Former Regulator Outs Obama's Economic Advisors

Last night Bill Moyer's main guest was Bill Black, a Professor and forensic accountant. He lead the forensic audit of the Savings and Loan crash of the late 80's. Professor Black's most recent book is called The Best Way to Rob a Bank is to Own One. He stated unequivocally that crimes were committed by the CEO's of the big financial institutions. The following is an excerpt from the transcript of last night's show:

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.

BILL MOYERS: How do they get away with it? I mean, what about their own checks and balances in the company? What about their accounting divisions?

WILLIAM K. BLACK: All of those checks and balances report to the CEO, so if the CEO goes bad, all of the checks and balances are easily overcome. And the art form is not simply to defeat those internal controls, but to suborn them, to turn them into your greatest allies. And the bonus programs are exactly how you do that.

As evidence of this conscious attempt to make gigantic profits through premeditated fraud he points to a 2004 report by the FBI warning of a looming financial catastrophe.

CNN Friday September 17th 2004

"Assistant FBI Director Chris Swecker said the booming mortgage market, fueled by low interest rates and soaring home values, has attracted unscrupulous professionals and criminal groups whose fraudulent activities could cause multibillion-dollar losses to financial institutions.

"It has the potential to be an epidemic," said Swecker, who heads the Criminal Division at FBI headquarters in Washington. "We think we can prevent a problem that could have as much impact as the S&L crisis," he said."

So action by regulators, agencies and financial institutions at that point could have prevented indenturing future generations of Americans. But we know Bush and his cronies were in charge then and that they chose to ignore the financial crimes that were being committed on their watch. So much for their religion of the "Free Market". American taxpayers and those losing their jobs now are paying dearly for the fraud carried out by these slimy criminals in the name of deregulation.