Category Archives: William K. Black

Did Financial Giant Goldman Sachs Just Admit the System is Rigged?

Bill Black explains why one of world’s largest investment firms Goldman Sachs is questioning the “efficacy of capitalism” and why its CEO is terrified of a Sanders presidency. You can view it here on the Real News (include transcript).

 

Hillary, the Banksters Committed “Fraud” not “Shenanigans”

William K. Black
February 4, 2016     Bloomington, MN

Former Secretary of State Hillary Clinton, in her debate with Senator Sanders minutes ago, said that she went to Wall Street and told them to stop their “shenanigans.”  The context was that she was being asked to respond to the complaint that she was too close to on Wall Street billionaires.  She had every incentive, therefore, to demonstrate how tough she would be on Wall Street.  In that context, the best she could muster was the pusillanimous “shenanigans.”  Here is a typical definition of that word with examples.

  1. : a devious trick used especially for an underhand purpose
  2. 2a:  tricky or questionable practices or conduct —usually used in pluralb :  high-spirited or mischievous activity —usually used in plural

Examples of shenanigan

  1. students engaging in youthful shenaniganson the last day of school
  2. an act of vandalism that went way beyond the usual shenanigansat summer camp

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Liar’s Loans, Plus Loan Brokers, Equals Fraud Heaven

William K. Black
February 4, 2016     Bloomington, MN

This is the fourth part of my series on the lies about “liar’s” loans that suffuse the Wall Street Journal article reporting that “big money managers” want to bring back “liar’s loans.”  This part focuses on the fact, which the WSJ treated as so obviously reasonable that it was unworthy of analysis, that:

Money managers want to bankroll the loans while relying on the mortgage firms to handle the process with borrowers, basically acting as a lender, “one step removed from the process,” one of these people said.

When the real lender taking the risk of making the home loan employs an agent from a separate for-profit firm to actually recruit the borrowers in return for receiving a sales commission from the real lender (the “big money managers”) we call that agent a loan broker.  The “big money manager’s” plan is (a) to make loans that are endemically fraudulent, (b) by incentivizing de facto loan brokers to find the buyers and handle the loan applications.

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Sanders vs Clinton on Wall St Reform

NEP’s Bill Black and Roosevelt Institute Fellow Mike Konczal take on the policies of the two contenders for the Democratic nomination in this appearance of The Real News. Getting the message out about Bank Whistleblowers United! You can view here (includes transcript).

Better Bankers Symposium

The Quest for Better Bankers, Better Banks Requires Better Economists

Review by William K. Black

[This review originally appeared in Concurring Opinions]

In Better Bankers, Better Banks, Claire Hill and Richard Painter of the University of Minnesota Law School signal their approach in the subtitle:  “Promoting Good Business through Contractual Commitment.”  This review explains why their thesis is so timely in terms of the most important theoretical debates boiling in economics and banking regulatory policy and the severe degradation of bankers and banks over the last 30 years.  Contractual commitment was, of course, the heart of Dr. Oliver Williamson’s approach to explaining modern capitalism.  Williamson, in work that led to being made a Nobel Laureate in Economics, argued that corporations were not simply a “nexus of contracts,” but also that these contracts had evolved to suppress the enormous danger to commerce posed by the powerful incentive of profit-maximizing actors to engage in “opportunistic behavior” whenever “information” was “asymmetrical.”  In The Economics Institutions of Capitalism, Williamson defined opportunistic behavior broadly and starkly as “self-interest seeking with guile.”

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How long did it take for the WSJ to Lie about Liar’s Loans? Two Sentences

William K. Black
February 3, 2016      Bloomington, MN

This is the third column in my series about the Wall Street Journal report that “big money managers” want to bring back “liar’s loans.”  Here are the article’s first two sentences.

Wall Street wants to bring back the “low-doc” loan.

These mortgages, which are given to borrowers that can’t fully document their income, helped fuel a tidal wave of defaults during the housing crisis and subsequently fell out of favor.

The second sentence begins the lies with an important lie.  “Low-doc” is a euphemism for endemically fraudulent “liar’s” loans.  The second sentence repeats a lie that the fraudulent lenders have told for decades – it is their carefully crafted creation myth of liar’s loans.  If the WSJ had done its job and exposed the lie, the creation myth and the fraud scheme would have died decades ago.  Instead, the WSJ endorses the lie.  Liar’s loans were not designed for or “given to borrowers that can’t fully document their income.”  The two keys lies by the fraudulent lenders about liar’s loans arise from their use of the word “can’t.”  As I explained in my second column in this series, the IRS created, decades ago, Form 4506-T, which allows the borrower to give the lender access to transcripts of the borrower’s two most recent tax returns.  This means that the self-employed can easily and cheaply permit the lender to verify their income – and home lenders routinely require borrowers to sign the 4506-T as a mandatory part of the loan application.  The first lie is that there are borrowers that are incapable (“can’t”) document their (purportedly ample) income.

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How Many Lies Can the WSJ Pack into a Chart on Liar’s Loans?

William K. Black
February 3, 2016     Bloomington, MN

This is the second article in my series prompted by the Wall Street Journal report that “big money managers” want to bring back “liar’s loans.”  Given that the best study of liar’s loans during the crisis found a fraud incidence of 90% — this is a startling proof of how openly addicted to fraud the “big money managers” remain.  It demonstrates some of the terrible costs of the Department of Justice’s refusal to prosecute the fraudulent loan originators’ controlling officers.

In this installment I lay out briefly the lies that the banksters made, and continue to make, about liar’s loans and why those lies are so harmful.  The WSJ chart on liar’s loans faithfully repeated those lies as if they were revealed truth.  The chart is shown below.  Let us count the lies.

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Lenders’ Lies about Liar’s Loans and “Rigorous Underwriting”

William K. Black
February 2, 2016     Bloomington, MN

It is time to break out one of our two family rules again – it is impossible to compete with unintentional self-parody.  How fraudulent is finance even now?  The Wall Street Journal reports that “big money managers” want to bring back “liar’s loans.”  I am trying to write much shorter columns, so there will be many columns in this series because the WSJ article so beautifully exemplifies the lies that the industry and the media told about liar’s loans before and after 2008.

Spoiler alert:  liar’s loans, as the name admits, are pervasively fraudulent.  Only fraudulent lenders make liar’s loans as a regular business practice.  These home loans make the officers wealthy through the “sure thing” of the “fraud recipe” for “accounting control fraud.” The WSJ, of course, ignores these facts and presents instead falsehoods provided by fraudulent officers.

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The Bank Whistleblowers United – Who are We, and Why are We Trying to Help Implement Real Banking Reform?

[revised – Michael Winston’s bio added]

At this time (January 29, 2016), we consist of four founding members:

Gary Aguirre
William Black
Richard Bowen
Michael Winston

Our bios are listed at the end of this post.  We share a number of common experiences.  They explain why we came together to try to implement real reform.  Continue reading

The Bank Whistleblowers United Campaign Funding Plan: Say “No” to Contributions from Financial Felons

In order to restore the rule of law, we ask every candidate for the nomination of their party for the presidency to pledge that they will not take contributions from any financial firm (or contributions above $250 from their officers) that the United States or its agencies have, after investigation, charged with committing the legal elements of fraud.  That list includes virtually all of the largest banks in the U.S. and Europe and Freddie and Fannie.  Indeed, most of these financial giants have admitted that they conducted massive frauds.