Tag Archives: accounting control fraud

Myerson’s newest model: “tax poor workers to subsidize rich bankers”

Posted on June 13, 2013 by Devin Smith | 10 comments

Roger Myerson has recently updated an article on his purported mechanism for explaining why our supposedly efficient markets are producing growing crises.

A MODEL OF MORAL-HAZARD CREDIT CYCLES (March 2010, revised September 2012)

Continue reading →

10 Comments

Posted in William K. Black

Tagged accounting control fraud, banksters, Control Fraud, plutocracy, plutocrats

Roger Myerson Updated Paean to Plutocrats as Capitalism’s Greatest Treasure

Posted on June 13, 2013 by Devin Smith | 4 comments

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

In my first article on the Nobel Laureate Roger Myerson’s failed policies that helped make finance so criminogenic that it drove the ongoing financial crisis I began the exploration of Myerson’s claim that plutocrats constituted the unique advantage of capitalism over a system that forbade privately-owned firms. Myerson calls a system that forbids privately-owned firms “socialism.” He asserts that plutocrats demonstrate the accuracy of Friedrich von Hayek’s assertion of the inherent advantage of “capitalism.” My first article used Myerson’s Prize lecture to explore why his methodology, theories, and recommended policies failed so spectacularly. This article expands on that theme by citing other work by Myerson.

Continue reading →

4 Comments

Posted in William K. Black

Tagged accounting control fraud, banksters, Control Fraud, plutocracy, plutocrats

Roger Myerson’s Paean to Plutocracy

Posted on June 5, 2013 by Devin Smith | 11 comments

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

Introduction

This article begins a project to critique the work by economists concerning regulation that has led to the award of Nobel prizes. The prize in economics in honor of Alfred Nobel is unique. It is not part of the formal Nobel Prize system. It was created by a large Swedish bank and it is the only “science” prize frequently given to those who proved incorrect. The theme of my series is how poorly the work has stood the test of predictive accuracy. Worse, it has led to policies in the private and public sector that are criminogenic and explain our recurrent, intensifying financial crises.

Continue reading →

11 Comments

Posted in William K. Black

Tagged accounting control fraud, Control Fraud, plutocracy, Riksbank, Roger Myerson

How Dare DOJ Insult HSBC’s Crooks as Less “Professional” than Liberty Reserve’s Crooks?

Posted on May 30, 2013 by Devin Smith | 3 comments

By William K. Black

Standard Chartered and HSBC’s leaders must be doubly humiliated by the description by Mythili Raman, the acting head of the U.S. Department of Justice’s (DOJ) Criminal Division, of Liberty Reserve’s money laundering operation. UK laws are, of course, very congenial to those suing for libel and I am sure that these banking titans are meeting with their solicitors to demand a retraction and apology from Raman. In the very first clause of her May 28, 2013 statement to the media on the actions against Liberty Reserve’s controlling officers, Raman emphasized how “professional” they were as money launderers: “Today, we strike a severe blow against a professional money laundering enterprise charged with laundering over $6 billion in criminal proceeds.” In four paragraphs, she used the word “professional” three times and “sophisticated” once to describe Liberty Reserve’s money laundering. Continue reading →

3 Comments

Posted in William K. Black

Tagged accounting control fraud, Control Fraud, DOJ, HSBC, Liberty Reserve, Standard Chartered

Why Do the Folks Who Make Booze Care More about their Reputations than the Bankers?

Posted on May 28, 2013 by Devin Smith | 4 comments

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

There are many forms of control fraud. I have written primarily about accounting control frauds because they drive our recurrent, intensifying financial crises and we are in the midst of the worst such crisis in modern history. I wrote recently about the intersection of anti-purchaser and anti-employee control fraud in Bangladesh that killed 1,127 employees (and injured roughly twice that number) and made the point that control frauds kill and maim more people than traditional blue collar crimes and cause greater financial losses than all other forms of property crime combined. Control frauds also cause a greater number of crimes than do traditional blue collar crimes. Think for example of the number of victims of the Libor scams, measuring in the hundreds of thousands and the foreclosure frauds.

Continue reading →

4 Comments

Posted in William K. Black

Tagged accounting control fraud, Control Fraud, gresham's dynamic

Brown-Vitter Will Not and Cannot Work but it is Criminogenic

Posted on May 10, 2013 by Devin Smith | 12 comments

By William K. Black

Introduction

Senators Sherrod Brown (D-OH) and David Vitter (R-LA) have introduced a bill entitled “Terminating Bailouts for Taxpayer Fairness Act of 2013.” It is a miracle of modern staffing that Vitter, who loves polluters as much as his prostitutes, was able to pull himself away from demanding that President Obama’s nominee to run the EPA answer over 600 questions and join Brown in proposing the bill. Under Obama, bipartisan bills have a dismal fate because the Democrats negotiate away key elements necessary to create a good bill and add provisions that make parts of the bill harmful – just to pick up a few token co-sponsors – and then the Republicans kill good parts of the bill anyway and try to enact the bad parts. Continue reading →

12 Comments

Posted in William K. Black

Tagged accounting control fraud, Brown-Vitter, criminogenic, SDI, too big to fail

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

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

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 →