How NPR Was Conned by Geithner into Censoring My Criticisms

By William K. Black
San Francisco, CA:  November 23, 2014

In December 2013 NPR interviewed me about one the great disgraces of the Obama administration – its refusal to prosecute either the officers or HSBC for laundering roughly $1 billion over the course of the decade for Mexico’s Sinaloa drug cartel.  The NPR story doesn’t name the cartel or inform the listener that it is one of the world’s most violent drug cartels, or that HSBC also routinely violated the money laundering laws on transactions involving tens of trillions of dollars, and covered up its numerous violations of U.S. sanctions on Iran and Burma.

The original NPR story presented my comments on Treasury’s opposition to brining criminal charges.  Those comments were subject to what NPR labeled a “clarification” which meant they were removed from the program.

“Clarification: In an early radio version of this story, a former regulator was quoted speculating that Treasury Secretary Timothy Geithner did not want to put HSBC out of business. We should have made it clear that it is the Justice Department, not the Treasury Department, that made the decision to defer prosecution of HSBC.”

This “clarification” had multiple (minor league) Orwellian elements.  NPR did not clarify, it obfuscated and censored.  The original story was accurate and far cleared.  The “clarification creates a strawman argument that I never made in order to appear to refute my actual position.  The “clarification” was crafted to mislead the listener.  I also became anonymous in the clarification, so that listeners were unable to judge from my background and reputation that the “clarification” was bogus.  By “deferred” prosecution DOJ means non-prosecution, so the clarification mislead the listeners on many dimensions.

Later, we learned from a New York Times article that Treasury Secretary Timothy Geithner’s press flacks had induced NPR to issue its obfuscating “clarification.”  That article, however, never quoted what I had actually said and instead treated Treasury’s strawman construct as if it were I had said.  The article was even stranger because it was written by Ben Protess.  Protess had written prior articles indicating that Treasury opposed prosecutions for elite banks and bankers, which was actually what I told NPR.  This makes Protess’ falling hook, line, sinker, rod, reel, and boat for Treasury’s strawman argument even lamer.

“When Treasury joined the Justice Department in announcing the case in December, a media outlet ran an overnight article in which a professor speculated that Mr. Geithner had not criminally prosecuted HSBC to avoid putting it out of business.

By dawn that day, Treasury officials e-mailed one another about the article. Shortly after, National Public Radio retracted the quote and issued a statement saying that Treasury had not been involved in the decision not to indict HSBC.”

I was that anonymous “professor.”  The quoted passage is not even clever.  I, unlike the Treasury flacks and the NPR and NYT reporters, am a former DOJ lawyers and financial regulator active in assisting the most successful prosecutorial effort against elite white-collar criminals in history.  I spend days of my life every year explaining to reporters and the public the difference between administrative, civil, and criminal actions and who makes the decisions.  I have never told anyone that Geithner makes the actual “decision” whether to prosecute.  What I have said is that when Treasury tells DOJ that prosecuting a bank could lead to a global systemic crisis virtually no Attorney General will prosecute the bank and risk being known as the person who caused a global financial crisis.  No one serious disagrees with my point.  Indeed, earlier in his article Protess says that DOJ guidelines require it to consider the impact of the potential bank failure prior to prosecuting a bank.  DOJ is going to rely on the Treasury and (sadly) the bank’s economists in making that decision.  Protess agrees with my actual statements to NPR though he says the opposite because was conned into falling for the strawman claim invented by Geithner’s flacks.

Fortunately, William Dudley Just Spilled the Beans

William Dudley is the President of the NY Fed.  He testified before a Senate subcommittee and finally admitted the truth that many of us have long been explaining.  The NYT article, sadly, failed to even report Dudley’s admission.  The Huffington Post made it their lead in an article aptly titled: “The Fed Just Acknowledged Its Too Big To Jail Policy.”

“‘We were not willing to find those firms guilty before, because we were worried that if we found them guilty, that could somehow potentially destabilize the financial system,’ Dudley said. ‘We’ve gotten past that and I think it’s really important that we got past that.’

Dudley’s admission was just one of several cringe-worthy exchanges during an hour-long appearance before a committee intent on holding him accountable for regulatory lapses.”

Conclusion

It is time for NPR to clarify its clarification and remove the censored version of my comments and the many disingenuous statements of its faux “clarification.”  It is time for the NYT to correct its endorsement of Treasury’s silly strawman claims against me.  They might even inform their readers which “professor” they were trying to diss.  If the Obama administration can (a mere six years later) come clean about its repeal of the rule of law for elite banks and bankers NPR and the NYT should also embrace belated glasnost.  Getting conned by Geithner’s press flacks requires the cleansing absolution that can only come from confession and contrition.

10 Responses to How NPR Was Conned by Geithner into Censoring My Criticisms

  1. Charles Hayden

    Looks to me like NPR jacked up the link to its “clarification” ???

    Also, “We’re not worthy….” and all that.

    Happy T-Day. Everybody is thankful for Bill Black and NEP.

  2. Charles Hayden

    Nah, it’s up and running.

  3. Geithner and his acolytes may still be gloating, but their day of reckoning will come. Financial fraud on this scale will be exposed and punished!

    And your good name will be redeemed, Dr. Black, I have no doubt.

  4. justin synnestvedt

    Prof. Black,
    I enjoy your blogs and appreciate the unbelievable amount of good you do here and abroad to help governments and populations improve their economies and protect against oligarchic abuses. For those who know of your work, your reputation isn’t a problem. For others, who hardly bother to go beyond headlines or soundbites, ‘clarifications of clarifications’ will probably not get much attention.
    I’m reminded of Epictetus, who spoke of ‘things we can control, and things we can’t control’ putting reputation among the latter. We can control our actions and our attitudes, however, which is all that matters for happiness.
    Yours, Justin (an old philosophy prof)

  5. Steven Greenberg

    “‘We were not willing to find those firms guilty before, because we were worried that if we found them guilty, that could somehow potentially destabilize the financial system,’ Dudley said. ”

    I don’t get this at all. They ought not to be prosecuting banks, but they ought to be prosecuting bank executives. Putting a bank executive in jail shouldn’t cause the bank to fail. The bank will just have another executive take over the duties of the one that goes to jail.

    Are the Treasury and the DOJ confused by the Citizens United decision into thinking that corporations are people? If anything, I would expect that to leave a control fraud perpetrating bank executive in power would pose more of a threat to the bank corporation , than taking him out of the corporation would be a threat. Taking the executive out of the corporation ought to be a relief to the stock holders and customers of the bank.

    • Excellent point, Steven. Now that will be something to be thankful for, when criminal bank execs get prosecuted and made an example of, so as to give future bank execs pause when they are thinking of breaking the law. Right now when they are thinking of breaking the law, they see no reason to stop themselves.

  6. NPR is linked at the hip to the State Departments and the Pentagon’s propaganda machine. NPR stands for National Propaganda Radio, and or, National Petroleum Radio.

  7. Steven Greenberg has got it right. Prosecute the individual fraudster or fraudsters, not the institution. The notion of “economic collapse” collapses right there.

  8. Dwight Haskins

    Thank goodness for the brilliance and clarity that Prof. Black brings to the discussion of willingness of regulators to close their eyes when they observe certain criminal activities. Black’s comprehensive and coherent analysis is an antidote to the usual propaganda we are so accustomed to from big media and big government. Keep up the work, Prof Black. You and the journalist, Hedrick Smith, continue to show how corruption and immoral leaders continue to steal the American dream from our citizenry.

  9. Holder trying to pretend — e.g., on “60 Minutes” — that you cannot distinguish between the bank and the bankers who actively perpetrated fraud has been one of the most annoying and insulting things this administration has done. His legacy and Obama’s will always be tainted by this lie. The motive seems apparent: they did not want to jeopardize Wall Street contributions: it’s not the banks that are arguably too big to jail who make those contributions, but the bankers themselves who can be punished with no harm to their institutions — who should have been punished, in fact, for the good of the institutions.

    In protecting Wall Street like that just as any Republicans would, the administration has virtually destroyed the Democratic Party as an organization with a history and message worthy of respect. The result: the worst two mid-terms in modern history. No President has ever squandered so much good will so fast.