(Bill Black’s stunning 5-part video interview by TheRealNews has been posted widely. However, most sites, including this one, posted all five with not much information. I’m breaking them down, one video a day, with notes. Emphasis added)
This stuff is bombshell. Black details how the financial crisis was the result of deliberate, organized, well-planned fraud by major financial institutions aided and abetted by both the Bush and Obama Administrations. It’s called control fraud, “fraud controlled from the highest levels of financial institutions and the government.”
Bill Black is an associate professor of economics and law at the University of Missouri – Kansas City (UMKC). He was the executive director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics. He was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel at the Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. Black developed the concept of “control fraud,” in which the CEO or head of state uses the entity as a “weapon.” Control frauds cause greater financial losses than all other forms of property crime combined and kill and maim thousands. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae’s former senior management. He is the author of The Best Way to Rob a Bank is to Own One.
“A systematic Ponzi scheme”
Deliberate conscious fraud. FBI warned of it in 2004. 80% of mortgage fraud comes from the lender, gutting underwriting standards. Then they packaged the fraudulent mortgages and sold them to investors. The senior officers walked away rich. “Failure of the firm is not a failure of the fraud scheme.”
Quoting George Akerlof on how’s the fraud is done.
- Grow like crazy.
- Make deliberately bad loans that aren’t going to be repaid because you can charge higher interest rates.
- Have extraordinary leverage.
- Don’t put on loss reserves in your accounting books. Thus you show a profit. And then senior management can take huge bonuses.
Banks extorted Congress to force FASB to say banks don’t have to recognize losses until they sell them. They don’t have to mark to market. In other words, basic accounting rules are deliberately being ignored. Bernanke was a primary reason this happened, and during the Obama Administration too. “We have negative accountability now.” Unlike the S&L crisis when thousands went to prison, no senior members of these firms have yet. “We have sociopaths in control of our major financial institutions and important levers of government as well.”