Category Archives: William K. Black

O’Donnell Thinks Krugman is “a lonely voice opposing austerity” because he listens to MSNBC

Posted on March 19, 2013 by Devin Smith | 14 comments

On March 18, 2013, Lawrence O’Donnell stated that John Boehner’s admission that the U.S. faces no current debt crisis vindicated Paul Krugman, who O’Donnell described as “a lonely voice opposing austerity.” It is true that Krugman has been a strong opponent of austerity and has been proven correct. It is also true that MSNBC has frequently portrayed Krugman as an isolated, virtually sole opponent of austerity. Continue reading →

14 Comments

Posted in William K. Black

Tagged austerity, MMT, Modern Monetary Theory, msnbc

The SEC embraces irony – its enforcement “inflection” “point”

Posted on March 18, 2013 by Devin Smith | 5 comments

By William K. Black

Many readers doubtless shared my doubt that the SEC was capable of exercising the critical self-examination and sense of humor about itself as a flawed institution that would make it capable of deliberate irony. When I accessed the Wall Street Journal’s home page I found the most delicious example of SEC (and WSJ) irony. The WSJ synopsis of its article on the SEC reads: “The SEC is filing significantly fewer civil fraud cases this year, as its efforts to punish misconduct related to the financial crisis start to ebb.”

“Start to ebb?” Is it only me, or have other readers missed the tidal bore of SEC enforcement cases “punishing” the “misconduct” of the most culpable, elite perpetrators of what, even conservative, finance scholars describe as “pervasive” accounting control fraud by our “most reputable banks”? Continue reading →

5 Comments

Posted in William K. Black

Tagged accounting control fraud, banksters, Control Fraud, enforcement, Great Financial Crisis, SEC

The EU Needs a Bill Seidman to Save It from Itself: Cyprus and the “Reverse Toaster Theory”

Posted on March 18, 2013 by Devin Smith | 11 comments

By William K. Black
(Cross posted at Benzinga.com)

Everyone involved in financial regulation in modern times with any broad knowledge of the field will know of Bill Seidman, Chairman of the FDIC and the RTC. In 1989, the newly elected President Bush (the First) had a very good idea that became the Financial Institution Reform, Recovery and Enforcement Act of 1989 (FIRREA). FIRREA was one of the very unusual cases of enhancing financial regulation. It was prompted by the lessons we had learned in containing the Savings and Loan (S&L) Debacle. The original administration bill, however, had a very bad idea associated with the President’s chief of staff, John H. Sununu. Sununu is a brilliant guy – who wants you to know how much smarter he is than everybody else. His wiki biography page informs the reader that: Continue reading →

11 Comments

Posted in William K. Black

Tagged Cyprus, eu, euro crisis, Eurozone

Slate Agrees that Obama’s Vanity Drives the Grand Betrayal – and Praises the Betrayal

Posted on March 14, 2013 by Devin Smith | 42 comments

By William K. Black

Slate’s John Dickerson leads its (and CBS’) political reportage so his specialty is in examining what is actually driving politicians’ policies and their efforts to “spin” those policies. Dickerson authored an article entitled “Why Obama’s Outreach to Republicans is All About Obama” (March 12, 2013).

Dickerson’s theme is one I have long emphasized: Obama is driven by concerns for his “legacy.” In more human terms, he is intensely vain about how history will perceive him. That is common, particularly in politicians’ final terms, and it can be a positive influence on policy. Dickerson also agrees with my warnings that Obama sees inflicting the “Grand Bargain” on the Nation as his means of achieving his legacy. Here is Dickerson’s introduction to his article. Continue reading →

42 Comments

Posted in William K. Black

Tagged austerity, grand betrayal, obama, vanity

Which Aspect of the FDIC’s Litigation Failures is the Most Embarrassing and Damaging?

Posted on March 12, 2013 by Devin Smith | 9 comments

By William K. Black
(Cross posted at Benzinga.com)

On March 11, 2013 the Los Angeles Times published a revealing article by E. Scott Reckard entitled: “In major policy shift, scores of FDIC settlements go unannounced.”

The article’s summary statement captures the theme nicely. “Since the mortgage meltdown, the FDIC has opted to settle cases while helping banks avoid bad press, rather than trumpeting punitive actions as a deterrent to others.” Continue reading →

9 Comments

Posted in William K. Black

Tagged accounting control fraud, banksters, Control Fraud, fdic, liars loans, litigation failure

Sequestration – Fourth Austerity Shoe Drops

Posted on March 5, 2013 by Devin Smith | 6 comments

Latest segment from The Black Financial and Fraud Report at theRealNews.com

REAL NEWS NETWORK — “Welcome back to the Real News Network. I’m Paul Jay in Baltimore. And welcome to this week’s edition of The Bill Black Financial and Fraud Report. [Professor] Black now joins us from Kansas City, Missouri. Bill’s an Associate Professor of Economics & Law at the University of Missouri-Kansas City. He’s a white-collar criminologist, a former financial regulator. He is the author of the book, The Best Way to Rob a Bank Is to Own One.

Continue reading →

6 Comments

Posted in William K. Black

Tagged austerity, MMT, Modern Monetary Theory, sequestration

The latest failed effort to blame the Community Reinvestment Act for Accounting Control Fraud

Posted on March 4, 2013 by Devin Smith | 15 comments

By William K. Black
(Cross posted at Benzinga.com)

Introduction

The latest effort to blame the Community Reinvestment Act (CRA) for the epidemic of accounting control fraud that drove the crisis is an econometric study by Sumit Agarwal, Efraim Benmelech, Nittai Bergman, and Amit Seru (“the authors”) (“ABBS 2012”). The study does not prove its thesis. The fact that the authors claim it proves causality makes obvious their controlling biases. Their title is “Did the Community Reinvestment Act (CRA) Lead to Risky Lending?” Their abstract answers: “Yes, it did.” They claim that their econometric study proves causality – which is impossible given their methodology. The authors were taught from their freshman years that an econometric study of this nature could not prove causality. Errors this basic and embarrassing demonstrate the crippling grip of the authors’ biases.

Continue reading →

15 Comments

Posted in William K. Black

Tagged accounting control fraud, banksters, community reinvestment act, Financial crisis

Representative Conyers needs our Support to Kill the Sequestration’s Austerity

Posted on March 1, 2013 by Devin Smith | 27 comments

By William K. Black

We have been strangling the economic recovery through economic incompetence – and worse is in store because President Obama continues to embrace (1) the self-inflicted wound of austerity, (2) austerity primarily through cuts in vital social programs that are already under-funded, and (3) attacking the safety net by reducing Social Security and Medicare benefits. The latest insanity is the Sequester – the fourth act of austerity in the last 20 months. The August 2011 budget deal caused large cuts to social spending. The January 2013 “fiscal cliff” deal increased taxes on the wealthy and ended the moratorium on collecting the full payroll tax. The Sequester will be the fourth assault on our already weak economic recovery. We have a jobs crisis in America – not a government spending crisis and the cumulative effect of these four acts of austerity has caused a certainty of weak growth and a serious risk that we will throw our economy back into recession. The Eurozone’s recession – caused by austerity – greatly adds to the risk to our economy because Europe remains our leading trading partner.

Continue reading →

27 Comments

Posted in William K. Black

Tagged austerity, Conyers, sequester

“Pervasive” Fraud by our “Most Reputable” Banks

Posted on February 28, 2013 by Devin Smith | 8 comments

By William K. Black

A recent study confirmed that control fraud was endemic among our most elite financial institutions. Asset Quality Misrepresentation by Financial Intermediaries: Evidence from RMBS Market. Tomasz Piskorski, Amit Seru & James Witkin (February 2013) (“PSW 2013”).

The key conclusion of the study is that control fraud was “pervasive” (PSW 2013: 31).

“[A]lthough there is substantial heterogeneity across underwriters, a significant degree of misrepresentation exists across all underwriters, which includes the most reputable financial institutions” (PSW 2013: 29).

Continue reading →

8 Comments

Posted in William K. Black

Tagged Control Fraud, Financial crisis, fraud, liars loans, MMT, Modern Monetary Theory, pervasive fraud

The Sequester Is Awful And Obama Didn’t Even Try To Stop It

Posted on February 26, 2013 by Devin Smith | 31 comments

NEP’s William Black appears on Daily Ticker with Henry Blodget. With two days to go before “sequestration” chops an indiscriminate $85 billion out of Federal government spending, the blame game has reached a fever pitch. Bill explains it is dumb economics and some of the short term impacts of the sequester.

You can view the episode at this link. (Sorry no embedding Yahoo videos)

[Yahoo was having technical difficulty – if video is not Henry and Bill, click image of House of Representatives to immediate right of Richard Branson beneath video.]