By their responses ye shall know them

By William K. Black
(Cross posted at

A preliminary note:

Greetings from Davos!  I’m actually writing this over the mid-Atlantic as I return from being a keynote speaker at the annual “Public Eye” “shame prize” awarded to Goldman Sachs for its abuses.  The shame prize award was made in Davos during the World Economic Forum as a counter-WEF event.  Shell also “won” a shame prize, but I spoke on Goldman Sachs, the role of epidemics of accounting control fraud, and the WEF’s anti-regulatory and pro-executive compensation policies.  I explained that the anti-regulatory policies were intended to fuel the destructive regulatory “race to the bottom” and why the executive and professional compensation policies maximized the incentives to defraud.  I also explained that WEF was a fraud denier.  Collectively, these three WEF policies contributed to creating the intensely criminogenic environments that produce the epidemics of accounting control fraud driving our worst financial crises.  Detailed written developments of these arguments can be found here on our UMKC economics blog: New Economic Perspectives.

Speaking truth to power

You often cannot evaluate a person’s character until they are under pressure.  Their response to substantive criticism reveals an important aspect of character.  While we learn the most from substantive criticism, the process is almost always painful.  For people in positions of power, the substantive criticism is particularly vital and useful because far too often people fail to “speak truth to power.”  They fear being excluded from the debate and marginalized should they criticize the false statements that the powerful make in order to maintain and extend their power.

The Society of Friends (Quakers) is unique in treating “speaking truth to power” as an obligation of their faith.  The Friends do not, of course, claim to know “truth” or have an exclusive on “truth.”  The obligation is to speak what each Friend believes to be the truth after appropriate efforts to learn the truth of a matter.  The Friends do not only speak truth to power – they act.  This obligation led the Friends to lead the anti-slavery efforts in the UK and to be key members of the “underground railroad that helped American blacks flee the slave States.

Journalists constantly face the ethical issue of whether to speak truth to power.  They need access to the powerful to do their jobs.  Journalists also want to be viewed as “serious” and the powerful often define as “unserious” any journalist who criticizes the powerful and the myths that the powerful spread in order to maintain and exploit their power.  Far too often, journalists decide against speaking truth to power.  This self-censorship is particularly damaging because it is invisible to the public and because it inherently degrades the journalist’s integrity.

The Department of Injustice tries to extort Frontline

Last week brought an example of how one group of journalists dealt with this inherent tension.  Frontline, the premier U.S. producer of documentaries, aired the results of an investigation entitled “The Untouchables.”  The documentary investigated why the elite bankers whose frauds drove our financial crisis have not been prosecuted.  It confirms what white-collar criminologists have been saying for years – there have not been serious investigations of the elite accounting control frauds.  One of our mantras about elite frauds is: “if you don’t look; you don’t find.”

A viewer asked the Frontline producer how the Department of Justice responded to the expose.  The producer revealed that the Justice Department (an increasingly oxymoronic name) responded with a threat.  It couldn’t bully Frontline with a claim that it had released confidential information.  Recent scandals have shown that the Justice Department is ruthless, even lethal, at using threats to prosecute such releases of information in a manner that brings great disgrace onto the prosecutors’ special ethical duty to always seek “justice.”

(twitter image via

Frontline does many documentaries every year that need input from the Justice Department, so the threat was the most severe means the Department had available to punish Frontline and extort changes in Frontline’s future behavior.  The Justice Department (sic) wants Frontline to cease speaking truth to power.  The Justice* Department’s leaders (*many exception apply, to secure your exception become a systemically dangerous institution (SDI) capable of making large political contributions) does not want Frontline embarrassing the Justice Department’s leaders, the SDIs, or the SDIs’ senior managers.  The Frontline program was very good at revealing why the Justice Department has refused to hold the ultra-elites accountable for their crimes even though those crimes made the banksters wealthy and drove a crisis that cost our Nation roughly $20 trillion and 10 million jobs.

The Justice Department’s shameful, extortionate response to Frontline’s latest act of speaking truth to power is equally eloquent as an admission that its leaders have perverted the department into a source of injustice.  The Justice Department did not try to refute the substance of Frontline’s detailed critique.  If Frontline had gotten its facts wrong the Department of Justice could have embarrassed Frontline by pointing out its errors.  The Department of Justice’s response is instead a classic case of a bully’s ad hominem threat to cripple Frontline’s future ability to expose the falsities that the powerful find so useful.

Bill Black is the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.

Bill writes a column for Benzinga every Monday. His other academic articles, congressional testimony, and musings about the financial crisis can be found at his Social Science Research Network author page and at the blog New Economic Perspectives.

Follow him on Twitter: @williamkblack

One response to “By their responses ye shall know them