Bill Black pt 7/9 -The Best Way to Rob a Bank is to Own One

Bill picks up the history of financial fraud with the Obama administration. Finance has targeted Black and Latinx families with sub-prime and liars loans and the crash wipes out 60-70% of their accumulated household wealth. What does Obama do? Bill joins Paul Jay on theAnalysis.news

Transcript

Paul Jay

Hi, I’m Paul Jay. Welcome to theAnalysis.news. Please don’t forget the donate button at the top of the webpage, subscribe button, share button, and sign up for the newsletter so you know when the new stories are coming. Be back in a second with Bill Black.

We’re continuing our series of interviews with Bill Black on what he calls control fraud. We started with the Savings and Loan scandal during the 1980s, and we’re now up to the Obama administration. In this section, we’re going to talk about the crisis that Obama faced and how he dealt with it. We’ve also been talking about a movie, a documentary series called The Con which does a very detailed history of the lead-up to the 07/08 financial crash and here’s a clip from that film.

MOVIE EXCERPT

“One of the biggest conflicts of interest is the revolving door, which is where you have people spin through positions in government, and positions in the private sector, and positions in government.  The point of the revolving door has been to enrich the people going through the revolving door, who … they in effect sell out their public service, and they gage in influence peddling. The American people see this process of people going through the revolving door and cashing in, and they’re in public service or some particular job for a couple of years, and they go out and get a million dollars or two million dollars from some big bank, or the banks’ trade groups, and its sends the wrong message. It’s a corruption of the process. It’s one of the most troubling aspects of the conflicts of interests to the rife throughout Washington DC.”

“I mean, just for example, take Citigroup and Robert Rubin, and the decision to install Robert Rubin as Vice Chairman of the board for Citigroup; that led to very large payments for Robert Rubin … I think 120 million dollars over a seven-year period for duties that were almost losery. Who has the power to make those kinds of job offers? Who has the power and the wealth to influence our politicians, and our regulators, and our law enforcement personnel, to that extent? Almost nobody. Almost nobody. We are talking about a small handful of financial elites who run the biggest banks in the world.”

“It’s a partnership, unfortunately, between the Washington swamp and Wall Street. I mean, when Lanny Breuer and Eric Holder can revolve right through and go back to Covington and Burling, making 5 million dollars a year. Why? You know, so then they are representing corporations who are hoping to get clients on Wall Street. Of course, you are not going to do anything to jeopardize that. And it’s not just those two it’s throughout. It’s lawyers at the FCC. It’s throughout. working in Washington has become a resume credential. You get that on your resume, you can go back to your firm and make even more money. Because now you know how it works, now you can open all sorts of paths to further, you know, corruption between Wall Street and Washington. The promise of going to Washington to clean up the swamp, well we know that was further fiction. Immediately, Donald Trump surrounded himself with Wall Street and corporate types.”

“So the trick is, how do you get people in public office, be they appointed or otherwise, who are willing to forget their loyalty to their prior employer, most importantly, to their future employer? That they aren’t just enhancing their resume, to get the bidding up for when they are going out the back door. So they can give them all the inside skinny on what happens in the government, to give their future employer an advantage over everybody else. And most importantly over most Americans.”

Now joining us to discuss the history and present state of, as I said, control fraud is Bill Black. He’s in the film. He was an advisor to its producers. Bill is an American lawyer, academic, and author, a former bank regulator with expertise in white-collar crime. He’s the author of the book, one of my favorite titles, The Best Way to Rob a Bank is to Own One. He’s an associate professor of economics and law at the University of Missouri, Kansas City. Thanks for joining us again, Bill.

Bill Black

Thank you.

Paul Jay

So as I’ve been saying with each new segment, you really should go back and watch the whole series because we’re going to pick it up where we left off and where we left off is we now have President Obama. His administration is facing the consequences of one of the biggest financial corruption cases and crashes in U.S. history and maybe you could pick up the story from there, Bill.

Bill Black

Sure. President Obama comes in. He is obviously the first black president in the United States and this crisis is not just control fraud, but control fraud plus predation, which picks up on that scheme way back in the savings and loan days in Orange County, California. And who are they targeting in particular? Blacks and Latinx households and not very long into it will come out a study and a study by very conservative economists at the St. Louis Fed that says the wealth loss in households with at least a college degree that are Latinx is 70 percent of their total wealth. This is the decade, of the great financial crisis, which wipes out essentially three generations of wealth accumulation and the figure for black households is 60 percent. And in fact, it is households in both of these communities that have at least a four-year university degree that suffer much greater losses. Now, that’s the opposite of the pattern for whites, where if you have a higher educational background, your loss is dramatically reduced.

Paul Jay

Why is that?

Bill Black

Well, it’s because, again, there’s a lot of talk about predation going after the vulnerable, and it does, but it’s the vulnerable that have money. And if you have a college degree and you’re black first, you’re much more likely to be married to someone or are partnered with someone who also has a college degree, and so, again, one of the great myths of the great financial crisis is that it’s the subprime crisis. It isn’t. We have the data and Thomas Herndon is a name nobody knows and everybody should know. This is a brilliant young economist who first overturned the book that was being used globally to say we need financial austerity in response to the great financial crisis, that there’s a fiscal cliff and once the country hits 90 percent of GDP in debt, you fall into this terrible quagmire and it’s almost impossible to get out of it. Well, Herndon, while still, a grad student was the lead author that reviewed this and said, we can’t get your numbers to work, and now in fairness, these two very prominent conservative economists, Reinhart and Rogoff, shared their stuff and they had simply made a massive data entry failure. Just failed to enter big chunks of the data. They’d also done a lot of games in how they picked time periods and other such things and when you corrected it, there was no longer a there there. The fiscal cliff disappeared entirely. So this is someone you should really listen to and he has looked at the Great Financial Crisis and he was the first one to actually do the study of the thing that you would think everyone focus on. The thing that causes problems is losses on loans. That means the bank goes bankrupt. That means other banks go bankrupt like dominoes, as we saw. So what you really want to care about is how big the loan losses are. Everybody else had been studying default rates and delinquency rates, and those are important, but only as an ingredient to get to how many losses they’re causing. When Herndon looked, he quantified that 70 percent of the total loan losses in the great financial crisis were coming from liar’s loans, not subprime.

Paul Jay

Explain the difference because most people conflate the two things.

Bill Black

That’s where I’m going. That’s right and there are no official definitions, but by industry usage, a subprime loan means either that you got no credit history and therefore you have no credit rating or you have a really bad credit rating. A liar’s loan means that the bank doesn’t verify the borrower’s income. The lender does not verify the borrower’s income. It is super simple and cheap and quick to verify the borrower’s income. So any honest lender would verify it. Why are they not doing so? Because that lets the loan brokers, who the bankers have incentivized, to inflate people’s incomes, make much more loans and much bigger loans, and make the loans appear safer because if I’ve got lots of income, the loan is safer. I’m a real good type person and similarly, as we talked about it, you inflate the appraisal by extorting the appraisers and that makes the loan look much safer. So that’s the scam. That will overstate asset values enormously, the more you overstate asset values, the more you can loot, and that’s what it’s called looting. Right. Pretty interesting term by two Nobel Prize winners in economics, George Akerlof and Paul Romer. So it’s not like we’re making this stuff up. So through liar’s loans, we massively inflate the borrower’s income. Is that a good way of seeming to qualify for the Community Reinvestment Act of loaning to poor people?

Paul Jay

No, but I suppose it’s easier to inflate income if somebody has a college degree.

Bill Black

So this just blows apart the whole theory that it was a government that made them do it or that they were trying to loan to poor people. No, these are loans going to people that have typically substantial income. Now, some of them are also subprime because these are two mutually different characteristics. So you could combine the two. You can loan to somebody who has a terrible credit history and where you don’t verify the income, and indeed, by 2006, half of all the loans called subprime are also liar’s loans. So this was the overwhelming cause of the actual crisis. Now, that means we’ve got fabulous fraud cases. We have not just that you are looting by reporting false numbers, but each of the individual steps and that false reporting would be a federal felony, but on top of that, each of the individual steps are a federal felony. When you extort an appraiser, that’s a federal felony. When you inflate the borrower’s income as loan brokers and the loan officers did millions of times, that is a federal felony. When you sell these loans to somebody else, you have to make representations and warranties, reps and warranties that you didn’t do these things, that you complied with your written underwriting standards, which bans all such things, so that is a third felony. Then you use this to file false financial statements with the government, which is a fourth felony. Then if you’re publicly traded, you file false financial statements with the Securities and Exchange Commission, which is a fifth felony. So this is pick your poison in military speak, a target-rich environment for fraud prosecutions.

Now, back in the day, the savings and loan debacle, we had never seen liar’s loans. They were brand new. I mean, totally brand new, none before, and our examiners, the little savings and loan examiners, first time viewing, got it right immediately. We write about this and we prosecute people and we drive them out of the industry for doing this liar’s loan plus racially based or ethnic-based predation, because that was the key thing that Ameriquest did and as I’ve explained in prior talks, becomes the Johnny Rotten Appleseed that spreads this fraud scheme first through the shadow financial regulatory sector and then back into the regular, supposedly regulated sector. Except that regulations died during this time period.

In Obama’s case, he doesn’t have to invent anything. We know what the fraud scheme is, we’ve known since to the year 1990. We’ve been putting this in writing and warning about it, so at that point. So that’s 18 plus counting during the Obama administration years, they just have to take the book off the shelf, turn to page six. Oh, these are the fraud plus predation schemes. This is how you stop them. This is how you prosecute them and because we get over a thousand felony convictions, we create the top criminal referral system in the world, which proves to be critical, and back in our day, we had no prominent whistleblowers from within the industry, none making our cases. But Obama has these massive whistleblowers and not just whistleblowers, he’s got whistleblowers who are from a perspective of somebody who trained the prosecutors and the FBI agent to die for, your dream witness that brings the case on a platinum platter and not against little people, against Bob Rubin. The most powerful financial person probably in the world at that point, right, and a big ally of President Obama, and Angelo Mozilo, who had his list of favored politicians who got special deals from Countrywide and who lead a massive fraud. And again, you don’t have to take my word for it. There’s a Securities and Exchange Commission complaint that says, here’s what our investigation found and its fraud after fraud after fraud led from the C Suite. Right, and we have Michael Winston, a really senior guy who reports directly to Mozilo and who tells Mozilo directly this is insane, what you’re doing is going to produce a catastrophe and the reaction is not, oh, thank you for saving the company. How can I promote you? It, of course, is to force him out.

Paul Jay

Mozilo is who again?

Bill Black

The head of Countrywide Financial, which after Ameriquest becomes the largest purveyor of fraudulent liar’s loans in the world. So these are enormous super-elite, super politically connected folks who, if you prosecuted them, would have sent the message. There is a new sheriff in town. I Obama inherited this crisis from those guys, the bad guys. I Obama am going to follow radically different policies of holding personally accountable the thieves that became incredibly wealthy by producing the great financial crisis. I Obama will point out the three national warnings that we talked about, the appraisers in 1998 and 2000 warning of an epidemic of felonies. The head of the FBI unit that is supposed to deal with mortgage fraud, who in September 2004 says there is an epidemic of mortgage fraud and it will cause a financial crisis and zero federal regulators under the Bush administration. Pick up the phone and say tell me about this and how I can stop it. And the third one is the industry’s own anti-fraud experts who say, you know these liars loans, 90 percent of them are fraudulent and typically they overstate the borrower’s income by more than 50 percent.

So they’re not just fraudulent, they’re massively fraudulent. The curve of these liars loans from 2003 to 2006 goes like this, they grow more than 500 percent and hyper-inflate the bubble and cause a terrible problem to become a catastrophic problem and on top of that, they’re largely targeting people of color. We have the first president of color in the history of the United States. As I say, we know exactly how to prosecute these folks without any whistleblowers. And you have the best whistleblowers in the history of the world and America doesn’t understand how blessed it is compared to other nations in the frequency of whistleblowers. This is not the norm around the world, right, that you get these many people.

What does the Obama administration do? It immediately makes the crisis it inherited, its crisis, it looks around and says, who is the absolute worst financial regulator in the world? And they look and they go, Ben Bernanke. He had the perfect statute, he was the only person in the United States of America, the president couldn’t do this, but Ben Bernanke could. He could have stopped all liars loans under a federal statute passed in 1994 by Congress specifically to stop these kinds of abusive and predatory loans called the Home Ownership and Equity Protection Act of 1994 (HOEPA), and it gave authority to the Federal Reserve and only the Fed, regardless of whether the institution had federal deposit insurance, to shut down all these things. Now, Alan Greenspan, of course, had been the Fed chairman up to right at the beginning of 2006. So he bears enormous responsibility for this and I’ve already explained that Bill Clinton reappointed this Ayn Rand groupie twice to be the regulator and of course, Alan Greenspan absolutely refuses to listen to the appraisers, absolutely refuses to listen to the FBI, absolutely refuses to listen even to the industry’s own anti-fraud experts and use a HOEPA to stop the liars’ loan. So he gets primary responsibility, but Bernanke comes in very early right at the beginning, January 2006, and he’s seen this massive rise in liar’s loans, and he’s got all these reports from the state attorney generals that it’s the lenders that are putting the lies in liars loans, not the borrowers. The borrowers don’t even know the right numbers to put in. So it’s the loan brokers and the bankers who are doing the scams and Ameriquest, for example, every branch has what they called internally, the “art department” and the art department was because they were artists, they whited out the numbers and put in new numbers and they would trace signatures and such.

You’d have a glass window with the sunlight going through and you’d put the document up so that you could trace onto it. Old school, baby, old school. None of the sophisticated stuff for them. You didn’t need to be sophisticated because you were in the shadow. There was no regulation at all of Ameriquest. OK, so Ben Bernanke finally in like 2008 after the liar’s loans have collapsed and aren’t being made anymore, proposes a rule to stop liars loans. This is after the great financial crisis end and even then, he defers the effective date of the rule by over 15 months because, you know, maybe there’s still some fraud left and you wouldn’t want to get in their way. It’s just absolutely insane stuff. OK, so Ben Bernanke, what the heck are we going to do with him? President Obama will reappoint him. He’s a partisan Republican who has just been a colossal failure and is continuing to be a colossal failure on the regulatory and non-prosecutorial side and out of all the people in America, Obama says that guy should get another term.

Now, that’s Bernanke, but he’s top-level, how about field-type guys? Who is the worst field regulator in America? Well, that one is easy. Who was supposed to be the top cop for Wall Street? Tim Geithner. President of the Federal Reserve Bank of New York. I know, let’s make him the secretary of the Treasury, the most powerful economic position in the world because he was an absolute total abject failure as a supervisor.

Paul Jay

And who’s advising Obama to do this, is this Larry Summers? Obama doesn’t you know, he’s being told what to do practically by Wall Street, who’s doing the telling.

Bill Black

So he’s got a bunch of people in his orbit who are Wall Street and two of them will become his staff director. Which again, is in White House terms, the chief of staff, one of the most powerful positions in the world. So one, Rahm [Emanuel] will then later become the mayor of Chicago, but he comes from Wall Street and the other one is [William] Daley, as in the Daley family, except this is the Daleys of Chicago that goes to Wall Street. So they have those two and the third that had an enormous connection with Obama are the Pritzkers and the Pritzker family goes back to predation. What are they infamous for, predating on people of color in terms of these home loans. So our first African-American president says, I know Geithner. He’ll be our secretary of treasury now, the secretary of Treasury, just as a footnote, is the boss of the IRS, the Internal Revenue Service. And what is Geithner famous for? Not paying his taxes and he isn’t just someone who failed to pay his taxes. When he was told because there’s a review when you become president of the Federal Reserve Bank of New York and so they caught this and they said you have been filing your taxes improperly for years and he said, I’ll pay back any portion that isn’t passed the statute of limitations. He decided not to repay the United States of America. Now, of course, when you’re going to become treasury secretary, that’s not a very good answer. So he finally pays at that point. So he is on every conceivable dimension. And by the way, he’s taken one course in economics in his life, and he said he did terribly at it. So, of course, he should be secretary of the Treasury because what does anyone need to know about economics or finance?

OK, so Obama surrounds himself on the financial side with a team of people who are terrible. Now he actually has some good in his Council of Economic Advisers [Christina Romer], for a traditional economist, a quite competent one, but Obama is famously sexist as well. So she gets frozen out and Obama has what the books call famously a bro crush on Tim Geithner. So Obama soon starts getting his economic advice almost entirely from the guy who, A, knows nothing about economics and B, has completely screwed up the world. That’s how crazy it is and he does not ever.

So, for example, the Obama campaign is up against, of course, John McCain and John McCain was one of the five U.S. senators who I blew the whistle on with my notes of the Keating Five meeting. So the Obama administration actually filmed a campaign video in the living room of our home in Kansas City, primarily interviewing me about McCain and the Keating Five and how McCain hasn’t from his recent statements, then recent 2008-ish statements learned anything from the days of it. So they’re quite willing to use those aspects, but, of course, they would never let me anywhere near having any governmental power again. So my career-limiting gestures, CLG, had gone to career-ending gestures in the public sector.

So he’s not going to bring anyone in who believes in regulating and they don’t even do the most basic things, which, again, they didn’t have to reinvent at all. The concept had already been proven and optimizing, so the top guy and it’s in the docuseries, The Con explains, we made, again, just our little agency in the savings and loan debacle, which was much smaller than the great financial crisis made over thirty thousand criminal referrals. Chris Swecker, the FBI person in charge of this, says he believes there were six criminal referrals from all the federal agencies with regard to the great financial crisis under Obama, none of which, by the way, were prosecuted. They were O for six, but, of course, in a broader sense, they were O for hundreds of thousands. So it isn’t that they swung and they missed to use a baseball metaphor. They never got the bat off their shoulder. They were called out on strikes.

Paul Jay

One of the ones I know you’ve talked about is where some of the mortgage paper hadn’t even been signed and they start getting robo signatures. All this is such outlandish fraud, but that’s almost beyond imagination, that they would think they would get away with that, but they did.

Bill Black

So there are ballpark 300 entities that were really making the fraudulent mortgages, not 20,000, not 2,000. Now loan brokers, yes, there was an army of those. Hundreds of thousands of those people, but that’s the point. Loan brokers were a force multiplier in military speak, right. That left you with relatively small numbers of lenders who make again, literally over a million fraudulent liar’s loans were made in 2005, 2006, and that rate was being made for the first half of 2007 before the market collapsed. So these are extraordinarily large operations, but not that many institutions. So what happens as soon as the bubble stops hyper-inflating? Now, we can’t refinance the loans, so that saying in the trade that a rolling loan gathers no loss, no longer works. Here comes that other myth that you’ve heard, oh, the crisis was because of the secondary market and the people making the loans had no skin in the game because they were just going to sell it to the secondary market. In previous portions of this have explained why that’s a lie, but here’s another demonstration it’s a lie because all the lenders start failing, and they stop failing before the secondary market collapses. It’s because, in fact, they do have skin in the game in every single case.

Paul Jay

I got a question for you. You’ve made it clear to me that one must focus on the bankers and not the banks because it’s the fees on all these BS transactions that make them all rich, but where is the board of directors of these banks? In theory, they should be wanting to defend the interests of the institution. Most of them come from the finance sector themselves. I mean, have they all got their hand in the honey jar as well? Why aren’t some of the board directors screaming here?

Bill Black

Because who picks the board of directors slate? The CEO and the CEO does not put people on who are going to raise a stink. And remember, this is not happening everywhere. There are 15,000 plus banks in the United States at this time period. This is 300 lending institutions doing 99 percent of all of these fraudulent loans.

Paul Jay

But when it gets to the level of the big banks like Goldman and Lehman Brothers and that. Why aren’t their boards of directors screaming? For the same reason?

Bill Black

Because the CEO picks them too. You do not put people on the board. The classic example is Enron and by the way, Warren Buffett and Charlie Munger talk about this all the time. So they’re considered two of the preeminent investors in world history and both of them have been on boards and they’re wonderfully plain-spoken about this, that you’re treated as if you vomited in the middle of the dinner party if you raise a question. Your job is to simply add your name and reputation to the greater glory of the CEO and so even when they are on the board, nobody in the officer ranks wants to hear anything from them. So the best people don’t go on boards and they only go on boards, the good people only go on boards where the CEO actually wants someone of substance. Enron is a classic example. It had a board of directors that were superstars. It has the head of the audit committee, somebody who had been the chair of the Stanford Graduate School of Business because he was an accountant, so he’d also chaired the accountancy department and he was known as a huge reformer. He voted to authorize the CFO to be on both sides of the transactions with the special purpose vehicles I told you about in a prior episode. He authorized that among all the other board members unanimously. So there is a real groupthink stuff that is incredibly destructive in these settings. For example, if you wanted somebody on a board who was good at detecting problems, you could think of Bill Black. I assure you, I’ve never been approached to be a director of any entity, nor have any whistleblower, the last person in the world who would be put on these things.

And again, we see this. This is revealed preferences, as we say in the econ biz. Don’t tell me about the crap speeches you give that are written by your PR folks it’s what you actually do that tells me about you and my fellow bank whistleblower united folks who blew the whistle at Countrywide and at Citigroup remain, this is now, 13 years later unemployed and unemployable throughout finance precisely because they were people of integrity who got it right.

Because all these firms are failing and because nobody is ever going to do these particular kinds of scams again for at least a decade when the place fails, it just goes into bankruptcy. And nobody wants to buy their assets because they’ve got nothing of value.

Paul Jay

OK, you’re talking about these mid-level banks, mostly?

Bill Black

In particular, but actually, it’s the giant ones in the shadow as well. So what the hell do you do with all the paper? You throw it in the trash. So millions of documents, original documents with what we call wet ink signatures were simply thrown in the trash because who would bear the expense of dealing with them? And then we won’t take the time, but they created this weird other thing to avoid paying fees to the public recordation folks. The combination meant that when they went to foreclose, they had time after time after time, the famous oh shit moment, we don’t have the documents. Now the law understands that occasionally documents get lost and there are some procedures and to do that, to invoke it and to say that this is an appropriate foreclosure, you have to make about ten different factual attestations and you have to do that under penalty of perjury, but of course, there are literally millions of these foreclosures and the documents don’t exist, so the only way to process them is to lie. So that’s what robo signing really was. There wasn’t, in fact, a mechanical signature the way most people think. It was human beings told that all day, every day, and with a time clock on them, they had to lie at least 180x an hour.

Paul Jay

Because they were sitting there signing people’s names.

Bill Black

No, they were not. They were signing why there weren’t names, why they weren’t original documents, that there had been a lost document and this was a true copy of it and they had verified that the person owed the money and little lawyers, not big fancy ones, got them in a deposition room and said, so how much of this was true? And they said, none of it. And they went none of it? None of it. It’s not like it was an occasional truth. These were rooms, vast operations dedicated to lies and a company was created that would supply supposedly lost documents. This is the greatest single if you take nothing else away. So a little legal jargon. What you’re going to do as part of this process is assign the rights so that somebody can foreclose to an agent, so that agent can foreclose on the property, so the people creating this form created a space holder. The space holder is usually something like TBM – to be named, but this space holder, because they obviously knew exactly what they were doing and had a morbid sense of humor is on a number of occasions they filled in bogus assignee. That was their placeholder, bogus assignee, and in several cases, the courts actually foreclosed the basis of a document that said, bogus assignee.

Paul Jay

Now, eventually, some courts stop foreclosing. Is that right?

Bill Black

Well, yes, but that was trivial. What happened is the companies that own the mortgage servicing rights, which are valuable even in these circumstances, said a grander oh shit moment. And that was stuff that they had paid hundreds of millions of dollars for were going to be reduced to nothing of value if they allowed this to persist, and so they created a stoppage, a time out, on foreclosures. Then began the Obama administration, one of its most interesting cons. If anybody even modestly competent investigates this, this is the greatest series of cases you can imagine. This is a litigator’s dream, right? It doesn’t get this good and you would have witness after witness after witness saying, yes, it was 100 percent perjury. How many times did you do it? Ten thousand times. Fifty thousand times. That type of thing. You can imagine and remember, state and local hearings in many places are televised or could be televised. The press is allowed in. So imagine the American people seeing this day after day after day. So the banker types go we have to stop this. These investigations will destroy us, and so they cut a deal, and they cut a deal incredibly cheap and then Shneiderman.

Paul Jay

They cut a deal with the Obama administration.

Bill Black

They cut a deal with the Obama administration, but more broadly, they had to get in the state AG. That was their political problem. And Shneiderman was holding out some.

Paul Jay

Who is Schneiderman?

Bill Black

The New York attorney general at that time and so the Obama administration used one of the absolute classics. We’ll give him a title and a fancy job and under some versions of the story, invite him to the State of the Union address as a special honor person and give him a shout-out. They made him the co-head of the federal task force. And what does every New York AG have in common? They want to be governor of New York. It’s the stepping stone for it. And so Shneiderman was very politically motivated, let’s put it that way. So he just gave up and they did a settlement that they made sound large but was incredibly trivial and one person went to jail, the person who was, the woman, of course, who was in a senior level in the company that actually manufactured the fraudulent documents. But remember, this is occurring years after the great financial crisis. So none of these things are the cause of the great financial crisis. So the Obama administration managed to keep unblemished its record of going again in baseball .000, never even swinging the bat. It never holds anyone senior accountable who actually led the frauds that drove the great financial crisis. They refused to even seriously investigate those people.

The top training person – this may seem obscure, I assure you it isn’t – was the U.S. attorney for the Eastern District of California, which is Sacramento, and it isn’t the biggest office, but as the top training person and the co-chair of the key committee, he was really important, and he said in response to reporters inquiries that I instigated, well, that Bill Black guy about looting, that doesn’t make any sense, because when you loot a bank, the bank loses money. So and I quote. “Why would they steal from themselves?” now, he can’t even keep his pronouns consistent, six words apart. That they, the CEO, that the themselves that he’s stealing from is not him, it’s the bank. So these are people that refuse to admit the existence of something that had just driven the savings and loan debacle and then the Enron era frauds and then was obviously being reprised the same exact recipe. I wrote to him because at first, I thought he just didn’t get it and I was afraid that his words were going to be used by every defendant in a criminal case. I was so naive, I thought there might be defendants in criminal cases, and he ignored it, and so I wrote instead of a super nice one a look, just here’s the facts one and how the Nobel Prize winners in economics had done it, how we had gotten the prosecutions, and here’s my contact information and such and of course, I got nothing back from him ever. And they never change.

So Obama’s famous line was, well, some of the worst things they did aren’t criminal. How does that justify, A, not prosecuting the things that are criminal, and B, if that’s true, then your top priority should be introducing legislation to criminalize the worst things that are not criminal but should be in these circumstances. So the Obama administration picked [Eric] Holder and he picked Lanny Breuer, Holder as attorney general of the United States of America, Lanny Breuer as head of the criminal division. And Lanny Breuer openly said in a documentary, Frontline expose, I lose sleep over the fear that I might cause a bank to fail by prosecuting the criminals. They always talked in terms of prosecuting the bank, and we’re going, why would you prosecute the bank, that would be stupid. You prosecute the people, looting the bank. That’s what we did over a thousand times successfully. Why wouldn’t you do that? And Lanny, his answer was, suing the CEO who looted the bank would be destabilizing.

So my standard comment during that era was to every reporter, modern financial regulators are obviously vastly more sophisticated than we were back in the day because we had never figured out that leaving frauds at the head of our most powerful financial institutions was the key to achieving financial stability.

Paul Jay

So the new book should be the best way to rob a bank is to manage one.

Bill Black

Owning is just great. It’s best to own it and in the savings and loan frequently you were both the CEO and the 100 percent owner and that meant nobody could get in your way. So if you want the ideal type, it’s still to own it. But you’re right. The key is to manage it, to be able to loot it.

Paul Jay

OK, we’re going to pick this up in the next segment. We’ll get to the big bailout. The fraudsters, not only are they not charged, arrested, or go to jail, they’re handed a lot of dough. So please join me for the next segment with Bill Black. And please don’t forget the donate button and the subscribe button and see you soon.