Posted onApril 18, 2019byDevin Smith|Comments Off on Financial Crisis & Fraud – A Guide with former Financial Regulator William Bill Black
NEP’s Bill Black appears on acTVism from Munich (in English) to define and talk about the role of a financial regulator. The discussion then turns to financial crisis – S&L debacle as well as the 2008 crash.
NEP’s Bill Black appears on The Real News and says it’s important to reimplement the Glass-Steagall Act – but it’s not enough to prevent another financial crisis. You can view here with transcript or watch video below.
For more than five years –big U.S. banks have been under scrutiny for their part in the 2007-2008 financial crisis.
JPMorgan Chase & Co. – America’s largest bank- is no different. For its part in the crash – the bank made an agreement with the U.S. Department of Justice to payout $13 billion to atone for misleading investors.
“I was completely caught off guard by the settlement,” says a former JPMorgan employee.
That’s Canadian-born, Alayne Fleischmann. She worked for JPMorgan as a transaction manager. Her job was to review and find the red flags in home loans the bank wanted to purchase from a mortgage lender.
This column discusses the most embarrassing title of an economic study of the U.S. financial crisis. It rivals the most embarrassing title of an economic study of the Icelandic crisis.
“The 2010 Academy Award-winning documentary Inside Job tells how [Frederic] Mishkin changed the name of the study from ‘Financial Stability in Iceland’ to ‘Financial Instability in Iceland’ on his curriculum vitae.”
Geetesh Bhardwaj of AIG Financial Products and Rajdeep Sengupta, a St. Louis Fed economist, entitled their September/October 2008 article: “Where’s the Smoking Gun? A Study of Underwriting Standards for US Subprime Mortgages.”
Note: This oral testimony was delivered on February 5, 2015 in Dublin, Ireland before the Oireachtas’ Joint Committee of Inquiry into the Banking Crisis. These are my prepared remarks. My actual oral testimony differed considerably. A transcript is available from the Inquiry, as is complete video.
To: Joint Committee of Inquiry into the Banking Crisis From: William K. Black Date: February 3, 2015
Oral Testimony of William K. Black
Thank you for the invitation to assist Ireland as you face among the most important questions Ireland and many other nations must answer correctly if we are to put a stop to our recurrent, intensifying financial crises. I am William K. Black and I come to you wearing four disciplinary and three institutional “hats.” My primary appointment is in economics with a joint appointment in law at the University of Missouri-Kansas City. I am a white-collar criminologist and a former senior financial regulator. My research specialties include elite white-collar crime and corruption, regulation, and financial crises. I am the Distinguished Scholar in Residence for Financial Regulation at the University of Minnesota’s Law School. I am a professor at the Instituto de Altos Estudios Nacionales es la Universidad de Posgrado del Estado in Quito, Ecuador. My testimony, of course, is solely my personal views rather than the official position of any of these universities.
Paul Krugman’s admirers would never list modesty as one of his characteristics. He has written a column “In Defense of Obama” that begins by explaining that his criticisms of President Obama were correct, but that unidentified others’ criticisms of Obama constitute “trash talk.”
Specifically, Obama “came perilously close to doing terrible things to the U.S. safety net in pursuit of a budget Grand Bargain.” Obama sought to produce a self-inflicted disaster by desperately trying to reach a “Grand Bargain” with Republicans that would have inflicted austerity on our Nation in 2012, “slash[ed] Social Security and [raised] the Medicare [eligibility] age.” As even Krugman admits, we were saved from this catastrophe “only by Republican greed, the GOP’s unwillingness to make even token concessions” to achieve the Grand Bargain. What Krugman omits in the tale is that it was also a revolt by Democratic progressives against the Grand Bargain that saved Obama and the Nation.
I’ve explained in prior columns that the groups opposing Scotland reclaiming its independence have been feverishly switching from threats to bribes as the polls on the likely vote on independence became a toss-up. My favorite proposed bribe was suggested by “Lord Prescott” – a Labor “Peer.”
“Lord Prescott also suggested a combined England and Scotland football team.
‘Perhaps if England and Scotland together had one team, we could at last beat the Germans – who knows?’ he said.”
This is the first installment of a series of articles about the media, finance industry, political, and Department of Justice (DOJ) reaction to Michael Lewis’ new book about high frequency trading (HFT). The media ballyhooed the book as if it were an amazing revelation of a fact of surpassing importance. The industry demonized the book and Lewis. DOJ immediately announced it had begun a criminal investigation and the SEC it had multiple investigations pending. Whether the industry or Lewis is correct about HFT practices (which he asserts are lawful) is unimportant for some purposes. My series will focus on the difference between the frenzied DOJ, political, and media reaction to Lewis’ criticism of allegedly lawful HFT practices and the “yawn” reaction of these same groups to the vastly more damaging criminal frauds runs by our elite financial leaders that caused the financial crisis is astronomical, ludicrous, and disastrous. Similarly, the reaction of these three groups to the finding by multiple investigations that 16 of the largest banks in the world committed crimes by setting LIBOR rates through frauds and cartels (the largest cartel, by several orders of magnitude, in history) was less than a yawn, as I described in prior articles.
I knew Charles Keating, the head of Lincoln Savings, in my capacity as a financial regulator and as the subject of his wrath. His fraud schemes and the manner in which they targeted our system’s vulnerabilities in an era before Citizens United made the corruption of politicians by fraudulent CEOs child’s play remain the play book for the world’s most destructive financial frauds. Our failure to learn the ten lessons has caused immense suffering. Keating’s life, and the great harm he caused, will not have been in vain if we step back and use the occasion of his death to reflect on the changes we need to make.
Warren Mosler gave this talk in Chianciano, Italy, on January 11, 2014 at the Chianciano Conference entitled Oltre L’Euro: La Sinistra. La Crisi. L’Alternativa. In English: Beyond The Euro: The Left. The Crisis. The Alternative [Google translation]. The video is embedded below, but you have to listen to a realtime translation in Italian, which doubles the listening time. I thought this talk important enough to transcribe, if not deliciously subversive on the part of Warren Mosler who offers Italians a way to save their economy. The transcription follows below the video.
Mosler describes how Italy (or any of the 17 EU countries that use the Euro) can leave the European Union safely if the EU persists, as it insists on doing, in impoverishing their country and citizens.
The subheads in blue are mine, not Mosler’s, and are designed to assist reading. Some terms Mosler refers to in the body text relate specifically to the Italian economy, and I can’t identify them because I don’t know their Italian names.