Tag Archives: banks

Paul Krugman and Holman Jenkins Shill for the Giant Banks

Posted on April 25, 2016 by William Black | 3 comments

By William K. Black
April 20, 2016 Bloomington, MN

Holman Jenkins, the ultra-conservative Wall Street Journal columnist who specializes in global climate change denial and elite financial fraud denial, has written recently to join Paul Krugman in defending the systemically dangerous banks. Jenkins is a member of the WSJ’s loopy editorial board. Jenkins’ title was “Big Banks Aren’t the Problem.” Jenkins’ thesis raises obvious and vital questions – he ignores each of them because answering them would falsify his thesis.

The 2008 crisis did not begin in a handful of too-big-to-fail banks, but in incentives cast far and wide among home buyers, mortgage brokers, lenders and others to underwrite tax-advantaged, one-way bets on home prices.

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Posted in William K. Black

Tagged banks, banksters, Great Financial Crisis, jenkins, krugman

A Question to Our Bank CEOs Who Are Criminals: “Have You No Sense of Decency”?

Posted on March 4, 2015 by William Black | 4 comments

By William K. Black
Quito: March 4, 2015

The FCPA Blog, an invaluable aid to anyone involved in the effort against corruption, has just run a story that epitomizes the neo-liberal approach to “liberty.” There is a massive movement, well-funded by political contributions, to privatize our prison systems. The private jailors overwhelmingly want to deal with the lowest risk jail populations – and then claim that they are “less expensive” than other prisons owned by the State.

The “Cash for Kids” Scheme

In Pennsylvania, in a fitting illustration of the dark side of von Hayek’s praise of “spontaneous order,” this privatization movement reached its neo-liberal peak when the owner of two privatized juvenile detention facilities bribed two Pennsylvania judges to send more kids to jail and maximize the owners’ profits. The huge size of the bribes demonstrates the scale of the miscarriage of justice and the enormous profits that injustice produced for the owner of the privatized juvenile detention facility. The FCPA Blog tells the sickening tale.

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Posted in William K. Black

Tagged banks, banksters, kangaroo court, neo-liberal

The Wall Street Journal’s Incredible Claim that Banks Can’t “Game” Asset Values

Posted on October 6, 2014 by William Black | 3 comments

By William K. Black

The Wall Street Journal has published a disingenuous editorial that claims that it is we should not worry about anti-regulatory leaders who produce a self-fulfilling prophecy of regulatory failure because they are chosen on the basis of their ideological opposition to effective regulation. The WSJ’s position is that George Stigler supposedly proved that “regulatory capture” is “inevitab[le]” and that any need for financial regulation and supervision can be supplied by “simple laws that can’t be gamed” such as a 15% capital requirement.

“Once one understands the inevitability of regulatory capture, the logical policy response is to enact simple laws that can’t be gamed by the biggest firms and their captive bureaucrats. This means repealing most of Dodd-Frank and the so-called Basel rules and replacing them with a simple requirement for more bank capital—an equity-to-asset ratio of perhaps 15%. It means bringing back bankruptcy for giant firms instead of resolution at the discretion of political appointees. And it means considering economist Charles Calomiris’s plan to automatically convert a portion of a bank’s debt into equity if the bank’s market value falls below a healthy level.”

No person did more to try to make financial regulation ineffective than did George Stigler, though Peter Wallison, Alan Greenspan, and Charles Calomiris were all in the running for that title. No media organ tries so hard to destroy effective financial regulation as the WSJ. Calomiris also ran his bank into the ground and was denounced by his brother as incompetent, so the suggestion that we take advice from him is a fine example of unintentional self-parody.

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Posted in William K. Black

Tagged accounting control fraud, banks, banksters

Bank Dollars & Sovereign Spending

Posted on September 3, 2014 by J.D. Alt | 28 comments

By J.D. Alt

Why do so many people—including the authors of most economics textbooks—believe the U.S. banking system creates the U.S. dollars we earn and spend and pay our taxes with? It’s because the U.S. banking system does, in fact, “issue” the great majority of the dollars we use—by making loans to businesses and citizens which are not backed by “real” dollars the banks have on deposit. What everyone overlooks, however (for reasons not entirely clear) is the fact that these new loan dollars are “made real” by the U.S. government’s solemn promise to convert them at any time, on demand, into actual, “real”, sovereign U.S. dollars. The U.S. government is able to make this promise because, by law, it can issue the necessary actual dollars by fiat (by simply “declaring” the dollars into existence.) A lot of people (again for reasons not entirely clear) don’t like to hear that last part. But it’s simply a fact of life: the cash dollar bills you get from an ATM machine are not printed up (created) by the banks—they are printed (or created electronically as needed) ONLY by the U.S. sovereign government.

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28 Comments

Posted in J. D. Alt

Tagged banking, banks, money, sovereign currency

WORLD without BANKS

Posted on August 12, 2014 by J.D. Alt | 37 comments

By J.D. Alt

Sometimes it helps, if you want to see and understand something more clearly, to imagine the world without it. I just finished a book (“Rethinking Money” by Benard Lietaer and Jacqui Dunne) that was so thoroughly confused—and confusing—about how the U.S. private banking system “creates our money” (but perversely refuses to create enough of it) that I felt an overwhelming need to try to clarify, in my own mind, what the private banking system actually is. That’s when I got the idea of imagining a world without private banks at all—and trying to see at what point, and for what purpose, they become useful or, perhaps, even necessary.

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Posted in J. D. Alt

Tagged banks

It’s Good – no – Great to be the CEO Running a Huge Criminal Bank

Posted on April 29, 2014 by Devin Smith | 2 comments

By William K. Black

Every day brings multiple new scandals. At least they used to be scandals. Now they’re simply news items strained of ethical content by business journalists who see no evil, hear no evil, and speak not about evil. The Wall Street Journal, our principal U.S. financial journal ran two such stories today. The first story deals with tax evasion, and begins with this cheery (and tellingly inaccurate) headline: “U.S. Banks to Help Authorities With Tax Evasion Probe.” Here’s an alternative headline, drawn from the facts of the article: “Senior Officers of Goldman Sachs and Morgan Stanley Aided and Abetted Tax Fraud by Wealthiest Americans, Failed to Make Required Criminal Referrals, and Demanded Immunity from Prosecution for Themselves and the Banks before Complying with the U.S. Subpoenas: U.S. Department of Justice Caves in to Banker’s Demands Continuing its Practice of Effectively Immunizing Fraud by Most Financial Elites.”

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Posted in William K. Black

Tagged accounting control fraud, banks, Control Fraud, criminogenic environment

What Banks Should Expect in the Future

Posted on April 19, 2014 by William Black | Comments Off

By William K. Black

Bill talks with CCTV America about the future expectations for Banks.

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Posted in William K. Black

Tagged accounting control fraud, banking, banks, Control Fraud, Great Financial Crisis, regulation, white collar crime

Why do Banking Regulators bother to Conduct Faux Stress Tests?

Posted on September 20, 2011 by William Black | Comments Off

By William K. Black
(Cross-posted from Benzinga.com)

One of the many proofs that banking regulators do not believe that financial markets are even remotely efficient is their continued use of faux stress tests to reassure markets. But why do markets need reassurance? If markets do need reassurance that banks can survive stressful conditions, why are they reassured by government-designed stress tests designed to be non-stressful?

Stress tests were first mandated for Fannie and Freddie by statute. Fannie and Freddie’s managers referred to them as “nuclear winter” scenarios – impossibly unlikely and stark disasters. The managers used the ability of Fannie and Freddie to pass the stress tests as proof that the institutions were safe and so well capitalized that they could survive even a lengthy depression. In reality, Fannie and Freddie had exceptionally low capital levels. Fannie and Freddie met their capital requirements under a newly toughened version of the statutory stress test weeks before they collapsed and were revealed to be massively insolvent.

AIG passed its stress test immediately before it failed. The three big Icelandic banks passed their stress tests shortly before they were revealed to be massively insolvent. Lehman passed its stress tests. The stress tests ignored the actual primary causes of losses and failures – extreme losses on fraudulent liar’s loans and CDOs.

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