Author Archives: William Black

Lenders’ Lies about Liar’s Loans and “Rigorous Underwriting”

Posted on February 2, 2016 | 5 comments

William K. Black
February 2, 2016     Bloomington, MN

It is time to break out one of our two family rules again – it is impossible to compete with unintentional self-parody.  How fraudulent is finance even now?  The Wall Street Journal reports that “big money managers” want to bring back “liar’s loans.”  I am trying to write much shorter columns, so there will be many columns in this series because the WSJ article so beautifully exemplifies the lies that the industry and the media told about liar’s loans before and after 2008.

Spoiler alert:  liar’s loans, as the name admits, are pervasively fraudulent.  Only fraudulent lenders make liar’s loans as a regular business practice.  These home loans make the officers wealthy through the “sure thing” of the “fraud recipe” for “accounting control fraud.” The WSJ, of course, ignores these facts and presents instead falsehoods provided by fraudulent officers.

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The Bank Whistleblowers United – Who are We, and Why are We Trying to Help Implement Real Banking Reform?

Posted on January 31, 2016 | 5 comments

[revised – Michael Winston’s bio added]

At this time (January 29, 2016), we consist of four founding members:

Gary Aguirre
William Black
Richard Bowen
Michael Winston

Our bios are listed at the end of this post.  We share a number of common experiences.  They explain why we came together to try to implement real reform.  Continue reading →

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The Bank Whistleblowers United Campaign Funding Plan: Say “No” to Contributions from Financial Felons

Posted on January 31, 2016 | 3 comments

In order to restore the rule of law, we ask every candidate for the nomination of their party for the presidency to pledge that they will not take contributions from any financial firm (or contributions above $250 from their officers) that the United States or its agencies have, after investigation, charged with committing the legal elements of fraud.  That list includes virtually all of the largest banks in the U.S. and Europe and Freddie and Fannie.  Indeed, most of these financial giants have admitted that they conducted massive frauds.

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An Explanation of the Bank Whistleblowers United 60-Day Plan

Posted on January 30, 2016 | 6 comments
  1. On Day One, the President directs each relevant federal financial agency to restore a superb criminal referral process, the criminal referral mandate, and criminal referral coordinators, at every federal financial agency. Local and state police forces rarely investigate sophisticated financial frauds.  That work is done overwhelmingly by roughly 2,000 FBI agents in the white-collar section.  That means that we have roughly two FBI agents per industry.  Those numbers mean that FBI agents don’t “walk a beat” – they only come when they receive a criminal referral alerting them to a likely fraud.  It also means that they cannot possibly have more than a few agents with expertise in the particular industry.  There is one other key fact to keep in mind – corporations don’t make criminal referrals against their own CEOs for obvious reasons, even though frauds led by CEOs cause by far the greatest harm of any form of fraud.

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Announcing Our Name Change to “Bank Whistleblowers United”

Posted on January 30, 2016 | 3 comments

William K. Black
January 30, 2016    Bloomington, Minneapolis

Well, this is slightly embarrassing.  Gary Aguirre, Bill Black, Richard Bowen, and Michael Winston came together to form a pro bono effort by bank whistleblowers to restore the rule of law on Wall Street.  As a placeholder in the drafting process, I called us the “Bank Whistleblowers’ Group” and that name survived the drafting process and was announced yesterday by me on New Economic Perspectives (NEP).  Michael Winston deserves credit for suggesting that we call ourselves “Bank Whistleblowers United” – a name that everyone in our pro bono group prefers.  We’ve changed the documents posted yesterday on NEP that make public our initiatives to reflect our new name.  The “announcement” document I posted yesterday has been changed to reflect the new name and I used the opportunity to make a few edits as well.

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Announcing the Bank Whistleblowers United Initial Initiatives

Posted on January 29, 2016 | 28 comments

William K. Black
January 29, 2016     Bloomington, Minnesota
Revised January 30, 2016

I am writing to announce the formation of a new pro bono group and a policy initiative that we hope many of our readers will support and help publicize.  Gary Aguirre, Bill Black, Richard Bowen, and Michael Winston are the founding members of the Bank Whistleblowers United.  We are all from the general field of finance and we are all whistleblowers who are unemployable in finance and financial regulation because we spoke truth to power and committed the one unforgivable sin in finance and in Washington, D.C. – being repeatedly proved correct when the powerful are repeatedly proved wrong.

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Wall Street Declares War on Bernie Sanders

Posted on January 25, 2016 | 20 comments

By William K. Black

Wall Street billionaires are freaking out about the chance that Bernie Sanders could be elected President.  Stephen Schwarzman, one of the wealthiest and most odious people in the world, told the Wall Street Journal that one of the three principal causes of the recent global financial trauma was “the market’s” fear that Sanders may be elected President.  Schwarzman is infamous for ranting that President Obama’s proposals to end the “carried interest” tax scam that allows private equity billionaires like Schwarzman to pay lower income tax rates than their secretaries was “like when Hitler invaded Poland.”

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DOJ’s Rules for Wall Street Are Nothing New

Posted on September 11, 2015 | Comments Off on DOJ’s Rules for Wall Street Are Nothing New

David Cay Johnston, Brandon Garrett and NEP’s Bill Black appear on HuffPostLive discussing DOJ’s rules for Wall Street. You can view it here.

 

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Now the DOJ Admits They Got it Wrong

Posted on September 11, 2015 | 12 comments

William K. Black

September 10, 2015

By issuing its new memorandum the Justice Department is tacitly admitting that its experiment in refusing to prosecute the senior bankers that led the fraud epidemics that caused our economic crisis failed. The result was the death of accountability, of justice, and of deterrence. The result was a wave of recidivism in which elite bankers continued to defraud the public after promising to cease their crimes. The new Justice Department policy, correctly, restores the Department’s publicly stated policy in Spring 2009. Attorney General Holder and then U.S. Attorney Loretta Lynch ignored that policy emphasizing the need to prosecute elite white-collar criminals and refused to prosecute the senior bankers who led the fraud epidemics.

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The Worst of the Worst of the Worst: New Century and its Economics Shills

Posted on August 10, 2015 | 10 comments

By William K. Black
Bloomington, MN:  August 8, 2015

I have often noted the existence of a primitive tribal taboo shared by virtually all economists against using the “f” word – “fraud.”  I have found a new example that sums up many of the pathologies of economics and economists.  It is an article entitled “Going for Broke: New Century Financial Corporation, 2004-2006.”  Given that New Century was a classic accounting control fraud, the use of the long-discredited gambling metaphor (our “autopsies” of S&L failures refuted it in 1984) demonstrates the crippling power of the taboo.  The three economists who authored the September 2010 article are Augustin Landier (Toulouse School of Economics) David Sraer (Princeton University) David Thesmar (HEC & CEPR) (collectively, “LST”).

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