Category Archives: William K. Black

McCloskey Wants the U.S. to Repeal the Foreign Corrupt Practices Act

By William K. Black
Quito: March 8, 2015

This is the fourth column in my series of articles critiquing Deirdre McCloskey’s book review in the Wall Street Journal entitled “Two Cheers for Corruption.”  McCloskey has subsequently written to New Economic Perspectives – but apparently not the WSJ – to complain that the title was authored by the WSJ and is contrary to her views.  As I mentioned, in my third column, the title is also innumerate in that McCloskey’s book review actually endorsed three types of corruption – and corruption is inherently a composite of bribery, extortion, and fraud.  She claimed that these three types of corruption exemplified why corruption can be desirable because it makes society more “efficient and just.”  I addressed in my second column in this series the first form of corruption that she endorsed – secret bribery, fraud, and corruption by firms in order to violate building safety codes with impunity.

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McCloskey Wants to Change the Title and the Substance of Her Article on Corruption

By William K. Black
Quito: March 8, 2015

Deirdre McCloskey has responded with two comments (to date) to my series of articles critiquing her book review in the Wall Street Journal of two new books about corruption. We welcome her to the pages of New Economic Perspectives and invite her to provide an article or series of articles presenting her views on elite white-collar crimes such as fraud and corruption of whatever length she thinks best. The harm done by these crimes is so severe that these topics well warrant extended discussion and debate. NEP is one of the rare economic blogs that devotes considerable space to these topics.

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McCloskey’s First “Cheer for Corruption” is also a Cheer for Fraud

By William K. Black
Quito: March 5, 2015

In my first column in this series I discussed the gaping contradiction in Deirdre McCloskey’s book review of two books on corruption. The title of her article captures the immorality of her proposed “sermons” on corruption: “Two Cheers for Corruption.” McCloskey urges us to embrace many forms of corruption because she asserts that they add to economic efficiency and justice.

“But corruption can be efficient and just, too. It can be good for efficiency if, say, bribes are paid to get around bad laws (such as most of the building codes in American cities) or to smooth the course of sales by U.S. businesses to the Egyptian military. And the turkey at Christmas supplied by Tammany Hall justly helped the poor—if they voted right.”

McCloskey’s first of three “cheers for corruption” is inherently a cheer not only for corruption, i.e., bribery and extortion, but also a cheer for four types of felonies by elite white-collar criminals. The first crime is deliberately violating the building safety codes. The second crime is covering up that underlying crime through corruption – the bribery and/or extortion of the building safety code inspectors.

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McCloskey’s Plea for an Unethical Ethical Response to Corporate Bribery

By William K. Black
Quito: March 4, 2015

Deirdre McCloskey has provided another proof of our family saying that it is impossible to compete with unintentional self-parody. She did so in the guise of a review in the Wall Street Journal of two books on corruption. McCloskey’s thesis is that only ethics, not institutions, matter when it comes to stopping corruption.

“All that works in the end is ethical change, urged from the mother’s knee, the pastor’s pulpit, the judge’s bench, the schoolmaster’s lectern. It is fruitless to propose ‘mechanisms’ or ‘institutions’ absent an ethical desire in enough of us to do good.

We need sermons, which is to say instruction from our mothers and movies and imams about How to Be Good. Sarah Chayes and Jay Cost provide ample texts for the sermons. Indignation on the ground, if pervasive, stops corruption. The books give us cause for indignation, surely. But the rest is up to us, or our mothers teaching us at their knees.”

McCloskey proposes that we create “pervasive” “indignation” demanding an end to “corruption.” She suggests that the key is the consistency of that ethical message to “do good.” We need “sermons” from clergy, mothers, teachers, judges (during sentencing), and the media and movies that reinforce the message that the public must achieve a “pervasive” loathing of corruption and a commitment to “stop” it.

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A Question to Our Bank CEOs Who Are Criminals: “Have You No Sense of Decency”?

By William K. Black
Quito: March 4, 2015

The FCPA Blog, an invaluable aid to anyone involved in the effort against corruption, has just run a story that epitomizes the neo-liberal approach to “liberty.” There is a massive movement, well-funded by political contributions, to privatize our prison systems. The private jailors overwhelmingly want to deal with the lowest risk jail populations – and then claim that they are “less expensive” than other prisons owned by the State.

The “Cash for Kids” Scheme

In Pennsylvania, in a fitting illustration of the dark side of von Hayek’s praise of “spontaneous order,” this privatization movement reached its neo-liberal peak when the owner of two privatized juvenile detention facilities bribed two Pennsylvania judges to send more kids to jail and maximize the owners’ profits. The huge size of the bribes demonstrates the scale of the miscarriage of justice and the enormous profits that injustice produced for the owner of the privatized juvenile detention facility. The FCPA Blog tells the sickening tale.

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Walker’s War on Workers and the Wall Street Journal’s Cleaned-Up Coverage

By William K. Black
Quito: March 1, 2015

Wisconsin Governor Scott Walker has channeled his inner Mitt Romney and written off an immense swath of Americans as people he would not represent if he were elected President. Romney wrote off 47% of Americans and Walker wrote off America’s workers. Romney channeled his inner Ayn Rand and labeled 47% of American’s as worthless “takers.” Walker was more extreme. He labeled American workers, peacefully protesting, as analogous to ISIS terrorists. Romney’s dismissal of the 47% was made as part of a fund raising pitch to billionaire supporters who responded warmly. Walker’ war on workers was warmly received by his ultra-conservative base and his ultra-wealthy potential donors.

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Irish-Style Banking Inquiry into the 2008 Financial Crisis

NEP’s Bill Black on The Real News Network discussing his recent testimony in Ireland for a banking inquiry and the challenges the country faces in acknowledging its financial crisis. Video is below. For the transcript, click here.

Iceland’s Supreme Court Upholds Jail Sentences of Four Banking Executives

Edition of the Bill Black Report at The Real News discussing the good news that Iceland’s Supreme Court upheld the jail sentences that were handed down to four banking executives in that country. The video is below. If you would like the transcript, it is available here

Remember When Carmen Segarra Exposed the NY Fed’s Refusal to Stop Goldman Sachs and Banco Santander’s Scam to Inflate Santander’s Capital? How’d that Work Out?

By William K. Black

On September 30, 2014 I wrote an article to explain the true significance (and horrific analysis by the NY Fed and much of the media) of Carmen Segarra’s key disclosure. My title was “A ‘Perfectly Legal’ Scam is Perfectly Unacceptable to Real Bank Supervisors.” Segarra was the NY Fed examiner who was fired for her criticisms of Goldman Sachs. Segarra was part of the group of new examiners hired as a result of the NY Fed’s admission that it had failed utterly under Timothy Geithner and that the failure had helped make possible the financial crisis. Segarra was part of the new crew that was supposed to radically vitalize the NY Fed’s broken supervisory arm. (Notice that I did not say “revitalize” – the NY Fed has always been Wall Street’s Fed bank, not America’s. It has never been an effective supervisor.)

The point I made was how similar the scam that Goldman crafted to reduce Banco Santander’s capital requirement was to the scam that Lehman used to reduce its capital requirement and pretend that it was healthy when it was deeply insolvent. The key thing that Segarra disclosed was that Mike Silva, her NY Fed boss, claimed that Lehman’s failure caused a “Road to Damascus” conversion that transformed him from a regulatory weakling into the big banks’ worst nightmare – a tough bank supervisor. I showed that, in reality, he did nothing when he learned of Goldman’s scam. The pathetic scope of his conversion is that he now understood that what Goldman and Santander were doing was unethical and endangered the global financial system, but remained unwilling to stop, try to stop, or even criticize Goldman and Santander’s scam.

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HSBC CEO: My Pay Was so Outrageous I Had to Use Tax Havens to Hide it from My Peers

By William K. Black
Quito, Ecuador: January 23, 2015

Greetings from Quito, where I will be spending four months teaching at IAEN about effective regulation and building ties with UMKC.

The latest twists on the latest HSBC tax evasion and tax avoidance scandal is that it has come out that Stuart Gulliver, HSBC’s head, put his money where his mouth wasn’t. He personally used double tax havens – Panama plus Switzerland – to hide his income and wealth from view because his pay was so outrageous that even other HSBC executives would have been outraged by it. The New York Times’ account of this tale demonstrates that Gulliver needs to fire Gulliver as his spokesperson.

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