William K. Black — Banking Rackets & Financial Fraud

Once again William Black hits the nail on the head. During the interview he covers the systemic fraud that is the US Banking Industry. Noting that there has not been 1 single criminal referral from either the OCC – Office of the Comptroller of the Currency, or the OTS, Office of Thrift Supervision. As an aside the S&L crises netted 1,000 criminal prosecutions for a financial fiasco that is dwarfed by the current crises.

The deliberate perversion of the FASB, Federal Accounting Standards Board, accounting rules so as to subvert the PCA, Prompt Corrective Action, act of 1991, allowing the banks to hide losses by maintaining assets on their books at grossly over inflated values. Hence the delay in foreclosure that has now hit 14-months and the huge “shadow inventory” of properties foreclosed but not sold. Yet another example of what can be achieved with the judicious of some lobbying. The result will be that markets don’t recover which means the economy wont recover as we pursue an extend and pretend strategy just like the Japanese, despite roundly criticizing them for it at the time. Like the Japanese who experienced a lost decade, now two, and declines of 70-90% in their real estate prices and 75% in their stock market along with a 20- odd year battle with deflation, we seem destined to follow the same path

Bill Black is the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.

Thanks to Max Keiser over at the Keiser Report for doing the Interview