Tag Archives: regulatory capture

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

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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Posted in William K. Black

Tagged banksters, criminogenic environment, regulatory capture

Dudley Do Wrong Rejects Being a “Cop” and Embraces “Foaming the Runways”

Posted on November 23, 2014 by William Black | 2 comments

By William K. Black
San Fransisco, CA: November 22, 2014

William Dudley, the President of the NY Fed, is not a stupid man. He is, however, wholly unfit to be a regulator. He has now admitted that publicly. It is time for him to return to Goldman Sachs so that he can be replaced by someone expressly chosen to be a vigorous regulator who will embrace the most critical function of a financial regulator – to be the tough “regulatory cop on the beat.”

The story of Dudley’s ineptness has been mirrored by the New York Times’ inept coverage of the failures of one of the reporter Peter Eavis’ favorite sons on Wall Street. Eavis is a Brit with a B.A. in international history and politics. He has also been a pastor. He co-authored the epically incoherent column on the NY Fed’s most recent scandal, the leaking of confidential information by a NY Fed employee to a former NY Fed employee who had joined Goldman Sachs. I criticized that column in my November 20, 2014 article and provided some of the key missing facts and analytics.

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Tagged banksters, goldman sachs, regulatory capture

If this is “Regulatory Capture” May the Lord Smite Us with It – And May We Never Recover!

Posted on October 8, 2014 by William Black | 4 comments

By William K. Black

In Fiddler on the Roof, Perchik and Teyve have this exchange:

Perchik: Money is the world’s curse.

Tevye: May the Lord smite me with it! And may I never recover!

I was reminded of this when reading the Wall Street Journal editorial claiming that “regulatory capture” was “inevitab[le]” and that we should therefore replace financial regulation with “simple rules” that “can’t be gamed.”

In my first installment I showed that the WSJ’s “simple rules” not only can be gamed – they are invariably gamed massively in the epidemics of accounting control fraud that cause our recurrent, intensifying financial crises. This installment refutes the “inevitability” of “regulatory capture.” As I promised to explain, I can personally attest that regulatory capture is not “inevitab[le]” even in circumstances that are ripe for capture. Further, “regulatory capture” has no definition and economists use it and the term “rent-seeking” as sloppy swear words to describe regulatory actions that are the opposite of regulatory capture. I conclude by showing that we know how to avoid harmful “regulatory capture,” but the ideologues that oppose effective regulation deliberately chose anti-regulatory leaders who create a self-fulfilling prophecy of regulatory failure. The WSJ editors and neo-classical economists are the jockeys who insure that their horse loses – and then blame the horse.

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