts to combat abuse of the financial system for illegal activities." The Bush administration has repeatedly touted its role as one of the 29 nations working with the FATF "to deny terrorist access to the world financial system."

On the June 26 edition of Hardball, Matthews himself acknowledged that terrorists had "figured out" U.S. efforts to monitor their international banking transactions prior to the publication of the June 23 Times story. During a discussion with Ron Suskind, author of the book The One Percent Doctrine: Deep Inside America's Pursuit of Its Enemies Since 9/11 (Simon & Schuster, June 2006), Matthews told Suskind "you say in your book, rather succinctly, that they figured out our game. We were checking on their electronic financial transfers and they started carrying it by hand." Matthews also stated that "[t]he bad guys know what we know," to which Suskind responded: "Of course Al Qaeda knows we're tracking their finances. They're very, very good of late in the last few years about not leaving electronic trails. That's for a reason."

Matthews later told Suskind: "I don't know why all the other news organizations aren't caught up to this. If they would just read your book ... they would know about this a lot longer than today when Cheney and Bush started yelling."

From the June 29 edition of MSNBC's Hardball with Chris Matthews:

MATTHEWS: Well, let me ask you to -- I'm going to ask you now to defend everybody on the right, here. We had [radio host] Melanie Morgan on the other night, a very bright lady, who said that these guys, Bill Keller on down, deserved 20 years in prison for espionage. Do you agree with that?

WALLACE: You know, no. And I'm not going to get into that and, again, I don't think it's black and white, and I don't think it's good for our country to make it black and white. This is --

MATTHEWS: Well, U.S. Congressman Peter King came on the other night and he said that the only difference between Bill Keller, the executive editor of The New York Times, and Alger Hiss, a Soviet spy from the '30s and '40s right up and through -- right up until Yalta, was spying for the Soviets under Soviet discipline, and he said the only difference between Bill Keller and Alger Hiss was a matter of degree. Do you buy that?

WALLACE: I'm going to let everyone's statements speak for themselves. But look, this shouldn't become -- this shouldn't become a shouting match. This should become a very serious and calm and orderly discussion about a free press.

MATTHEWS: So it's possible that Bill Keller was thinking patriotically; he just had a different judgment than the president. It's possible.

WALLACE: Well, it's not possible he placed as high of a premium as we do and as members of the Congress who are speaking out, as the Democrats that called him and urged him not to run that story, put on this tool, and perhaps he didn't understand the value of the tool. But it's not debatable that The New York Times valued their right to publish the story more than they valued or appreciated the power of this tool.

Let me say one thing, though, about what The New York Times did. They made a crucial mistake in describing our efforts as half-hearted. We made a passionate, vigorous, sustained effort. We had, you know, certainly other -- other partners in contact with The New York Times, trying to help them understand how valuable this tool is.

And there is no way The New York Times, unless they're talking to terrorists, could possibly say some of the things they've said about terrorists already knowing about this tool. How would they know?

MATTHEWS: If New York is such an evil place, Nicolle, why are you moving up there?

WALLACE: Oh, all for love. All for love.

MATTHEWS: Your husband is there.

WALLACE: My husband's there fighting the good fight at the United Nations.

MATTHEWS: It's great to have you. Good luck in your new life up in New York.

WALLACE: Thank you. Thanks, Chris.

MATTHEWS: Nicolle Wallace, communications director for President Bush.

From the June 26 edition of Hardball:

MATTHEWS: That was your point, Ron, in your book, which as I'd like to point -- it takes awhile to get a book published. And in my book I'm reading this weekend, about what you've written months ago, shows up in your book and they're arguing about it as if it's almost like -- I didn't know there was gambling going on here, Rick. I mean, it is not news.

SUSKIND: Well, the fact is we need real debates --

MATTHEWS: The bad guys know what we know.

SUSKIND: This thing with the Times and the government's a false debate. We need a real debate. The fact is, our enemy has adapted. We need to come up with new tools to get them. That's the real debate. It's not about who said what in this case. Of course Al Qaeda knows we're tracking their finances. They're very, very good of late, in the last few years, about not leaving electronic trails. That's for a reason. We need to come up with new tools. Human intelligence is what works here, not so much this.

[...]

MATTHEWS: What you say in your book, I thought it was well done, and I'll just congratulate you. Every war, one side gets an upper hand on the other side for a while, and then the other side figures out the other side's game. In this case, you say in your book, rather succinctly, that they figured out our game. We were checking on their electronic financial transfers, and they started to carry it by hand.

SUSKIND: Absolutely, and we're trying to come up with new games. This is the battle. It's call and response. It's adaption [sic], each one is adapting.

MATTHEWS: I don't know why all the other news organizations aren't caught up to this. If they just read your book -- just to sell it a little bit here -- they would know about this a lot longer than today when Cheney and Bush started yelling.