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About Bill Black

Bill Black was a regulator during the Reagan era. Following the fraud-induced Savings and Loan crisis, he was instrumental in putting over 1,000 elite criminals in prison. Dr. Black estimates that the fraud leading to our crisis was 70 times the magnitude of what led to the S&L crisis. Yet, we have seen no serious investigations or prosecutions.

Bill Black’s background includes acting as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board, Deputy Director of the Federal Savings and Loan Insurance Corporation, Senior Vice President and General Counsel of the Federal Home Loan Bank of San Francisco, Senior Deputy Chief Counsel of the Office of Thrift Supervision, and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement.

There is no one more qualified than Bill Black to clean up our financial sector. He has the integrity, experience, and determination that it will take to ensure that serious investigations are conducted and, if warranted, that rigorous prosecutions are pursued.

Our conflicted legislators and policy-makers are not going to enlist Bill Black unless we give him a big push. They are beholden to an entrenched power elite that will fight to keep Bill Black from protecting citizens. Let’s give our president the excuse he needs to do the right thing, by sending him the message that we want Bill Black to be appointed.

Dr. Bill Black Presents the Fraud Recipe for CEO’s:

On the “technocrats” running the show in Europe: There are no ‘technocrats,’ especially ‘genius’ technocrats.  I suggest a new rule of thumb for judging a ‘genius technocrat.’  They have to be right at least two out of ten times.  There is not a single economist in Europe, who calls himself a technocrat, that could do the equivalent of making two penalty kicks out of ten.

What we learned from the Savings & Loan crisis: George Santayana famously said that, “those who cannot remember the past are condemned to repeat it.” But, even if we remember the mistakes we have made, the new policy we pick could be another mistake.  Here is what we learned about the incidence of fraud leading up to the savings and loan crisis, according to the national commission that investigated the causes of that crisis:

“‘The typical large failure [grew] at an extremely rapid rate, achieving high concentrations of assets in risky ventures… [E]very accounting trick available was used… Evidence of fraud was invariably present, as was the ability of the operators to ’milk’ the organisation.’

Bonnie Faulkner interviews former bank regulator, William K. Black:

Select notes by Jaime Falcon:

On banks’ traditional role as middleman: Some banks do very useful things for the world. According to economic theory, banks act as a middleman. Banks take savings, accumulate money, make loans to companies to invest productively… Middlemen serve a very useful purpose, but should not be very big and should not make a lot of money… based on the efficiency principal.
On what has happened to our elite financial institutions: In the world we live in, finance has become the dog instead of the tail. In the USA, 30% to 40% of all profits in business come from the financial sector. They have become a parasite… They weaken the economy. Overall, finance has lost its way – in an immensely destructive way. Why is it that our most elite institutions are our worst institutions? Why are our most elite institutions the ones that time after time violate the law and cause recurrent intensifying crises?

Why the crisis has not abated in Europe: Europe does not have its own currency. It makes the crisis far worse for them. In Europe it has become a core vs. periphery issue. The core is becoming increasingly furious with the periphery. But the core largely caused the crisis. The victims are being blamed.

Audio of Russ Roberts’ interview of William K. Black (73 minutes):

Select notes by Jaime Falcon:

William K. Black’s Regulatory Background: On April 2, 1985, William K. Black became the Litigation Director of the Federal Home Loan Bank Board – the primary federal regulator of Savings and Loan Associations. That agency subsequently became the Office of Thrift Supervision. Black ultimately had a docket of 10,000 cases and an outside-counsel budget of $100M. Soon after his appointment, there was a $6bn run on the largest S&L in the USA – American Savings. Bill Black was made staff leader of the emergency task force set up to handle that crisis. This led to his anti-fraud efforts.

Comparing the Fed’s efforts at Lehman to how American Savings was handled: The SEC and the Fed sent staff into Lehman in its final months of distress. The Fed, knowing that Lehman was in desperate shape, sent 2 staff members. Black’s team had sent 45 people to American Savings. Those 45 worked around the clock in shifts going through collateral. They made emergency lines of credit available on the basis of reasonable collateral. American Savings survived the run. Black’s team used their leverage as a lender to force out Charlie Knapp.

The Fraud at American Savings and other S&L’s: The major fraud was initially missed by the SEC and by investors. Ultimately, it was discovered that they were engaging in what the industry termed “cash for trash”.

Dylan Ratigan interviews Bill Black:

Select notes by Jaime Falcon:

On why we have high and rising levels of white collar crime: Bush and Obama both cut prosecutions of white collar criminals. It has been a unilateral disarmament.

On why Republicans and Democrats are not pursuing elite white collar crime: It would hurt campaign contributions. Finance is the leading source of campaign contributions for both parties.

Bill Black is interviewed by Amy Goodman:

Select notes by Jaime Falcon:

On What Has To Happen:  We have to stop the dynamic that produces recurrent intensifying crises. This one devastated the nation. The next one will probably be equivalent to the Great Depression. Part of that is to hold folks accountable, especially the most elite. They did it through fraud – via the “C” Suites – as in the CEO’s and the CFO’s.  The absolute top.

On April 25, 2012, Treasury Secretary Geithner made remarkable statements about the role of elite financial fraud and greed in producing our recurrent, intensifying financial crises.

By William K. Black

The central questions for a theorist are whether his theory showed strong explanatory power and to what extent it proved useful in diverse settings. A distinguished economist, Dr. Jayati Ghosh, has addressed those questions in an article in which she was explaining to Indian readers that a large fraud, Satyam, was not the product of unique defects in Indian regulation.

But the truth is that instances like Satyam are neither new nor unique to India. Similar — and even more extreme — cases of corporate malfeasance abounded in the past decade, across all the major capitalist economies, especially in the US. And these were not aberrations, rather typical features of deregulated capitalist markets.

Bill Black Authoritative
Book On Fraud In The
Financial Sector