Dodd-Frank Was Designed to Fail – and Trump Will Make it Worse

By William K. Black
April 17, 2017     Bloomington, MN

William Cohan’s April 14, 2017 column in the New York Times discusses Daniel Tarullo’s swan song talk on bank regulation.  Here are the key passages from that column for the first half of my discussion.

Much to the relief of Wall Street executives, who feared and hated him in equal measure, Daniel K. Tarullo left his powerful perch on the Federal Reserve Board of Governors last week, but not before delivering one last lecture on how big banks should be regulated in his absence.

His swan song was pretty surprising, all things considered. It also went largely unnoticed, much like Mr. Tarullo himself during his eight years at the Federal Reserve. Many people have never heard of him, even though his decisions affected their lives in ways big and small.

Once described as the “Wizard of Oz,” for the power he wielded behind the scenes, Mr. Tarullo was appointed to the Federal Reserve by President Barack Obama in January 2009. At the Fed, Mr. Tarullo took over the important responsibility of regulating the big Wall Street banks, a job that, understandably, had been the purview of the president of the Federal Reserve Bank of New York. The oversight moved to Washington from New York in the wake of the financial crisis.

“It was obvious that a lot in the U.S. regulatory system had not worked particularly well before the crisis,” Mr. Tarullo said in a 2015 interview with The Wall Street Journal.

Cohan was writing about a different subject, one I discuss briefly in the second half of this article, so he did not discuss the insanity described in these four paragraphs.  Here is the short version of that insanity.

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Ecuadorians Reject Neoliberalism in Presidential Race

NEP’s Bill Black appears on Rising Up With Sonali talking about Ecuadoreans and their choice of continuity by choosing a left-leaning government over a neo-liberal agenda in recent Presidential elections.

President of Richmond Fed Leaks Insider Information and Goes Free

NEP’s Bill Black appears on The Real News Network discussing the investigation into leaking of inside information and how it shows how banks and the Federal Reserve are riddled with conflicts of interest. You can view here with transcript.

Inequality Update: Who Gains When Income Grows?

By Pavlina R. Tcherneva
Bard College

Growth in the US increasingly brings income inequality.  A striking deterioration in this trend has occurred since the 80s, when economic recoveries delivered the vast majority of income growth to the wealthiest US households.  This note updates my original inequality chart (reproduced below) with the latest data. For earlier discussions, see e.g., here, here, and here.

Figure 1: bottom 90% vs. top 10%, 1949-2012 expansions (incl. capital gains)

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Reality Virus Infects Kansas Legislators, Brownback Immune

By William K. Black
March 28, 2017      Bloomington, MN

The good news is that the Kansas legislature, the land of the lunatics, experienced an outbreak of the reality virus (first diagnosed and named by Steve Keen among neoclassical economists).  The bad news is that the Kansas’ Crazy-in-Chief, Governor Sam Brownback, has proven immune to the virus.

Brownback decided to put Art Laffer in charge of Kansas’ taxation policy.  Even neoclassical economists roll their eyes when it comes to Laffer’s claims that dramatic tax decreases lead to significantly increased net tax revenues.  Laffer’s batting average on this claim is .000 and his “proof” of his claim is a graph (the “Laffer curve”) that he drew that contradicts reality.  Brownback knew that Laffer was batting .000 on his claims and that Laffer never drops his claims when reality (repeatedly) falsifies his graph.  To no one’s surprise, Brownback’s tax cuts produced a fiscal disaster for Kansas.

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Why did Preet Bharara Refuse to Drain the Wall Street Swamp?

William K. Black
(A co-founder of Bank Whistleblowers United)
March 20, 2017

The New York Times’ editorial board published an editorial on March 12, 2017, praising Preet Bharara as the “Prosecutor Who Knew How to Drain a Swamp.”  I agree with the title.  At all times when he was the U.S. Attorney for the Southern District of New York (which includes Wall Street) Bharara knew how to drain the swamp.  Further, he had the authority, the jurisdiction, the resources, and the testimony from whistleblowers like Richard Bowen (a co-founder of Bank Whistleblowers United (BWU)) to drain the Wall Street swamp.  Bowen personally contacted Bharara beginning in 2015*. Continue reading

February Job Growth Barely Made Dent in Record Low Labor Force Participation

NEP’s Bill Black appeared on The Real News Network discussing newest government data still show trends of low wage job creation, racial disparities in employment, and workers continuing to leave the labor force. Video is below. You can view with transcript here.

Trump’s 2005 Tax Forms: ‘Like Going to Dinner And Being Served Pictures of Food’

NEP’s Bill Black appears on The Real News Network along with economist James Henry hypothesizing that here are fraudulent and criminal activities lurking within Trump’s unreleased Tax forms. The video is below. You can view with transcript here.

The 2016 Nobel Prizes in Economics Go to those Who Pushed Criminogenic Policies

By William K. Black
February 27, 2017     Bloomington, MN

How has the Swedish Central Bank’s committee that awards prizes in Economics in honor of Nobel responded to the field’s abject failures regarding the recent financial crisis and the Great Recession?  A lesser group would display humility, acknowledge its failures, and promise a fundamental rethink of the field.  Neoclassical economists, however, are made of sterner stuff.  The committee’s response is to praise the discipline for its theoretical advances and proposed policies related to finance, regulation, and corporate governance.  Eugene Fama, Jean Tirole, Oliver Hart, and Bengt Holmström exemplify this pattern.  This series of articles discusses the joint award in 2016 to Hart and Holmström.  In this introduction to the series, I outline the major errors that I will address in this series.

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MINSKY AND MODERN MONEY THEORY: Was Minsky a “forefather”?

By L. Randall Wray

A few weeks ago, a video of a lecture that Hyman Minsky gave at Westminster College on Oct 30, 1991 was made available. Although the Levy Institute has some audio of Minsky, this is the only video I know of. The audio of this one is not great, but you will get some flavor of his style. In truth, it was always a bit hard to follow his presentations as he had a tendency to lower his voice and mumble near the end of sentences as his mind raced ahead to the next point. He usually did not script his talks (he walked into many of his university lectures with nothing more than a copy of the Wall Street Journal), but he would read some brief sections of papers—while riffing the rest–and it appears that this is what he was doing that evening.

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