The “Hyper-meritocracy” – an Oxymoron Led by Criminal Morons

By William K. Black

This column was prompted by William Galston’s review of Tyler Cowen’s new book Average is Over.  Galston’s column worries about the huge, permanent underclass that Cowen envisions will grow in the United States.  I write to challenge Cowen’s assumption that winners will prevail through a process of “hyper-meritocracy.”  Cowen’s embrace of Social Darwinism assumes that the winners have a selective advantage that arises from “merit” – which Cowen conflates with the ability to create wealth.  This is passing strange as we are still suffering from an orgy of wealth destruction led by the “winners.”  The people who grew wealthiest were often the people must responsible for the largest destruction of wealth in history.  In this first column I show that it is the most anti-meritocratic system.  We do not live in a “winner-take-all” Nation.  We increasingly live in a “cheater-take-all” system.

What Cowen has missed is the famous (but nearly famous enough) warning sounded by George Akerlof and Paul Romer in 1993 in their classic article “Looting: The Economic Underworld of Bankruptcy for Profit.”

“[M]any economists still [do] not understand that a combination of circumstances in the 1980s made it very easy to loot a [bank] with little risk of prosecution. Once this is clear, it becomes obvious that high-risk strategies that would pay off only in some states of the world were only for the timid. Why abuse the system to pursue a gamble that might pay off when you can exploit a sure thing with little risk of prosecution?” (Akerlof & Romer 1993: 4-5).

The result of these perverse incentives is the epidemics of accounting control fraud that drive our recurrent, intensifying financial crises.  In the savings and loan debacle, for example:

“The typical large failure [grew] at an extremely rapid rate, achieving high concentrations of assets in risky ventures…. [E]very accounting trick available was used…. Evidence of fraud was invariably present as was the ability of the operators to ‘milk’ the organization” (NCFIRRE 1993).

The large Enron-era frauds were all accounting control frauds.

Worse, when cheaters prosper market forces become perverse because of the “Gresham’s” dynamic in which bad ethics drives good ethics out of the markets and professions.  George Akerlof explained this in his most famous article on “Lemons” in 1970.

“[D]ishonest dealings tend to drive honest dealings out of the market. The cost of dishonesty, therefore, lies not only in the amount by which the purchaser is cheated; the cost also must include the loss incurred from driving legitimate business out of existence.”

Akerlof was not the first expert to understand the dynamic.

“The Lilliputians look upon fraud as a greater crime than theft.  For, they allege, care and vigilance, with a very common understanding, can protect a man’s goods from thieves, but honesty hath no fence against superior cunning. . . where fraud is permitted or connived at, or hath no law to punish it, the honest dealer is always undone, and the knave gets the advantage” (Swift, J. Gulliver’s Travels: 1726).

The mortgage fraud crisis occurred because the fraudulent CEOs whose banks created the twin epidemics of mortgage origination fraud deliberately generated a series of Gresham’s dynamics that produced an unethical race to the bottom in the professions that aided and abetted the loan origination fraud.  The earliest warnings of this were made by honest appraisers in 2000.

“From 2000 to 2007, a coalition of appraisal organizations … delivered to Washington officials a public petition; signed by 11,000 appraisers…. [I]t charged that lenders were pressuring appraisers to place artificially high prices on properties [and] “blacklisting honest appraisers” and instead assigning business only to appraisers who would hit the desired price targets”( FCIC 2011: 18).

A national survey of appraisers conducted in early 2004 found that 75% of appraisers had been urged within the prior 12 months to inflate an appraisal.  A 2007 survey found that the percentage of appraisers reporting that they had been urged to inflate an appraisal within the past 12 months had risen to 90% and honest appraisers were forced to pay a high price for refusing to give in to the coercion: 68% reported losing a client and 45% did not get paid for their work.  Note that a Gresham’s dynamic does not have to drive all the honest professionals out of the field to produce epidemic levels of fraud.  Even if only a small percentage of the appraisers are suborned they can inflate all the appraisals required.

New York Attorney General (now, governor) Cuomo investigation of Washington Mutual (WaMu) found that it had blacklisted honest appraisers.  Cuomo described WaMu as typical of nonprime lenders.

Similar Gresham’s dynamics have been documented in many crises and professions.

“[A]busive operators of S&L[s] sought out compliant and cooperative accountants.  The result was a sort of “Gresham’s Law” in which the bad professionals forced out the good” (NCFIRRE 1993).

Modern executive compensation is also a superb device for enlisting the aid of hundreds or even thousands of employees and officers and suborning internal controls.  It also reduces whistleblowing.

“Don’t just say: ‘If you hit this revenue number, your bonus is going to be this.’ It sets up an incentive that’s overwhelming. You wave enough money in front of people, and good people will do bad things” Franklin Raines:  CEO, Fannie Mae.

Raines’ analysis was correct, which explains why the bonus system he put in place was so successful in turning Fannie Mae into one of the world’s largest and most destructive accounting control frauds.

“By now every one of you must have 6.46 [earnings per share (EPS)] branded in your brains.  You must be able to say it in your sleep, you must be able to recite it forwards and backwards, you must have a raging fire in your belly that burns away all doubts, you must live, breath and dream 6.46, you must be obsessed on 6.46….  After all, thanks to Frank, we all have a lot of money riding on it….  We must do this with a fiery determination, not on some days, not on most days but day in and day out, give it your best, not 50%, not 75%, not 100%, but 150%.

Remember, Frank has given us an opportunity to earn not just our salaries, benefits, raises, ESPP, but substantially over and above if we make 6.46.  So it is our moral obligation to give well above our 100% and if we do this, we would have made tangible contributions to Frank’s goals.”  (Mr. Rajappa, head of Fannie’s internal audit, emphasis in original.)

The second epidemic of loan fraud by lenders created the epidemic of fraudulent “liar’s” loans.  The liar’s loan epidemic interacted with the appraisal fraud epidemic to hyper-inflate the real estate bubble and created a financial catastrophe.  The fraudulent leaders of nonprime lenders deliberately created a Gresham’s dynamic among their loan officers and their loan brokers.  Loan brokers did most of the dirty work (giving the lenders deniability) of inflating appraisals and putting the lies in liar’s loans.

“More loan sales meant higher profits for everyone in the chain. Business boomed for Christopher Cruise, a Maryland-based corporate educator who trained loan officers for companies that were expanding mortgage originations. He crisscrossed the nation, coaching about 10,000 loan originators a year…. (FCIC 2011: 7)

“His clients included many of the largest lenders—Countrywide, Ameriquest, and Ditech among them. Most of their new hires were young, with no mortgage experience, fresh out of school and with previous jobs ‘flipping burgers,’ he told the FCIC.  Given the right training, however, the best of them could ‘easily’ earn millions.”  (FCIC 2011: 8 )

“He taught them the new playbook: ‘You had no incentive whatsoever to be concerned about the quality of the loan, whether it was suitable for the borrower or whether the loan performed.’ He added, ‘I knew that the risk was being shunted off. I knew that we could be writing crap. But in the end it was like a game of musical chairs. Volume might go down but we were not going to be hurt’” (FCIC 2011: 8 ).

“I knew that we could be writing crap.”  Under the incentive structures deliberately created by the officers controlling the lenders the loan officers “had no incentive whatsoever to be concerned about the quality of the loan, whether it was suitable for the borrower or whether the loan performed.”  To ensure that their new loan officers understood and responded to the perverse incentives the fraudulent lenders hired people like Christopher Cruise to train them to understand and act in accordance with those incentives.

The general reader may be confused as to why the CEOs leading the fraudulent lenders were deliberately creating incentives to make enormous numbers of bad loans.  The fraud “recipe” for an accounting control fraud optimizing fraudulent income by making (buying) bad loans has four ingredients.

  1. Grow extremely quickly by
  2. Making (buying) bad loans at premium yield
  3. While employing extreme leverage, and
  4. Providing grossly inadequate allowances for loan and lease losses (ALLL)

This is the recipe that produces what Akerlof and Romer aptly described as a “sure thing” and that hyper-inflated the bubble and drove the crisis.  The recipe produces three sure things: the lender (purchaser) of “crap[py]” loans will immediately report record income, the controlling officers will promptly be made wealthy through modern executive compensation, and the firm will suffer severe losses.

It is simple to follow the recipe.  No skill is required.  The fact that the recipe can be employed simultaneously by the originator/seller and the buyer of the fraudulent loans explains why the secondary market followed the financial version of “don’t ask; don’t tell.”

Even the former head of the professional association of mortgage brokers, while trying to minimize the success of the Gresham’s dynamic, actually conceded its critical importance.

“Marc S. Savitt, a past president of the National Association of Mortgage Brokers, told the Commission that while most mortgage brokers looked out for borrowers’ best interests and steered them away from risky loans, about 50,000 of the newcomers to the field nationwide were willing to do whatever it took to maximize the number of loans they made. He added that some loan origination firms, such as Ameriquest, were ‘absolutely’ corrupt” (FCIC 2011: 14).

Ameriquest was not some random lender.  It was the fraudulent lender that first developed liar’s loans and it was for many years the largest originator and seller of fraudulent loans.  Its CEO, Roland Arnall, was made wealthy by the fraud – wealthy enough to make the large political contributions that got him appointed our Ambassador to the Netherlands after the fourth time Ameriquest was subject to government sanctions.  It was Ameriquest that WaMu and Citicorp rushed to acquire even though Ameriquest was the most notorious lender in America.

Sadly, Savitt’s estimate of fraudulent loan brokers was far too low.  When entry is easy – and becoming a mortgage broker was simple – and the financial incentives to commit fraud are powerful the result is horrific.

“According to an investigative news report published in 2008, between 2000 and 2007, at least 10,500 people with criminal records entered the field in Florida, for example, including 4,065 who had previously been convicted of such crimes as fraud, bank robbery, racketeering, and extortion” (FCIC 2011: 14).

A loan broker could make $2,000 to $20,000 by getting a single bad loan approved.  But he got nothing if the loan was not approved.  The brokers knew that that if they put the borrower into a liar’s loan the broker would receive a higher fee because such loans had a higher interest rate (which increased the broker’s compensation).  The brokers knew that the lender would not verify the borrower’s reported income on a liar’s loan.  If the broker inflated the borrower’s income the lender was far more likely to approve the loan.  The broker, but not the borrower, knew how much to inflate the borrower’s stated income.

“[Many originators invent] non-existent occupations or income sources, or simply inflat[e] income totals to support loan applications. Importantly, our investigations have found that most stated income fraud occurs at the suggestion and direction of the loan originator, not the consumer.”  Tom Miller, AG, Iowa, 2007 testimony to Fed.

It was the lenders and their agents that put the lies in “liar’s” loans and that used coercion to inflate appraisals.  No honest lender would create the perverse incentives sure to lead to fraudulent epidemics of liar’s loans and inflated appraisals.

The constants present in each of our three modern financial crises (the S&L debacle, the Enron-era scandals, and the mortgage fraud crisis) were that the crises were driven by epidemics of accounting control fraud and that during the expansion phase of each crisis neo-classical economists praised the worst frauds as brilliant innovators who understood the importance of technological advances.  The economists assured us that the massive compensation that the fraudulent CEOs awarded themselves was the just result of an emerging meritocracy.  The reality was the opposite.

“Neither the public nor economists foresaw that [S&L deregulation was] bound to produce looting.  Nor, unaware of the concept, could they have known how serious it would be.  Thus the regulators in the field who understood what was happening from the beginning found lukewarm support, at best, for their cause. Now we know better.  If we learn from experience, history need not repeat itself” (George Akerlof & Paul Romer.1993: 60).

Cowen does not discuss financial fraud, Akerlof and Romer’s findings, or the Gresham’s dynamic in his book even though they are central to his purported thesis.  He simply assumes that the financial frauds were made wealthy because they were more “productive.”  They were the opposite of productive.  Cowen has adopted, implicitly, the label that Christopher Cruise, the lead training official that the fraudulent lenders chose to train their loan officers, used.

“Most of their new hires were young, with no mortgage experience, fresh out of school and with previous jobs ‘flipping burgers,’ he told the FCIC.  Given the right training, however, the best of them could ‘easily’ earn millions.”  (FCIC 2011: 8 )

Cruise and Cowen simply assume that whoever can “earn millions” represents the “best” of Americans.  It can, but it can also represent the worst of us.  Finance has become dominated by the worst of us, which is why we have recurrent, intensifying financial crises driven by their fraud epidemics.  Cowen looks at the results of our hyper-anti-meritocracy system of finance, a gaudy whorehouse bedecked with red neon lights.  Cowen concedes in his book (though it does lead to any analytical inquiry) that finance executives are currently the largest winners in gaining wealth despite causing the massive loss of societal wealth in the ongoing crisis.  Without even discussing fraud or why the people who are the leading destroyers of wealth were the largest beneficiaries and experienced the greatest growth in wealth since 2009 Cowen describes finance as if it were a temple of meritocracy.  Cowen has demonstrated that when Akerlof and Romer said of economists – twenty years ago – that “now we know better” about fraud and financial crises they were far too optimistic about their profession.

34 responses to “The “Hyper-meritocracy” – an Oxymoron Led by Criminal Morons

  1. The Problem, Professor Black, is that even so-called “prudent”, “responsible” lending by a government-backed credit cartel is still the unethical transfer of purchasing power from some, the so-called less creditworthy, to the so-called more creditworthy.

    And we’re supposed to be upset that thieves are themselves the victims of thieves? I can’t think of anyone less deserving of sympathy than rich bank owners (though I have nothing to say against non-rich pensioners that are bank owners since our system is set up so that one is either a victimizor or a victim. How’s that for perverse incentives, Professor Black?).

    I’d say the money system ITSELF is criminal, though legal. How can a criminologist not see that?

    • You’re daft.

    • Mr. Beard, I don’t have any idea what you mean in your first sentence. Responsible lending backed by the fdic is an ethical transfer of purchasing power to the less creditworthy. Prudent lenders give sensibly-sized loans at fair terms, so that borrowers can successfully use the funds to purchase an item that generates value e.g. a home (instead of paying rent), yet still be able to repay the borrowed funds. The lender makes a fair but not excessive return.

      As for thieves: What?! Professor Black describes only one group of thieves, and he certainly does not imply that they are deserving of our sympathy, contrary to what you stated. Those who are deserving of sympathy:
      (1) the 11,000 real-estate appraisers whose petitions and warnings were ignored from 2000 to 2007 and
      (2) the honest mortgage brokers who were advocates for their customers (the consumer borrowers) but did not put either the home buyer nor the bank lender at risk by falsifying buyer assets (in order to qualify for a larger loan).

      I don’t believe that the majority of mortgage originators and employees of now moribund institutions such as WaMu were thieves. Most lost their jobs, without having participated in the huge fraud-driven windfalls that their corrupt executive management devised.

      No one is sympathetic toward rich bank owners (your words). No need, as rich bank owners are thriving! They have continued to prosper, from 2008 through the present, unlike the rest of us. Our regulatory authorities have abandoned substantive enforcement. Instead, our legislature seems to be actively subverting the power and beneficent aspect of government. They facilitate an optimally efficient transfer of wealth from the majority, i.e. masses of jobless or underemployed taxpayers, to the private fortunes of the already fabulously wealthy.

      • Mr. Beard, I don’t have any idea what you mean in your first sentence. Ellie Kesselman

        Suppose A has $100,000 in cash and B has no cash but land valued at $120,000 which secures a credit line for that amount. Now suppose both go to an auction. Then why should B be able to outbid A because some bank, by virtue of government privileges, is able to create $120,000 in new purchasing power for him? Has not A been cheated? Is it at all morally relevant that B is so-called creditworthy simply because he has land or other collateral to secure a loan? So that the bank can sell that collateral in case of loan default? No, it is morally irrelevant since the ability to return stolen purchasing (plus interest) DOES NOT justify theft.

        Thus the money system steals from the less or non so-called creditworthy for the benefit of the more so-called creditworthy and, of course, the banks themselves.

  2. My father spoke to me:: “Do the right thing at all times – even when you feels no one is observing.” So I expect it of myself and I seek it in others.

  3. Well said, Prof. Black.

    Now for the next stage: why do so few lawmakers and other policy people grasp the crisis for what it is, even 25 years on? Even today’s “conservatives” say they hate cheaters–and many of them really do seem to hate SOME cheaters. And yet you can spend hours and days, online and in the real world, arguing with people who will insist, even today, that the fact that no actual human bankers have been brought to the dock means that there was no actual high level fraud. “Name the names!” they say, and if you mention Tangelo or Arnell they say “they aren’t criminally charged.”

    We need a next step.

    • What if the relevant laws are so subjective as to be unenforceable? Can one give the banks the right to steal and then expect them to not steal “too much”, whatever that is?

    • The next step has to do with picking up the phone and telling your congressman or woman that you want the financial crisis of 2008 investigated properly by an independent commission, or you’re going to primary him (her). Phone calls stopped a war with Syria, didn’t they?

  4. John Hemington

    Mr. Beard says, “Can one give the banks the right to steal and then expect them not to steal ‘too much'” . . . Perhaps I missed something along the line, but I have been reading Professor Black’s various works for a very long time and for the life of me can not ever remember him urging that our “laws be made so subjective as to be unenforceable.” He has, if I recall correctly, always been a vigorous critic of the massive deregulation which occurred under Reagan, Bush, Clinton and Bush II administrations. Nor do I recall Professor Black ever condoning any loosening of regulatory enforcement.

    On one point I will concede that Mr. Beard is no doubt correct, if (to use Professor Black’s terminology) one creates a criminogenic environment then it is highly likely that criminals will come to dominate the profession, whatever that may be. It would seem to me that this is exactly what Professor Black is asserting in this post — the criminals are not winning because of some meritocratic brilliance or justice in their actions, they are winning because the system was rigged in order to allow criminal behavior to prosper. If the political and the criminal justice systems had not been compromised by those wanting to promote this type of criminal behavior, the behavior itself would have been stopped at an early stage and the players charged with crimes and tried.

    Instead, our elected leaders have “elected” to allow them to remain in place, in position to continue pillaging the communities they are charged with serving. In this situation it matters not whether it is a quasi-governmental operation such as Fannie and Freddie were in the mid-2000s or purely private organizations such as financial institutions and mortgage brokers. Fraud is fraud regardless of who or what commits it; and fraud on this scale can only occur with the overt assistance of the political and regulatory organs of government. The ability of the financial sector to corrupt our government and the willingness of our government to be corrupted in this way is what this is all about — and make no mistake, the move to create a corrupt government came from the private sector with the aid and assistance of academic economist and think tank shills.

    Yes, a relatively small number of people made hundreds of millions, even billions, of dollars from these criminal actions — and they were criminal actions even with the loosened regulatory structure — but they did not earn this money, they stole it and there is no merit in thievery.

    • Skip all Beard’s comments otherwise they will drive you crazy!

      • Joe Firestone

        Hey, skip the ad hominems!

        • “Doug Walton, Canadian academic and author, has argued that ad hominem reasoning is not always fallacious, and that in some instances, questions of personal conduct, character, motives, etc., are legitimate and relevant to the issue,[9] as when it directly involves hypocrisy, or actions contradicting the subject’s words.” (Wikipedia)

      • Speaking of crazy, reading Scripture daily (almost daily, that is, since sometimes I don’t remember how good it is for me until I force myself to start reading) has greatly increased my own sanity or at least has made me insane in the same manner (but to a smaller extent) as some of the greatest people in the most, far and away, successful culture in history.

  5. Dr. Black. You must get tired repeating the same thing over and over and over again, but I, for one, thank you a million times over for having the fortitude to repeat it in as many ways as you can. It’s a valuable lesson on top of it all. This one is going to all the other people I sent your previous articles to who may not have understood them or not wanted to wade to the end.

    Thank you.

  6. You are correct, the present system does operate on cheater takes all methods…we can see it in the case of the continual illegal US military occupation of 120 plus years…read this educational website and see for yourself…thank you for putting this out because the other false assumption is that if you have a PHd…you got it because you are smart? No…most who have their degrees still do not have a job, for many reasons and one being the true reason why, they do not fit into this crooked system no matter what your expertise is, if you are not willing to; lie, cheat and do as you are told…you do not fit and will never get a job to do what you know is right…those who get the jobs know their way around the system and are willing to play the three monkeys game to; pay their bills for their life pathetic style to hold the family together or get the money to be recognized by the people that matter, to feed their ego…both reasons are just excuses and only adds to the world wide problems that supports wars, let Monsanto sly, allows the President of the US to succeed in pushing his Obama scare package or the Syrian war…they are all connected.

  7. The educational website is; to my previous comment.

  8. Pingback: Links 10/5/13 « naked capitalism

  9. As the Brits might say the United States has become ” A taking-the-piss republic” which translated means a blatant disregard of democracy and laughing about getting away with such disregard. Evidence? John Boehner and many of his fellow republicans should long ago have started serving long prison sentences for taking bribes:-

  10. Wow! Boehner admits to bribery on the Senate floor (see the video above)? How can that go unpunished? He needs to cry in jail!

  11. Boehner can share a cell with Christopher Cruise.

  12. Jesse Porter

    The word “merit” begs the question “Who ascribes value” to the idea, thing or person who is said to be meritorious? Too often the “who” is a general assent of people to a leader, better described as someone who has arrogated a position of leadership which an insufficient portion of the people from whom said leadership has been arrogate have not objected. It has become my position, possibly because I have turned cranky in my old age, that I recognize no one as my leader. I have met no one yet who is not a liar and a fraud, including that hardest person to know, me.

  13. Richard Harris

    The USA needs an enema.

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  16. Christina Marlowe

    On Global Financialization:

    There is one and only one solution to both the American and the entire Global problem of the thorough “financialization” of the Kleptocratic, Corporate-owned and Corporate-Run [Corporate Takeover] Fascist Dictatorships that have enthroned themselves to power. Here it is:

    The CRIMINALS must be PROSECUTED for their CRIMES. Absolutely NOTHING will “change,” much LESS get “better” until and unless THAT happens. Indeed, if the CRIMINALS are ALLOWED to continue to PLUNDER, it will, in FACT, only get WORSE. MUCH WORSE.

    ALL criminals involved in these monstrous, reprehensible, PATHOLOGICAL financial CRIMES, which were clearly, totally and willfully collaborated as a gigantic Scheme to Defraud and totally BILK the very citizens of this, our country, the United States, and, um, the entire world, MUST PAY.

    Each one of these Criminals must be Indicted, Prosecuted to the fullest extent of THE NEW LAWS, (all of which will be made retroactive) and, finally, actually PUNISHED SEVERELY; Let me be perfectly clear: Each CRIMINAL that is found GUILTY in the Courts of Law, whether by a judicious Judge or by a Jury of his/her “peers,” shall be held fully accountable for their [blatant] CRIMES, and penalties will surely entail STIFF terms of imprisonment, along with the lawful SEIZURE of ALL ill-gotten gains.

    We all know, for example, that George Bush, Dick Cheney…that list goes on and on; And let’s not forget Jamie Dimon, Lloyd Blankfein, Richard Fuld, Hank Paulson, Larry Sommers, Timothy Geithner, Alan Greenspan; Most of our [illegitimate/kleptocratic] government; And an astonishingly dizzying and countless number of all the other CRIMINALS; All should be on the TOP of the list for the vigorous investigations and thorough prosecutions.

    We MUST HOLD each of these Serial PREDATORS/Criminals FULLY ACCOUNTABLE for their outrageous crimes of Fraud, Scheme to Defraud, Financial Elder Abuse, and countless other very serious Felonies.

    So, I am merely waiting, and have been for quite some time, for the unrelenting waves of Peasants with Pitchforks…In the meantime, I think that the most apt term is Brainwashed. Yes, brainwashing has been used throughout the ages via a myriad of tactics; One is Patriotism, Nationalism; Being taught that America (or which ever country) is Great, Superior; Also, it builds a military that won’t ask questions as they are deluded into thinking that they are Patriots and Heroes.

    Just Sayin’…


  17. Thank you Mr. Black for another well written article.
    Thank you Mr. Black for exposing fraud in our financial system
    Thank you Mr. Black for explaining how this fraud takes place
    Thank you Mr. Black for your successful 1000 felony convictions during the S&L crisis.

    It does not take a PhD to know that as long as fraud goes unprosecuted, it will continue and the economy will never recover.

    Are you listening Obama and Holder?

    • Fraud? Banking started with this fraud*: “Your deposit is available on demand even though we lent most of it out” and it’s only gotten worse since the banks have worked hard ever since to insulate themselves from the consequences of their own behavior via government privilege at the expense of everyone else. Let me clue you, honest businesses don’t require privileges from the government.

      *The current fraud (always present to some extent but now almost unlimited due to government privileges) is that the banks lend us each others stolen purchasing power and charge us for the dubious honor of being thieves!

  18. «Dr. Black. You must get tired repeating the same thing over and over and over again, but I, for one, thank you a million times over for having the fortitude to repeat it in as many ways as you can.»

    But repeating a deeply unpopular message is pointless and irritating.

    Most Real Americans *celebrate* the cheater-take-all attitude of their betters, and just wish they had the same opportunity to cheat their way to becoming millionaries or billionaires. And they are self-loathers if they realize that they don’t have the skills or the taste for the extensive cheating that would make them rich quick.

    Most Real Americans don’t give a damn about how “the best of them could ‘easily’ earn millions”, because millions mean success, and it is envy to begrudge someone’s success, no matter how obtained, and most Real Americans don’t judge winners who do whatever it takes to make money fast, which is the Real American Dream.

    What Bill Black ought to develop is an argument to show that cheater-takes-all means that most Real Americans, and especially the business owning ones, will see their personal wealth reduced, and tey won’t have any chance to be winners themselves. That’s what would matter to the voters and campaign donors that ultimately control political will.

    The enormous amount of cheating and stealing during the Roaring Twenties bubble was widely popular, and public opinion turned only when after the end of the bubble most Real Americans found that they had been personally ruined by all the cheating and stealing, and these attitudes lasted decades, and to a very large extent that Bill Black and colleagues managed to do something about the S&L wave of larceny was enabled by the last surviving laws and attitudes from that time.

    But he needs to find again arguments to persuade that cheating is bad for them the majority of voting Real Americans, ordinary people who would love to cheat their way to a few millions, and admire the winners who have had the luck and guts to do it.

    Bill Black is the Jimini Cricket, Wall Street are Cats and Foxes, and Real Americans are Pinocchios…

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  20. Amazing the ignorance shown in this entire article. Variations of the word respons… as in responsible, appear only twice, and neither in the context of actual personal responsibility.

    If the Officers and managers and major share holders and boards of directors of these financial institutions were actually personally financial responsible for the liabilities of these financial institutions, could not avoid them by filing bankruptcy, and that responsibility extended to all immediate family members, including wife, children, parents and siblings, then you can bet there would be almost zero failures for such institutions.

    Some family members could avoid responsibility by making a case in civil court that they did not know and could not be reasonably be expected to have known about the malpractice. Those would be members who were not living with the responsible person, and had had no monetary benefit from his fraudlent success. But if he gifted a member with more than a family members monthly income in any single twelve month period, that person better be ready with a good defense, or have done due dilligance.

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