Daily Archives: February 4, 2016

Sanders vs Clinton on Wall St Reform

Posted on February 4, 2016 by Devin Smith | Comments Off

NEP’s Bill Black and Roosevelt Institute Fellow Mike Konczal take on the policies of the two contenders for the Democratic nomination in this appearance of The Real News. Getting the message out about Bank Whistleblowers United! You can view here (includes transcript).

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Posted in William K. Black

Tagged Bank Whistleblowers United, BWU

Reviews of Why Minsky Matters

Posted on February 4, 2016 by Devin Smith | Comments Off

Below are links to a couple of reviews of Randy Wray’s latest book – Why Minsky Matters: An introduction to the work of a maverick economist.

What Would Minsky Do Now? A review by Laurence B. Siegel at ValueWalk

A review by William J. Bernstein for CFA Pubs.

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Posted in L. Randall Wray

Better Bankers Symposium

Posted on February 4, 2016 by William Black | Comments Off

The Quest for Better Bankers, Better Banks Requires Better Economists

Review by William K. Black

[This review originally appeared in Concurring Opinions]

In Better Bankers, Better Banks, Claire Hill and Richard Painter of the University of Minnesota Law School signal their approach in the subtitle: “Promoting Good Business through Contractual Commitment.” This review explains why their thesis is so timely in terms of the most important theoretical debates boiling in economics and banking regulatory policy and the severe degradation of bankers and banks over the last 30 years. Contractual commitment was, of course, the heart of Dr. Oliver Williamson’s approach to explaining modern capitalism. Williamson, in work that led to being made a Nobel Laureate in Economics, argued that corporations were not simply a “nexus of contracts,” but also that these contracts had evolved to suppress the enormous danger to commerce posed by the powerful incentive of profit-maximizing actors to engage in “opportunistic behavior” whenever “information” was “asymmetrical.” In The Economics Institutions of Capitalism, Williamson defined opportunistic behavior broadly and starkly as “self-interest seeking with guile.”

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Posted in William K. Black

Tagged banking, banksters

How long did it take for the WSJ to Lie about Liar’s Loans? Two Sentences

Posted on February 4, 2016 by William Black | 2 comments

William K. Black
February 3, 2016 Bloomington, MN

This is the third column in my series about the Wall Street Journal report that “big money managers” want to bring back “liar’s loans.” Here are the article’s first two sentences.

Wall Street wants to bring back the “low-doc” loan.

These mortgages, which are given to borrowers that can’t fully document their income, helped fuel a tidal wave of defaults during the housing crisis and subsequently fell out of favor.

The second sentence begins the lies with an important lie. “Low-doc” is a euphemism for endemically fraudulent “liar’s” loans. The second sentence repeats a lie that the fraudulent lenders have told for decades – it is their carefully crafted creation myth of liar’s loans. If the WSJ had done its job and exposed the lie, the creation myth and the fraud scheme would have died decades ago. Instead, the WSJ endorses the lie. Liar’s loans were not designed for or “given to borrowers that can’t fully document their income.” The two keys lies by the fraudulent lenders about liar’s loans arise from their use of the word “can’t.” As I explained in my second column in this series, the IRS created, decades ago, Form 4506-T, which allows the borrower to give the lender access to transcripts of the borrower’s two most recent tax returns. This means that the self-employed can easily and cheaply permit the lender to verify their income – and home lenders routinely require borrowers to sign the 4506-T as a mandatory part of the loan application. The first lie is that there are borrowers that are incapable (“can’t”) document their (purportedly ample) income.

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