Tag Archives: bankster

James M. Cirona: In Memoriam

By William K. Black
(Cross posted and Benzinga.com) 

The death of a successful banker and regulator

James M. Cirona died January 4, 2014.  I doubt that many readers know of Jim’s work even if they follow finance.  That is a shame for Jim was one of the most important reasons the savings and loan debacle did not cause a financial crisis and a Great Recession.  The reason Jim was so effective was that he understood that the factor driving the debacle was a surging epidemic of accounting control fraud and he had the leadership abilities and the courage to expand and focus the resources of the Federal Home Loan Bank of San Francisco (FHLBSF) to stop that epidemic.

Continue reading

Is B of A the Most Embarrassing Department of Justice Suit Ever?

By William K. Black

The Department of Justice’s (DOJ) latest civil suit against Bank of America (B of A) is an embarrassment of tragic proportions on multiple dimensions.  In this version I explore “only” seven of its epic fails.

The two most obvious fails (except to the most of the media, which failed to mention either) are that the DOJ has once again refused to prosecute either the elite bankers or bank that committed what the DOJ describes as massive frauds and that the DOJ has refused to bring even a civil suit against the senior officers of the banks despite filing a complaint that alleges facts showing that those officers committed multiple felonies that made them wealthy by causing massive harm to others.  Those two fails should have been the lead in every article about the civil suit.

Continue reading

The Game Theoretical CEO: An Inexplicable Lawful Agent

By William K. Black
(Cross posted at Benzinga.com)

Introduction

This is the sixth (and final) of my series of articles on the work of Roger Myerson, a 2007 Laureate in Economics.  Myerson’s work on CEOs is typical of the game theoretical approach to explaining the behavior of CEOs and firms, so I am discussing an exemplar rather than an outlier.  This installment discusses some of the fatal flaws that I argue characterize the game theoretical work on CEOs by the Laureates.  I will urge that they are weakest where they believe they are strongest – their models.  The article explains why the models are specified incorrectly because the models have no coherent theory (or understanding) of fraud or ethics.  The game theoretical Laureates (Laureates) make unsupportable implicit assumptions that are belied by the data and internally inconsistent with their explicit assumptions.

Continue reading

Myerson’s Ode to Crony Capitalism

By William K. Black

This is the fifth installment in my series of article about the predictive and policy failures of Roger Myerson, Nobel Laureate in economics in 2007.  My first two articles critiqued his claim that capitalism’s unique advantage over communism is plutocracy because only exceptionally wealthy CEOs can be successfully bribed by their shareholders to “imitate” “good” CEOs who will not cheat the shareholders.

Continue reading