This page has been archived and commenting is disabled.

Janet Tavakoli: "President Obama - Bring Back Black"

Tyler Durden's picture




 

By Janet Tavakoli, first posted on the Huffington Post

William K. Black, a regulator during the dark days of the Savings & Loan Crisis, gave the most sensible testimony about the financial crisis heard in Washington so far.*
Fraud thrives and spreads in a regulatory free, highly paid,
criminogenic environment. Cheaters prosper driving honesty out of the
market.

"Firms such as Citigroup and Merrill Lynch [and others]
were able to create complex securities backed by recklessly
underwritten [often fraudulent] mortgages, knowing that they could pass
the risk along to someone else who had less information about the
underlying loans. [The] $62 trillion credit derivatives market allowed
Wall Street to lend without having confidence in the men and women it
lent to. Wall Street hedged away the risk of lending and in the process
undermined the entire system."

Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff, P. 295, Christine Richard (Wiley, 2010).

It's time to bring back Black and resolute regulators like him. Our
proposed "financial reform" bill is a sham, and the health of our
society and our economy is at stake. ("William Black Warns That Financial Reform Bill Won't Stop the Wall Street Crime Wave," Dan Froomkin, HuffPo, April 21, 2010)

Failed Regulators Are Still in Charge

Our financial "investigations" aim to miss. First, the media writes
breathless articles portraying Washington's financial "investigators"
as "tough." Each new commission is billed as our "Pecora" moment. The
"investigators" hire teams of staffers who badger people like me for
charity with insightful questions like: "What's a CDO?" Treasury,
Federal Reserve, and Wall Street notables loudly complain about
"unfair" and "harsh" investigators. Then everyone marches to the Hill
where the committee pelts Wall Street executives with verbal
marshmallows. Here are just four examples:

The FCIC: Phil Angelides, Chairman of the Financial
Crisis Inquiry Commission, had Robert Rubin, Citigroup's former senior
advisor (also former Treasury Secretary under President Bill Clinton,
and former Co-Chair of Goldman Sachs), and Chuck Prince, former CEO of
Citigroup, in the palm of his hand. He failed to question them about
Citigroup's sales of complex CDOs and a $200 million loan to the failed
Bear Stearns hedge funds, even though it was public information and a
classic situation for securities fraud. ("Congress's FCIC Nearly Nailed Citigroup Executives to the Wall--Then Blew It," Tavakoli, HuffPo, April 8, 2010)

The SEC: The SEC filed a recent complaint of alleged fraud in a civil lawsuit against Goldman Sachs.
The complaint did not mention that Goldman may have used the subprime
mortgage-linked security at issue to unload other complex bonds it
created. The complaint strikes me as an SEC publicity stunt. Wall
Street banks had deep ties (and often ownership) with corrupt mortgage
lenders and created phony securities that funded loan fraud. Corrupt
finance--enabled by the SEC's multi-year failures--amplified the
problem. The SEC (rating agencies, and more) behaved as collaborators,
and now they seem to want credit for bringing one seemingly incomplete
complaint against a sapling, while the forest fire rages on. ("Abacus Might Have Had Other Benefits for Goldman," Matt Goldstein, Reuters, April 23, 2010, "Goldman Sachs: Spinning Gold," Tavakoli, HuffPo, April 7, 2010.

Senate's Permanent Subcommittee on Investigations - "Trial by Email": The leak of Goldman's emails suggests that shorting as a hedge is the same thing as betting against clients. ("Blankfein E-Mail Shows Firm Profited Betting Against Mortgages," Christine Harper, Bloomberg,
April 24, 2010.) It's not necessarily so.** Even if facts show it is
true, there is a much bigger issue. Wall Street banks bet against our
entire society when they created and sold phony securities that fueled
fraudulent mortgage lending. That activity was profitable for some
firms (Goldman) and unprofitable for others (Lehman, Citigroup, Merrill
Lynch, and more). Yet in every case, it was control fraud. CEOs and
bankers grew rich while the financial institutions that employed them
often imploded. The agents of the fraud prospered while American
society and the American economy were massively damaged. ("Wall Street's Fraud and Solutions for Systemic Peril, " Tavakoli, TSF, September 29, 2009)

TARP "Investigations": Unintentionally or otherwise, the TARP Inspector General's November 17 "SIGTARP" Report appeared
to be evasive action or just plain whitewash. Ten days before that
particular SIGTARP report was released I disclosed key information that
the SIGTARP report didn't even mention. With better access, a budget, a
mandate, greater staff, and more time, the "investigator," did a poor
job, yet is lauded in much of the media and in Washington as "tough."
After damaging facts become public, SIGTARP "catches up." It's an
embarrassment. ("Goldman's Undisclosed Role in AIG's Distress," Tavakoli, TSF, November 10, 2010.)

I urge the President to play the race card--the human race card. The
Founding Fathers sought to protect the Republic from this tyranny of
private interests. This was meant to be a place where all members of
the human race have a fair opportunity to thrive.

These show trials and faux 'investigations" distract us from the
real job of reform and protect Wall Street's interests. It's time to
bring back Black--or regulators like him--and truly give us our
"Pecora" moment.

 

* Statement by William K. Black,
Associate Professor of Economics and Law, University of Missouri -
Kansas City before the Committee on Financial Services, United States
House of Representatives regarding "Public Policy Issues Raised by the Report of the Lehman Bankruptcy Examiner." April 20, 2010. William K. Black is also the author of The Best Way to Rob a Bank is to Own One: How Corporate Executives and Politicians Looted the S&L Industry (University of Texas Press, 2005).

** When banks sell short, it is often to hedge their risks.
Sometimes hedges result in a net loss, and sometimes they result in a
profit. Some hedge funds ethically sold short shares in companies with
sham-based-accounting earnings. Short sellers were often the only
people sounding the alarm as Pershing Square head Bill Ackman did with
bond insurer MBIA. Christine Richard's just released book, Confidence Game
(Wiley, 2010) is the gripping account of how he tried in vain for years
to get regulators to listen. Meanwhile MBIA, at first an apparently
healthy company, was a financial mirage and within a few years the
"AAA" rated company sank like a stone. Short sellers were not
responsible for the death of Lehman Brothers. My book on the meltdown, Dear Mr. Buffett (Wiley,
2009) is exculpatory evidence for anyone who shorted the stock or
bought puts on the shares of Bear Stearns, Lehman, Merrill Lynch,
Citigroup (and more) prior to the financial crisis. This type of short
selling is very different from shorting a healthy company and spreading
false rumors. It is also different from selling short while withholding
damaging information.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 04/26/2010 - 13:47 | 318307 nedwardkelly
nedwardkelly's picture

When I first read the headline I thought he was referring to Ink. You don't see much of the black variety from the Government these days..

Mon, 04/26/2010 - 16:45 | 318657 Missing_Link
Missing_Link's picture

And here I always thought that "Once you go Black, you never go back."

Mon, 04/26/2010 - 13:48 | 318309 anynonmous
anynonmous's picture

dream on Janet

Mon, 04/26/2010 - 13:54 | 318319 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"All the things you do pretty Mama, ah come back to you."

Aerosmith - Dream On (Live Symphony):

http://www.youtube.com/watch?v=BH3il4rJzVc

Mon, 04/26/2010 - 15:21 | 318519 Problem Is
Problem Is's picture

Aerosmith- The Banker's Song

I found the secret, the key to the vault
We walked in darkness, kept hittin' the walls

I took the time, to feel for the door
I found the secret, the key to it all

In the line of fire, you know what to say
They gave us no choices, just one shade of gray

Walking on Gucci, wearin' Yves Saint Laurent
Barely stay on, 'cause I'm so God damn gaunt

Mon, 04/26/2010 - 18:56 | 318811 Miles Kendig
Miles Kendig's picture

You found the combination!  WhoT!  one of the all time classic guitar riffs to boot...

http://www.youtube.com/watch?v=gNbm5nALkF0

Now we know what it's like being that last child....

http://www.youtube.com/watch?v=UUieA7epeKQ

Mon, 04/26/2010 - 19:04 | 318820 THE DORK OF CORK
THE DORK OF CORK's picture

I dream of Janet.

Mon, 04/26/2010 - 13:48 | 318310 BlackBeard
BlackBeard's picture

She's great.

Mon, 04/26/2010 - 13:51 | 318312 Sir Angry Spankalot
Sir Angry Spankalot's picture

Janet for Treasury Secretary and Black for SEC. Then maybe we'd be getting somewhere.When will the USA get its own 'color revolution'? Maybe we should have our own Greece style strikes and slow downs with marches on Washington. Nothin's going to happen 'til people stop the machine's daily grind.

Mon, 04/26/2010 - 14:10 | 318363 Rick64
Rick64's picture

Yes. Definitely!

Mon, 04/26/2010 - 14:15 | 318373 aint no fortuna...
aint no fortunate son's picture

How about a couple million people march down Wall Street some fine day... after American Idol and Dancing With the Stars are done for the season of course.

Mon, 04/26/2010 - 14:57 | 318462 hbjork1
hbjork1's picture

Write your congressmen and/or women.  I blow away $0.44 a shot on that often and even write congresspersons from other states. 

Most of these folks want to be re-elected.  Pressure matters.

Mon, 04/26/2010 - 14:41 | 318430 Cursive
Cursive's picture

She was a big-time acolyte of Warren Buffett.  Has she fully rebuked and distanced herself from him?  I would have to see this before considering her for anything other than a good letter writer.  OTOH, men like Bill Black are rarer than gold these days.

Mon, 04/26/2010 - 17:19 | 318714 THE DORK OF CORK
THE DORK OF CORK's picture

Do you really want your revolution to be sponsored by the CIA ?

Mon, 04/26/2010 - 14:09 | 318358 Rick64
Rick64's picture

It's time to bring back Black and resolute regulators like him.

 William Black is wall street and the banks worst nightmare. He cannot be duped or intimidated. He is a truth speaker and doer. He knows more about how these frauds than anybody in the government. He is a true patriot unlike our politicians.

Mon, 04/26/2010 - 14:17 | 318375 aint no fortuna...
aint no fortunate son's picture

+1 he was on Moyers the other night and ripped them all a new one

Mon, 04/26/2010 - 15:03 | 318472 greased up deaf guy
greased up deaf guy's picture

are you sure it was the other night? looks like it was over a year ago if you're talking about this (unless it's new and i missed it)...

http://www.pbs.org/moyers/journal/04032009/watch.html

Mon, 04/26/2010 - 18:05 | 318768 Mentalic
Mon, 04/26/2010 - 18:06 | 318770 Ripped Chunk
Ripped Chunk's picture

what??

Mon, 04/26/2010 - 14:11 | 318364 Bam_Man
Bam_Man's picture

They say "once you go Black..."

Mon, 04/26/2010 - 14:42 | 318434 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

T-Shirt!

Front pocket, ZH logo.

On the back, it says "Once you go Black...." and above these words we can have his smiling face when he was telling the Congress that the SEC was fully aware of his assesments.

Mon, 04/26/2010 - 14:29 | 318401 Marvin_M
Marvin_M's picture

Ms. Tavakoli has a fine idea but it is no more realistic than her own phone being rung by Messrs. Obama, Bernanke, Summers or Geitner.  Mr. Black's suggested "return" is predicated on the assumption that there are those for whom he would be working that would allow (require?) him to perform his duties as mandated by letter of the laws defining them.

The "letter of the law" is an antiquated notion that has little or no meaning in the 2010 version of the US Government.  Mr. Black, if he were to "return" today, would either immediately quit in disgust, be fired for insubordination or have his career destroyed by a scandal of his enemies' (they would be legend) design.

A lot more needs to be fixed before men and women of true character can again function effectively in behalf of the American People.  Bill Black is too fine a man to be dragged through the open sewer that is Washington.  His voice rings loudest as a private citizen who stands in open ridicule of a government that wouldn't have him as an employee.

Mon, 04/26/2010 - 15:23 | 318524 Problem Is
Problem Is's picture

Independent Special Prosecutor Black....

Mon, 04/26/2010 - 14:32 | 318410 scatterbrains
scatterbrains's picture

I'd like to see an independant run for president with one plank in his platform being W Black as his A.G. and see where it goes.

Mon, 04/26/2010 - 14:57 | 318460 Miss Expectations
Miss Expectations's picture

"Now, that's funny."

B. Obama  (the pirate one, not so much)

Mon, 04/26/2010 - 15:06 | 318484 tony bonn
tony bonn's picture

bill black is an american treasure.....he was on bill moyers' journal yesterday and provided an electric interview.....he should be running sec and that useless bitch running it now should be burned at the stake....

Mon, 04/26/2010 - 15:08 | 318491 Sam Malone
Sam Malone's picture

And Angelides was previously California State Treasurer, so great body of work he left behind there...

Mon, 04/26/2010 - 15:30 | 318541 Problem Is
Problem Is's picture

Phil Angelides Was Previously California State Peter Principle Nimrod...

And I am being VERY generous here...

Angelides was chosen specifically for the fact that he is a fuck up of Dodd like proportions.... Phil, like Dodd,  possess the unique ability of being unable to find his own ass even with giant mirrors at hand...

Mon, 04/26/2010 - 15:37 | 318554 Sam Malone
Sam Malone's picture

But no need to be concerned. The FCIC is in capable hands.

Mon, 04/26/2010 - 15:15 | 318502 Gimp
Gimp's picture

 A little classic AC/DC - Back in Black

http://www.youtube.com/watch?v=k816dPQyPAM

to keep you trading!

Mon, 04/26/2010 - 16:39 | 318637 Miles Kendig
Miles Kendig's picture

back atcha.  After all, Powerage was the tour to see... ;-]

http://www.youtube.com/watch?v=ZSvBLPcvs84

Mon, 04/26/2010 - 18:23 | 318776 Ripped Chunk
Ripped Chunk's picture

Yes sir. Musical genius, especially live music genius is something that only happens occasionally.

Mon, 04/26/2010 - 16:19 | 318607 Miles Kendig
Miles Kendig's picture

Keep at it Janet.  Until then there remains time to enjoy a favorite for border crossings while at play.  peace

http://www.youtube.com/watch?v=Dq_0wPYFp9A

Mon, 04/26/2010 - 16:44 | 318655 Mark My Words
Mark My Words's picture

Dear God, please put Mr. Black in charge of the SEC!  Amen.

Mon, 04/26/2010 - 17:04 | 318691 Hulk
Hulk's picture

Marko would also make a good SEC head.

He has already stated that were he in charge of the SEC, he would start by firing everyone, and that was before the porno findings

But we do have to get Black involved, along with an additional 2000 FBI agents to assist him.

Tue, 04/27/2010 - 01:49 | 319210 Bolweevil
Bolweevil's picture

nary a peep out of the fbi. too quiet?

Tue, 04/27/2010 - 01:56 | 319214 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I think the fbi was told to stand down over 5 years ago.  They had found that mrgage fraud was happening on a massive scale back in'03 or '04.  This is common though, the fbi is often told to stand aside.  Read Webster Griffin Tarpley's book "9/11 Synthetic Terrorism" to find all about how they knew 9/11 was going to happen years before it did.

Mon, 04/26/2010 - 23:37 | 319132 Fred123
Fred123's picture

Ok, I'm emailing all my so-called representatives with a link to the video to encourage them in real reform. Also I will write a letter to the editor of my local paper about Bill Black and financial reform.

Maybe if all posters on ZH did the same we might just be able to change a few things.

 

Tue, 04/27/2010 - 17:07 | 320497 Jim B
Jim B's picture

If you expect to get their attention, you will need to send along a substantial campaign contribution as well. LOL

Do NOT follow this link or you will be banned from the site!