Bill Black reviews the highlights and holes of the film The Big Short in 2 parts on The Real News. You can view part 1 here and part 2 is here. Both have transcripts.
“Any request for loan level tapes is TOTALLY UNREASONABLE!!! Most investors don’t have it and can’t provide it. [W]e MUST produce a credit estimate. It is your responsibility to provide those credit estimates and your responsibility to devise some method for doing so.” [S&P 2001] [emphasis in original]
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Posted in William K. Black
Tagged banksters, criminogenic
By William K. Black
Bloomington, MN: February 11, 2015
HSBC’s most recent scandal is the perfect holiday gift. Whatever genre of entertainment one favors – from blood diamonds to drug cartels to rollicking royals to sport stars HSBC was happy to aid the wealthiest stars of your genre to illegally evade their taxes. Taxes were once termed the price we paid for civilization, but they now represent the price the wealthy brag to each other about refusing to pay as they pillage civilization. Because the City of London “won” the “regulatory race to the bottom” it is the worst “vector” for the epidemic of sleaze led by our most elite bankers. Oh, sorry, I let reality intrude in that last sentence.
The “respectable” government people in the UK and the U.S. (and Ireland) insist that we are experiencing the first virgin crisis – consisting of hundreds of thousands of fraudulent transactions by bankers – in which not a single CEO of the largest banks knew that his bank was a massive criminal enterprise. The long-running (anti) morality play with an extended run in each of these three nations claims that we are experiencing the first “Virgin Crisis” conceived without sin in these bank C-Suites. In every case, the bank CEOs – paid like Croesus because they are financial geniuses and managerial wizards – has been bamboozled by the tiny folks in the banks’ “org charts.” Such a betrayal of the trust that the elite bank CEOs reposed in these unworthy junior officers and employees! The pain of the elite bank CEOs is palpable – having their reputation besmirched by their ungrateful and immoral lesser. We’ll put aside who it is that crafts the perverse incentives that created the City of London’s (and Wall Street’s) corrupt financial cultures for the same reason that the CEOs’ apologists put aside that unsettling question.
By William K. Black
Bloomington, MN: February 9, 2015
This the second in a series of columns about Jeb Hensarling and Peter Wallison – the Nation’s chief myth makers about the causes of our financial crisis. Hensarling is the Chairman of the House Financial Services Committee and a leader in the effort to gut the Dodd-Frank Act’s few effective provisions. Wallison is one of the primary architects of the three “de’s” (deregulation, desupervision, and de facto decriminalization) that made the banking environment so criminogenic that it caused the fraud epidemics that hyper-inflated the bubble and drove the financial crisis.
In this second column I focus on Hensarling’s embrace of Bill Clinton and Al Gore’s worst anti-regulatory blunders. Their overall blunder was “Reinventing Government,” a broad assault on regulation and government effectiveness. In the financial sphere, Clinton and Gore embraced a fatal concept (the regulatory “race to the bottom”), two specific legislative acts of deregulation, and the growth of systemically dangerous institutions (SDIs) that were “too big to fail.” Each of these blunders contributed to the most recent crisis and unless corrected will contribute to future crises. Hensarling celebrates each of these anti-regulatory blunders as superb policies.
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After a decade of committing tens of thousands of felonies that the U.S. government believes helped fund terrorism and Iran’s development of nuclear weapons, having the great fortune of settling the cases without any senior officers being prosecuted or its license to operate in the U.S. being pulled, having immediately violated the settlement agreement by lying about its prior actions, being discovered to have mislead the U.S. during the settlement negotiations, and being found to have continued to violate the same U.S. laws after entering into the settlement, one might think that Standard Chartered’s leaders would learn to keep their mouths shut and to obey the law at least until the settlement agreement restrictions lapse. Standard Charter’s senior leadership, however, is composed of the most arrogant and entitled class. When the bank’s Chairman of the Board is “Sir John Peace” entitlement (but no longer noblesse oblige) comes naturally. So, instead of mea culpa, the Standard Chartered mantra is: how dare you criticize us?
Posted in William K. Black
Tagged accounting control fraud, banksters, criminal, criminogenic, fraud
The web has provided another proof of our family rule that it is impossible to compete with unintentional self-parody. The day after GM’s preposterous congressional testimony and its release of the unintentionally hilarious Valukas report detailing GM’s criminal indifference to human health and life a libertarian blogger featured GM’s cartoon version of von Hayek’s “Road to Serfdom” to warn us of the fact that democratic government invariably leads to serfdom.
I just posted an article about the ludicrous excuse that Mary Barra, GM’s CEO, offered in her congressional testimony for GM’s lengthy refusal to correct a design defect it knew was killing and maiming people.
The defective design caused GM cars, without warning, to suddenly lose electrical power essential to the driver’s ability to control the car and for the air bags to function. The car became an unguided missile and simultaneously lost the protective device that was most critical to safety in such circumstances. The design defect, therefore, endangered not only GM customers but also anyone in the vicinity when the GM car lost electrical power.
On July 9, 2013 I participated in a radio interview with a lobbyist for the 100 largest financial firms. The San Francisco radio program host asked me what question I would ask the lobbyist and I said that any discussion should begin with allowing him to state his view of what caused the crisis. In the course of his explanation, he bemoaned the fact that there was no warning about the crisis.
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
Posted in William K. Black
Tagged accounting control fraud, Brown-Vitter, criminogenic, SDI, too big to fail
I wrote yesterday about the “control frauds” (in which the person controlling a seemingly legitimate entity uses it as a “weapon” to defraud) that target purchasers of bad quality goods (“lemons”) and employees. The example I used to explain these concepts was the collapse of the building housing garment factories in Bangladesh. Continue reading
Posted in William K. Black
Tagged austerity, Bangledesh, criminogenic, neoclassical economics, troika, wages
William Black, by invitation of the President of Ecuador’s National Assembly, will present to the Standing Specialized Committee of Economic and Tax Regime in Quito, Ecuador on the banking crisis in that country.
Professor Black’s experience in financial regulation and his involvement in the US Savings and Loan Crisis puts him in a position to assist the Ecuadorians with their banking crisis.
Details are available in the following spanish language article.
Click images to view details
