Tag Archives: banksters

The Media Fall for Hillary Clinton’s Gensler Gambit

Posted on April 17, 2015 by William Black | 3 comments

By William K. Black
Quito: April 16, 2015

Richard Cordray (former Attorney General of Ohio), the head of the Consumer Finance Protection Bureau (CFPG) and Gary Gensler (a former disaster under Bill Clinton and Goldman Sachs) have been the two great appointments by President Obama in the field of finance. Obama’s other appointments at Treasury, the financial regulatory agencies, and the (non) prosecutors who are supposed to specialize in financial prosecutions have been nightmarishly bad.

Gensler was another Rubinite from Goldman Sachs who, under Bill Clinton, helped destroy Brooksley Born’s effort to protect the nation from the financial derivatives that blew up AIG and much of the financial world through passage of the infamous Commodity Futures Modernization Act of 2000. As Obama’s appointee to chair the Commodity Futures Trade Commission (CFTC), however, Gensler justly earned praise for attempting to restore effective regulation. Gensler was a grave disappointment to Obama’s administration, which thought it was sending a reliably pro-finance Rubinite to run a fairly obscure agency he had helped emasculate. When Gensler showed a spine Obama refused to reappoint him and replaced Gensler with Timothy G. Massad, a Timothy Geithner minion noted for his pro-industry views. Massad’s claim to fame was being one of the principal unprincipled architects of the failed homeowner relief programs. As I pointed out in my first Bill Moyers interview, failing (for the right political reasons) proves you are a reliable “team player” and gets you promoted in Washington, D.C. As Geithner found out, succeeding gets you your walking papers. Jesse Eisinger, as his norm, wrote a great piece about Massad when Obama nominated him in November 2013. An alternative view can be found in the American Banker, which gave prominently space to an op ed praising Massad’s nomination written by the head of a firm that trains CFTC staff.

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Posted in William K. Black

Tagged banksters, gensler, Hillary Clinton

Capitalism’s Defender Unknowingly Indicts the Banksters

Posted on April 13, 2015 by William Black | 4 comments

By William K. Black
Quito: April 13, 2015

Johan Norberg, of Cato, wrote a book in 2009 entitled Financial Fiasco. Norberg is an Austrian School economist and the author of In Defense of Global Capitalism (2001). As his 2009 book demonstrates, however, the quintessential global capitalists were preparing to blow up the global capitalist system in an orgy of “accounting control fraud” at the time he wrote his “Defense.”

He agrees that Fannie and Freddie were used by their controlling officers as accounting control frauds in order to enrich themselves through lush executive compensation. He aptly explains President Bush’s hypocrisy about Fannie and Freddie.

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Posted in William K. Black

Tagged accounting control fraud, banksters, FCIC, Great Financial Crisis, regulatory capture

William Black Tells the Ugly Truth!

Posted on April 5, 2015 by Devin Smith | Comments Off

Crossposted from www.richardmbowen.com

William K. Black, author of The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&L Industry, is a lawyer, academic, and a former bank regulator. He was formerly the litigation director of the Federal Home Loan Bank Board, deputy director of the Federal Savings and Loan Insurance Corporation (FSLIC), senior vice president and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel of the Office of Thrift Supervision. Black was also deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement.

Black was a central figure in exposing Congressional corruption during the Savings and Loan Crisis. He took the notes during the Keating Five meeting that were later published in the press, and brought the event to national attention and a congressional investigation. Looks as if he had a hit put out on him for his pains!

According to Bill Moyers, “The former Director of the Institute for Fraud Prevention now teaches Economics and Law at the University of Missouri, Kansas City. During the savings and loan crisis, it was Black who accused then-house speaker Jim Wright and five US Senators, including John Glenn and John McCain, of doing favors for the S&L’s in exchange for contributions and other perks. The senators got off with a slap on the wrist, but so enraged was one of those bankers, Charles Keating — after whom the senate’s so-called “Keating Five” were named — he sent a memo that read, in part, ‘get Black — kill him dead.’ Metaphorically, of course. Of course.” Continue reading →

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Posted in Cross Posting

Tagged accounting control fraud, banksters, Citi, Richard Bowen

HSBC Violates its Sweetheart Deal and Lynch Praises It

Posted on April 2, 2015 by William Black | Comments Off

By William K. Black
Quito: April Fools’ Day 2015

HSBC got a sweetheart deal from the Obama administration. It laundered vast amounts of money for Mexico’s murderous Sinaloa cartel, helped bust sanctions for terrorists and mass murderers, and did not cooperate with the investigation. The U.S. Attorney in charge of the case, Loretta Lynch, refused to prosecute any of the HSBC bankers or even sue them individually. Instead, there was a pathetic non-prosecution agreement limited to HSBC. Lynch is accused of not contacting either of the primary whistleblowers in the case. The failure to contact one of the whistleblowers has already blown up in Lynch’s face as it became public a few months ago that the governments of the U.S. and Europe were provided many years ago with data on HSBC’s Swiss affiliate that show it was helping terrorists, genocidal leaders, the most violent drug gangs, and tens of thousands of wealthy people evade taxes. Lynch failed to bring that case or use any of the invaluable data provided by the whistleblower who copied the files from the Swiss bank.

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Posted in William K. Black

Tagged accounting control fraud, banksters, dealbook, DOJ, HSBC, nyt

We Send Teachers to Prison for Rigging the Numbers, Why Not Bankers?

Posted on April 2, 2015 by William Black | Comments Off

By William K. Black
Quito: April Fools’ Day 2015

The New York Times ran the story on April Fools’ Day of a jury convicting educators of gaming the test numbers and lying about their actions to investigators.

“ATLANTA — In a dramatic conclusion to what has been described as the largest cheating scandal in the nation’s history, a jury here on Wednesday convicted 11 educators for their roles in a standardized test cheating scandal that tarnished a major school district’s reputation and raised broader questions about the role of high-stakes testing in American schools.

On their eighth day of deliberations, the jurors convicted 11 of the 12 defendants of racketeering, a felony that carries up to 20 years in prison. Many of the defendants — a mixture of Atlanta public school teachers, testing coordinators and administrators — were also convicted of other charges, such as making false statements, that could add years to their sentences.”

This was complicated trial that took six months to present and required eight days of jury deliberations. It was a major commitment of investigative and prosecutorial resources. But it was not investigated and prosecuted by the FBI and AUSAs, but by state and local officials. In addition to the trial success, the prosecutors secured 21 guilty pleas.

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Posted in William K. Black

Tagged accounting control fraud, Atlanta, bankers, banksters

Meet Citi’s Ethical Underwriters That Tried to Save It and America: Sherry Hunt

Posted on March 27, 2015 by William Black | Comments Off

By William K. Black
Quito: March 26, 2015

This is the fourth and final column in my series that began by focusing on Richard M. Bowen, III. Bowen blew the whistle on Citi’s sale of scores of billions of dollars in toxic mortgages, primarily to Fannie and Freddie, through fraudulent reps and warranties. After Bowen protested and blew the whistle within Citi to its senior management (including Robert Rubin) – Citi’s senior officers’ classic accounting control fraud strategy expanded both in terms of the volume of sales and the incidence of fraudulent reps and warranties – which rose to 80 percent.

I have explained how Bowen and his boss’ banking careers were destroyed by the retaliation of Citi’s senior managers and how the SEC, the Department of Justice (DOJ), and the Financial Crisis Inquiry Commission (FCIC) have followed the disgraceful policy of trying to keep Bowen’s detailed disclosures from becoming public and being used to bring Citi’s criminal controlling officers to justice.

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Posted in William K. Black

Tagged banksters, Citi, criminogenic environment, fraud, Sherry Hunt

How FCIC Spurned Its One Chance at Greatness

Posted on March 26, 2015 by William Black | Comments Off

By William K. Black
Quito: March 25, 2015

This is the third column in what I intended to be my three-part series about Citi’s most famous whistleblower, Richard M. Bowen, III. In this column I discuss Bowen and Citi’s senior (but not controlling) officers’ presentations before the Financial Crisis Inquiry Commission (FCIC). Upon further research I realize that a fourth column is required to bring in the related story of Bowen’s estimable colleague and fellow-whistleblower, Sherry Hunt. Hunt’s story is not simply important and necessary to understand the scandals of the Department of Justice (DOJ) and the SEC and Citi’s top managers the FCIC’s spurning its one chance at greatness – it also deserving of a movie. It’s too complex and rich to add it to this column. Hunt also deserves full length treatment devoted to her attempted service to Citi, her service to the Nation, and to DOJ’s and the SEC’s failure to act against any of Citi’s fraudulent officers despite her offering them up tied with a bow.

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Posted in William K. Black

Tagged banksters, Citi, FCIC, Richard Bowen

The DOJ and the SEC Spurn their Ace in the Hole: Richard Bowen

Posted on March 24, 2015 by William Black | Comments Off

By William K. Black
Quito: March 24, 2015

In this second column about Richard M. Bowen, III, I discuss the failure of the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) to make use of his expertise and testimony. Bowen was the Citi SVP who blew the whistle on Citi’s senior managers’ strategy of knowingly buying massive amounts of fraudulently originated loans sold to Citi through fraudulent reps and warranties and then reselling those toxic mortgages (primarily to Fannie and Freddie) through false reps and warranties. My first column described that strategy and the failures of the Financial Crisis Inquiry Commission (FCIC) to understand how damning Bowen and Clayton’s testimony was. Clayton was the dominant “due diligence” firm for secondary market mortgage sales and was designed to be an easy grader. The two great epidemics of mortgage origination fraud (appraisal fraud and liar’s loans) were so endemic and so crude that even Clayton found a 46% incidence of false reps and warranties by the sellers to the secondary market who fraudulently originated the loans. That incidence grew to 54% by the second quarter of 2007.

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Posted in William K. Black

Tagged banksters, Citi, criminogenic environment, Richard Bowen

The Lessons Richard Bowen’s FCIC Testimony Should Have Taught the Nation

Posted on March 23, 2015 by William Black | Comments Off

By William K. Black
Quito: March 20, 2015

This is the first of three columns prompted by Richard Bowen’s interview this morning on Bloomberg. Richard Bowen, a Citi SVP, blew the whistle within Citi on Citi’s massive fraudulent sales of fraudulently originated mortgages, primarily to Fannie and Freddie. Even Attorney General Eric Holder now repeatedly labels these mortgages “toxic.” Had Citi’s leadership been honest, Bowen’s warnings could have substantially reduced the three fraud epidemics driving the financial crisis and Bowen would be one of Citi’s most senior leaders. No spoiler alert is required because even my readers who know anything about Bowen know how the story actually ended. Citi’s senior managers did not ignore Bowen’s warnings – they actively made the frauds he documented worse and they destroyed Bowen’s distinguished career in banking. Citi, Fannie and Freddie, and Treasury lost billions of dollars and Citi’s senior officers were made wealthy by the “sure thing” of the accounting control fraud “recipe.”

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Posted in William K. Black

Tagged banksters, Citi, fannie mae, FCIC, freddie mac, Richard Bowen

Stanford Exposes Rodgin Cohen’s Myth of the Myth of Regulatory Capture

Posted on March 20, 2015 by William Black | Comments Off

By William K. Black
Quito: March 19, 2015

Sometimes the fates conspire to bring together two stories that when considered together bring that lightbulb moment. The first story, dated March 18, 2015, is from the Wall Street Journal. It overwhelmingly conveys the opinion of Rodgin Cohen, the super-lawyer to the super-fraudulent bank CEOs. He was a leader of the financial regulation wrecking crew that produced the criminogenic environments that drove our recurrent, intensifying financial crises. As I will explain in a future column, Cohen basically has one speech, which he has repeated with minor variants for decades. The latest Cohen variant claims that:

“[T]he regulatory environment today is the most tension-filled, confrontational and skeptical of any time in my professional career.

Cohen says the strained relations between government regulators and bank officials stems from ‘the myth of regulatory capture.’

‘The consequences of such as approach are likely to be less effective examinations, not more,’ he said. ‘Unless we deal with the canard of regulatory capture, we will inevitably be placing pressure on examiners to disprove this charge.’”

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