By William K. Black
I have been attempting the vain act of trying to embarrass the New York Times’ Deal Book feature into dropping its ethics-free reportage of elite financial crimes. I have had so little success that today’s James Stewart column reached the pinnacle of unintentional self-parody of Deal Book’s zealous efforts to remove any concept of ethics from its reportage of elite white-collar crime. The substance of piece is reporting that Steve Jobs “was a walking antitrust violation.” Stewart focuses on the cartel Jobs formed with other giant firms to fix (and suppress) employees’ salaries.
But the title of the piece takes the fact that Jobs was a serial felon who caused great harm to employees and preforms a remarkable transformation in which he is praised as “Steve Jobs, a Genius at Pushing Boundaries.” “Pushing boundaries” is Deal Book’s euphemism for Jobs’ crimes that he committed in order to make the already spectacularly wealthy CEO even wealthier – at the direct expense of his employees. And, this being Deal Book, and James Stewart being what Stewart has descended to, we have the inevitable claim that Jobs was a “genius” at crime. But it turns out that if you consider the facts reported; he wasn’t a genius. His violations of anti-trust law were obvious crimes. Instead, his key characteristic was the one we always emphasize is critical about the most fraudulent CEOs – audacity. Jobs had gotten away with committing so many crimes that he came to believe he was immune from prosecution.
By William K. Black
Conservative economists love “creative destruction.” They can’t wait to “get their Schumpeter on” when a business fails and thousands of workers lose their jobs. There is no more “creative destruction” conceivable than when we put a bank that has become a fraudulent enterprise into receivership, remove the controlling officers leading the fraud, and sell the bank through an FDIC-assisted acquisition. Indeed, the pinnacle of creative destruction would be doing this with a systemically dangerous institution (SDI) through a process that split the supposedly “too big to fail” bank into smaller components that (1) were no longer large enough to pose a systemic risk, (2) were more efficient than the bloated SDI, (3) no longer extorted a large (implicit) government subsidy that made real competition impossible, and (4) no longer had dominant political power via crony capitalism. Unlike the situation in which an SDI collapses suddenly in the midst of causing a global crisis when its frauds cause a liquidity crisis, it is vastly easier to put fraudulent SDIs in receivership in today’s circumstances. Unlike Arthur Anderson, the receivership power allows us to keep the enterprise alive and create more competitors rather than fewer.
By William K. Black
(Cross posted at Benzinga.com)
Overview and Background
The New York Times’ “Deal Book” continues its ethics-free treatment of the ethical collapse of the leaders of many of our most elite firms related to finance. Matthew Goldstein’s* March 6, 2014 article is entitled “4 Accused in Law Firm Fraud Ignored a Maxim: Don’t Email.”
The article is about the indictment charging the leaders of one of finance’s leading law firms – Dewey & LeBoeuf – with securities fraud and larceny.
“The indictment paints a portrait of a law firm being run like a criminal enterprise. Mr. Vance said his office had already secured guilty pleas from seven other people who once worked for Dewey.”
Deal Book refuses to recognize control fraud even when the indictment describes a control fraud. The indictment does not “paint a portrait of a law firm being run like a criminal enterprise.” The indictment describes a criminal enterprise led by the partners controlling Dewey & LeBouef. Deal Book still can’t bend its mind around the fact that seemingly legitimate firms make the best “weapons” for fraud.