The greatest scam in history and how they did it
Well, that might be a little overstated but this is an amazing Bill Moyers interview with Bill Black;
Here’s a snip from the begining;
April 3, 2009
BILL MOYERS: Welcome to the Journal.
For months now, revelations of the wholesale greed and blatant transgressions of Wall Street have reminded us that "The Best Way to Rob a Bank Is to Own One." In fact, the man you’re about to meet wrote a book with just that title. It was based upon his experience as a tough regulator during one of the darkest chapters in our financial history: the savings and loan scandal in the late 1980s.
WILLIAM K. BLACK: These numbers as large as they are, vastly understate the problem of fraud.
BILL MOYERS: Bill Black was in New York this week for a conference at the John Jay College of Criminal Justice where scholars and journalists gathered to ask the question, "How do they get away with it?" Well, no one has asked that question more often than Bill Black.
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.
Now Black is focused on an even greater scandal, and he spares no one — not even the President he worked hard to elect, Barack Obama. But his main targets are the Wall Street barons, heirs of an earlier generation whose scandalous rip-offs of wealth back in the 1930s earned them comparison to Al Capone and the mob, and the nickname "banksters."
Bill Black, welcome to the Journal.
WILLIAM K. BLACK: Thank you.
BILL MOYERS: I was taken with your candor at the conference here in New York to hear you say that this crisis we’re going through, this economic and financial meltdown is driven by fraud. What’s your definition of fraud?
WILLIAM K. BLACK: Fraud is deceit. And the essence of fraud is, "I create trust in you, and then I betray that trust, and get you to give me something of value." And as a result, there’s no more effective acid against trust than fraud, especially fraud by top elites, and that’s what we have.
BILL MOYERS: In your book, you make it clear that calculated dishonesty by people in charge is at the heart of most large corporate failures and scandals, including, of course, the S&L, but is that true? Is that what you’re saying here, that it was in the boardrooms and the CEO offices where this fraud began?
WILLIAM K. BLACK: Absolutely.
BILL MOYERS: How did they do it? What do you mean?
WILLIAM K. BLACK: Well, the way that you do it is to make really bad loans, because they pay better. Then you grow extremely rapidly, in other words, you’re a Ponzi-like scheme. And the third thing you do is we call it leverage. That just means borrowing a lot of money, and the combination creates a situation where you have guaranteed record profits in the early years. That makes you rich, through the bonuses that modern executive compensation has produced. It also makes it inevitable that there’s going to be a disaster down the road.
BILL MOYERS: So you’re suggesting, saying that CEOs of some of these banks and mortgage firms in order to increase their own personal income, deliberately set out to make bad loans?
WILLIAM K. BLACK: Yes. . . . .
This is simply another step in the direction of undoing the classical liberal ideal of free markets. That is markets free of corruption and coercion. Of course in the Orwellian era in which we find ourselves, the notion of free markets has been turned on its head. This is nothing new or exceptional. Much of what comes out of the business dominated press has to invert reality in order to keep the masses confused and ill informed. Every once in a while reality slips by the gate keepers. Usually it is so devoid of context that the message is lost. The issues are so foreign that the conversation might as well be in Manx. If the message does get through, it’s taken as proof of our free press and the market place of ideas.
It’s been said that the Bush administration wanted to take the US back to the 19th century age of robber barons and subsistance wages. What they really wanted is to take us back to an economic system more in line with th 9th century feudalism. Obama puts a bit of lipstick on this pig, but it’s still a pig. He’s sided with the financial sector that was the main source of his campaign contributions that mattered. Yes, Joe Sixpack and Sally Housecoat gave their couple of bucks, but are these the kind of contribution that buys access? Understandably and quite predictably this pig, otherwise known as the Federal Reserve and FIRE sector, will not be missing any meals. In fact under the tender loving care of Obama and his Clintonite coterie, that pig will get a lot fatter in the coming years. You’ll notice a bit less on your dinner plate as a result.
Are Bill Moyers and Bill Black in any imediate danger for letting a cat out of a bag? Not likely for the above reasons. Also, they’re focused on the corruption angle. No problem there. Either the viewers will nod along with the idea that politicians are by nature corrupt, an acceptable propaganda ploy, or the system will be forced to self correct and once again prove just how fair and resiliant capitalism is.
Now if Moyers and Black had spent a little time describing, capitalism notwithstanding, how class privilege is behind most of the theivery, Moyers would again be on his way out the door and Black would not be heard from again save some obscure journal or website. Not unlike Noam Chomsky, Michael Parenti, Norman Finklestein, etc, etc.