Fraud. Plain and Simple.
So says Bill Black, author of The Best Way to Rob a Bank is to Own One. The current financial crisis is not just the result of rampant greed, but fraud — a fundamental “moral crisis” within the most elite American financial institutions.
In the video linked below, Black, formerly a federal regulator whose investigations helped bring successful convictions during the S & L scandal tells Bill Moyers:
a) The collapse of the market, brought about by bad loans, was a deliberate result of criminal fraud by banks’ CEOs and the rating system.
b) The FBI has known for years. In 2004, the FBI publicly announced an epidemic of mortgage fraud and vowed to respond but was unable, largely because the Bush administration had allocated 500 FBI investigators to national terrorism efforts and not replaced them.
c) Taxpayer money has already gone to banks fined for fraudulent activity.
d) Tim Geithner is denying the insolvency of many large banks, in violation of the law, which requires that these banks be closed. The cover-up is motivated by fear of a total collapse beyond the scope of the current crisis, but it is also helping those guilty of fraud to find protection from the rule of law.
e) Conflicts of interest abound. Larry Sommers, who advises Obama, is near the center of the trouble. And under Bush, Henry Paulson appointed Goldman Sachs to the panel recommending the fate of AIG, while AIG was in charge of bailing out Goldman Sachs (which Paulson himself had recently served as CEO). Black notes, “in most stages in American history, that would be a scandal of such proportions that he wouldn’t be allowed in civilized society.”
I think the twenty-seven minutes of this presentation, and the article Bill Moyers and Michael Winship ran in Salon today are both worth understanding clearly by all Americans. This is at least as big as the spin that got us into Iraq. Bigger, in important ways.