Tag Archives: banksters

The NYT Thinks Jailing the Banksters Would Cause a “Bind

By William K. Black
San Francisco California: November 24, 2014

Peter Henning, in his self-bowdlerized Dealbook feature he branded as “White Collar Watch” (note his deletion of the word “crime”) has come up with an article that illustrates that the New York Times is clueless about bank regulation. The good news is that once the fundamental error in their understanding of banking regulation is corrected the supposed dilemma that the Henning claims has placed the NY Fed in a terrible “bind” disappears. The title of Henning’s November 24, 2011 article has morphed during the course of the day into “Fed’s New ‘Cop on the Beat’ Role Put it in a Bind.” The title exemplifies three fundamental errors. First, the role of federal financial regulators as “regulatory cop on the beat” is not “new.” It has always been our paramount role as financial regulators. Second, Henning’s columns was prompted by William Dudley, the NY Fed’s President’s testimony before a Senate banking committee subcommittee in which he expressly refused to function as the “cop on the beat” our Nation vitally needs. Third, were Dudley to embrace the role of “cop on the beat” and perform it properly he and our Nation would escape the desperate “bind” we are in – not create a “bind.” Henning’s article tries to support the three errors encapsulated in his title in the reverse order, which I will track.

Continue reading

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.

Continue reading

Dudley Do Wrong Rejects Being a “Cop” and Embraces “Foaming the Runways”

By William K. Black
San Fransisco, CA: November 22, 2014

William Dudley, the President of the NY Fed, is not a stupid man. He is, however, wholly unfit to be a regulator. He has now admitted that publicly. It is time for him to return to Goldman Sachs so that he can be replaced by someone expressly chosen to be a vigorous regulator who will embrace the most critical function of a financial regulator – to be the tough “regulatory cop on the beat.”

The story of Dudley’s ineptness has been mirrored by the New York Times’ inept coverage of the failures of one of the reporter Peter Eavis’ favorite sons on Wall Street. Eavis is a Brit with a B.A. in international history and politics. He has also been a pastor. He co-authored the epically incoherent column on the NY Fed’s most recent scandal, the leaking of confidential information by a NY Fed employee to a former NY Fed employee who had joined Goldman Sachs. I criticized that column in my November 20, 2014 article and provided some of the key missing facts and analytics.

Continue reading

Note to Dudley: Everyone Questions the NY Fed’s Motives – For Good Reasons

By William K. Black
San Francisco, CA: November 20, 2014

The NY Fed and Goldman have combined again to produce fingers scraping on a moral blackboard. The story is – not – told coherently in a NY Times piece.

I’ll comment on only two aspects of the incoherent story. First, contrary to the NYT portrayal of the story, there is typically no ambiguity about whether regulatory information is confidential and there was no ambiguity about the particular information that we read (albeit, not in the NYT) that the NY Fed employee leaked to his former colleague after he joined Goldman Sachs.

Second, the NY Fed’s head, William Dudley’s, response to the latest scandal was “I don’t think anyone should question our motives.” I will argue that given the NY Fed’s intolerable institutional conflicts of interest, and the defense of continuing that conflict by the NY Fed’s leadership, e.g., Dudley, everyone should the regional Feds’ motives.

Continue reading

Cochrane Demands that the Public Unilaterally Disarm while the Banksters Loot

By William K. Black
San Francisco, CA: November 19, 2014

(I’m participating in the annual meeting of the American Society of Criminology. I presented Wednesday on a panel honoring the 75th anniversary of Edwin Sutherland’s announcement of the concept of white-collar crime.)

 

John Cochrane has written an article with an initial sentence that should spark broad agreement: “confiscating wealth is ultimately about political power.” The banksters who led the frauds that caused the financial crisis “confiscate[ed]” immense wealth from the public and “their” firms’ customers, creditors, and shareholders. They did so with nearly complete impunity, which is “ultimately about political power,” indeed it defines the extraordinary nature of their power. The banksters’ confiscation of wealth has caused a dramatic increase in inequality, which has exacerbated the banksters’ domination of the levers of power. In a prior article, Cochrane stated that the financial crisis was driven by runs on financial institutions and that the runs were typically driven by elite accounting fraud.

“Not for nothing have most runs been sparked by an accounting scandal or fraud.”

Continue reading

Standard Chartered Is Outraged That It Is Treated Like A Criminal For Its Criminal Acts

By William K. Black

After a decade of committing tens of thousands of felonies that the U.S. government believes helped fund terrorism and Iran’s development of nuclear weapons, having the great fortune of settling the cases without any senior officers being prosecuted or its license to operate in the U.S. being pulled, having immediately violated the settlement agreement by lying about its prior actions, being discovered to have mislead the U.S. during the settlement negotiations, and being found to have continued to violate the same U.S. laws after entering into the settlement, one might think that Standard Chartered’s leaders would learn to keep their mouths shut and to obey the law at least until the settlement agreement restrictions lapse. Standard Charter’s senior leadership, however, is composed of the most arrogant and entitled class. When the bank’s Chairman of the Board is “Sir John Peace” entitlement (but no longer noblesse oblige) comes naturally. So, instead of mea culpa, the Standard Chartered mantra is: how dare you criticize us?

Continue reading

CEO Compensation: “Cheaters Prosper”

By William K. Black

As financial regulators we have been warning since 1984 that accounting control fraud is optimized by modern executive compensation. Modern executive compensation is so perverse that it creates overwhelming incentives to engage in fraud and the means of committing the fraud that makes it far more difficult to prosecute. The CEO is able to convert the firm’s assets to his own benefit through seemingly normal corporate mechanisms. CEOs also use executive and professional compensation to generate “Gresham’s” dynamics and incentivize fraud by employees, officers, and professionals.

George Akerlof and Paul Romer added their voice to this point in1993 in their article “Looting: The Economic Underworld of Bankruptcy for Profit.” Among the points they emphasized were that accounting control fraud was a “sure thing” and that the way for the CEO controlling a lender to optimize to optimize his looting was to cause the lender to make very bad loans at a premium nominal yield. White-collar criminologists and the National Commission on Financial Institution Reform, Recovery and Enforcement (NCFIRRE) reached similar conclusions beginning in 1993.

Continue reading

Zero Prosecutions Aren’t Few Enough – Wall Street Wants SEC Sanctions Reduced to DMV Points

By William K. Black
Kilkenny, Ireland: November 8, 2014

Wall Street’s full depravity was put on display in Joseph Fichera’s November 6, 2014 op ed in the New York Times. I hasten to add that the reason that the op ed is so revealing is that Fichera is one of the sometimes good guys who, for example, accurately warned that “auction-rate securities” were a dangerous scam and criticized JPMorgan’s odious abuse of Denver. When the Ficheras of the world join in Wall Street’s “race to the bottom” Federal Reserve Bank of New York’s President Dudley’s point about the corrupt culture that characterizes Wall Street is proven irrefutably.

Continue reading

Thomas Curry: The Very Model of the Modern Failed Regulator

By William K. Black

I explained in a 2012 column as soon as Thomas Curry was publicly identified as the likely new head of the Office of the Comptroller of the Currency (OCC) why he was such a poor choice to be a regulatory leader. Curry is such a good example of Obama’s crew of failed agency heads because he is neither evil nor stupid. As I explain below, he views morality as a misnomer in banking. He is the rarity among Obama appointees, a true professional regulator. He is well within the top 50% of Obama’s (dismal) appointees in finance and regulation.

Curry is also an abject failure who should be cashiered immediately. No one had to order him to fail or intimidate him into failure. He represents anti-regulation as usual, which has been the pattern in finance since 1993. One can read his speeches and see that he has learned none of the essential lessons from the crisis and lacks even a dying ember in his belly, much less the raging fire required for regulatory success. We know from his record of failure as an FDIC director from January 2004 throughout the crisis that had he been the top federal regulator in the savings and loan debacle rather than Ed Gray cost of the debacle would have grown to trillions of dollars. At that level it would have hyper-inflated real estate bubbles and likely caused a severe recession.

Continue reading

Jamie Dimon: U.S. Must Create a “Safe Harbor” Where JPM’s Corruption Is Not “Punished”

By William K. Black

I want to give a hat tip to a recent Wall Street Journal article that brought to my attention two damning admissions by JPMorgan’s (JPM) CEO and Chairman of the Board, Jamie Dimon.  The irony is that Dimon was lulled into making these admissions because he was basking in the perfect calm created by the confluence of Sorkin’s and CNBC’s storied sycophancy at the one place on earth where elite bankers feel most loved, honored, and protected – the annual meeting of the ultra-wealthy in Davos, Switzerland.  Sorkin was the only interviewer, so Dimon faced no risk of tough questions.  It may well have been this perfect setting that caused Dimon to let slip the mask and reveal two illustrative sins of elite bankers reported in the WSJ article.

Continue reading