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William Black Tells The Truth On Lehman's Failure: "A Story In Large Part Of Fraud"

Tyler Durden's picture


There is at least one person left who isn't afraid to speak the truth.

Courtesy of Firedoglake

FDL Contributor Bill Black scorched everyone with his testimony on the failure of Lehman Brothers before the House Financial Services Committee today.  His prepared remarks can be found here (PDF).

CHAIRMAN KANJORSKI: And now we’ll hear from Mr. William K. Black, Associate Professor of Economics and Law, the University of Missouri, Kansas City School of Law. Mr. Black.

BILL BLACK: Members of the Committee, thank you.

You asked earlier for a stern regulator, you have one now in front of you. And we need to be blunt. You haven’t heard much bluntness in hours of testimony.

We stopped a nonprime crisis before it became a crisis in 1991 by supervisory actions.

We did it so effectively that people forgot that it even existed, even though it caused several hundred million dollars of losses — but none to the taxpayer. We did it by preemptive litigation, and by supervision. We broke a raging epidemic of accounting control fraud without new legislation in the period of 1984 through 1986.

Legislation would’ve been helpful, we sought legislation, but we didn’t get it. And we were able to stop that because we didn’t simply consider business as usual.

Lehman’s failure is a story in large part of fraud. And it is fraud that begins at the absolute latest in 2001, and that is with their subprime and liars’ loan operations.

Lehman was the leading purveyor of liars’ loans in the world. For most of this decade, studies of liars’ loans show incidence of fraud of 90%. Lehmans sold this to the world, with reps and warranties that there were no such frauds. If you want to know why we have a global crisis, in large part it is before you. But it hasn’t been discussed today, amazingly.

Financial institution leaders are not engaged in risk when they engage in liars’ loans — liars’ loans will cause a failure. They lose money. The only way to make money is to deceive others by selling bad paper, and that will eventually lead to liability and failure as well.

When people cheat you cannot as a regulator continue business as usual. They go into a different category and you must act completely differently as a regulator. What we’ve gotten instead are sad excuses.

The SEC: we’re told they’re only 24 people in their comprehensive program. Who decided how many people there would be in their comprehensive program? Who decided the staffing? The SEC did. To say that we only had 24 people is not to create an excuse — it’s to give an admission of criminal negligence. Except it’s not criminal, because you’re a federal employee.

In the context of the FDIC, Secretary Geithner testified today that this pushed the financial system to the brink of collapse But Chairman Bernanke testified we sent two people to be on site at Lehman. We sent fifty credit people to the largest savings and loan in America. It had 30 billion in assets. We had a whole lot less staff than the Fed does.

We forced out the CEO. We replaced the CEO. We did that not through regulation but because of our leverage as creditors. Now I ask you, who had more leverage as creditors in 2008? The Fed, as compared to the Federal Home Loan Bank of San Francisco, 19 years earlier? Incomprehensible greater leverage in the Fed, and it simply was not used.

Let’s start with the repos. We have known since the Enron in 2001 that this is a common scam, in which every major bank that was approached by Enron agreed to help them deceive creditors and investors by doing these kind of transactions.

And so what happened? There was a proposal in 2004 to stop it. And the regulatory heads — there was an interagency effort — killed it. They came out with something pathetic in 2006, and stalled its implication until 2007, but it ’s meaningless.

We have known for decades that these are frauds. We have known for a decade how to stop them. All of the major regulatory agencies were complicit in that statement, in destroying it. We have a self-fulfilling policy of regulatory failure
because of the leadership in this era.

We have the Fed, the Federal Reserve Bank of New York, finding that this is three card monty. Well what would you do, as a regulator, if you knew that one of the largest enterprises in the world, when the nation is on the brink of economic collapse, is engaged in fraud, three card monty? Would you continue business as usual?

That’s what was done. Oh they met a lot — they say “we only had a nuclear stick.” Sounds like a pretty good stick to use, if you’re on the brink of collapse of the system. But that’s not what the Fed has to do. The Fed is a central bank. Central banks for centuries have gotten rid of the heads of financial institutions. The Bank of England does it with a luncheon. The board of directors are invited. They don’t say “no.” They are sat down.

The head of the Bank of England says “we have lost confidence in the head of your enterprise. We believe Mr. Jones would be an effective replacement. And by 4 o’clock that day, Mr. Jones is running the place. And he has a mandate to clean up all the problems.

Instead, every day that Lehman remained under its leadership, the exposure of the American people to loss grew by hundreds of millions of dollars on average. Auroroa was pumping out up to 300 billion dollars a month in liars’ loans. Losses on those are running roughly 50% to 85 cents on the dollar. It is critical not to do business as usual, to change.

We’ve also heard from Secretary Geithner and Chairman Bernanke — we couldn’t deal with these lenders because we had no authority over them. The Fed had unique authority since 1994 under HOEPA to regulate all mortgage lenders. It finally used it in 2008.

They could’ve stopped Aurora. They could’ve stopped the subprime unit of Lehman that was really a liar’s loan place as well as time went by.

(Kanjorski bangs the gavel)


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Wed, 04/21/2010 - 10:22 | 310686 Cursive
Cursive's picture

Bill Black is what America needs right now.  Less Bernanke/Geithner/Summers and a whole hell of a lot more William Black.

Wed, 04/21/2010 - 10:32 | 310716 Cognitive Dissonance
Cognitive Dissonance's picture

Truth is mortally dangerous to the Ponzi and thus it will always be given the heave ho. It is only when the masses recognize that they have willingly allowed their own theft will they tune out WIIFM (What's In It For Me). Until then, they will continue to believe the lie that their continued existence depends upon the well being of the Ponzi.

Wed, 04/21/2010 - 12:01 | 310883 JW n FL
JW n FL's picture

Germany... was already in a depression... before, the loans went bad in Cleveland, Chicago or other $0.25 on the dollar secondary market places in America.


Liars Loans did not cause the World to faulter, considering the World was already faultering...



Utility Output Slows the Increase in Industrial Production

Wed, 04/21/2010 - 16:24 | 311356 hbjork1
hbjork1's picture


I don't understand.  The utility output is normally an issue of supply and demand until local capacity issues arise.  My understanding is that utility output, at least here in Michigan, is reduced by lack of demand.

Would appreciate your comment on this.



Wed, 04/21/2010 - 19:53 | 311655 JW n FL
JW n FL's picture


The Tail that Wags the Dog

  • Although it comprises less than 12 percent of total output, utility production has been the X-factor in recent reports on industrial production. An exceptionally cold winter followed by an unseasonably warm spring resulted in a 6.4 percent decline in utilities output, the sharpest drop in more than four years. Manufacturing output was strong, increasing 0.9 percent for the month as the manufacturing recovery continues.

    I thought it was interesting that power production is hindering manufacturing, I am in Florida and suffer JEA and more often that not FPL... so I am un-aware of the problems suffered in the great white north, although I do hear that offshore or lake power is on the rise in your neck of the woods. Sorry I could not be of more service to your question directly, it was not my intent to be ignorant on the matter presented.

    Be well, JW

    Wed, 04/21/2010 - 11:25 | 310878 macfly
    macfly's picture

    He is one of the greatest voices for us the people. It is completely clear that everyone from Wall St to Washington is complicit in this ridiculous scam, the engineered collapse. If you haven't seen his Bill Moyers interview it is well worth watching...

    Wed, 04/21/2010 - 13:11 | 311042 mudduck
    mudduck's picture

    I like Blacks little dig at the end, "By the way, the folks who are the better regulators, they pay their taxes so you can get them through the vetting process a lot quicker."

    Wed, 04/21/2010 - 12:17 | 311008 Double down
    Double down's picture

    Bill Black and a bunch of 9mm arguments

    Wed, 04/21/2010 - 10:28 | 310695 Marvin_M
    Marvin_M's picture

    I absolutely love this guy's moxy.  The efforts to marginalize the truth speakers to date have been successful.  When Bill Black (and others like him) begins to be taken seriously, we will finally see the unmovable begin to move.  All America now knows what the freedom movement by African Americans in the 50s and 60s looked like from the inside.

    Wed, 04/21/2010 - 10:26 | 310697 M.B. Drapier
    M.B. Drapier's picture

    No harm to plug his book.

    Wed, 04/21/2010 - 10:28 | 310704 vote_libertaria...
    vote_libertarian_party's picture

    Watch the video again.  Watch the guy popping in and out on the left.  His expressions seem to be "OH SHI*!  He isn't on script."

    Wed, 04/21/2010 - 11:17 | 310851 Hulk
    Hulk's picture

    That idiot annoyed the shit out of me...

    Wed, 04/21/2010 - 18:32 | 311527 No More Bubbles
    No More Bubbles's picture

    Yeah, that guy bothered me too. I wanted to punch that prick.   I was also infuriated at the scumbag hitting the gavel in the last minute over & over. 





    Wed, 04/21/2010 - 10:29 | 310706 AntiMort
    AntiMort's picture

    He trimmed the beard... Nice!  Makes him more credible.

    Wed, 04/21/2010 - 10:36 | 310723 Cursive
    Cursive's picture

    LOL.  He could slap on some crazy Dr. Hugo (Dune reference) eyebrows and I'd still listen to every word.

    Wed, 04/21/2010 - 10:45 | 310753 Cognitive Dissonance
    Cognitive Dissonance's picture

    Someone made a Dune reference last week in the comment section of ZH that drove me to my library to resurrect my copy. Rereading Dune in the current economic and political environment has convinced me that Frank Herbert was definitely a clairvoyant or great seer.

    Wed, 04/21/2010 - 10:50 | 310764 Cursive
    Cursive's picture


    That was a messed up movie.  I hope we don't end up with heart plugs.  Few things creepier than the scene of Baron Harkonin (sp?) taking that dude out.  If Benron could, he would.

    Wed, 04/21/2010 - 11:05 | 310806 crosey
    crosey's picture

    Hell, we could eat some Melange, fold space, and get the hell out of here.

    Wed, 04/21/2010 - 11:34 | 310896 WaterWings
    WaterWings's picture

    Oh, yeah. Nobody warned me - I was raised pretty quietly so my worldview was skewed for a day or three.

    Wed, 04/21/2010 - 11:08 | 310818 Commander Cody
    Commander Cody's picture

    You're welcome.  Harkonen.  He who controls the spice controls the universe!

    Wed, 04/21/2010 - 11:28 | 310886 House Atreides
    House Atreides's picture

    My father once told me that respect for the truth comes closer to being the basis for all morality. "Something cannot emerge from nothing", he said. This is profound thinking if you understand how unstable "the truth" can be.

    - from "Conversations with Muad'Dib' by the Princess Irulan

    Wed, 04/21/2010 - 22:33 | 311921 monmick
    monmick's picture

    Like my wife would say: "He looked like Easy Top"!

    Wed, 04/21/2010 - 10:29 | 310708 Kina
    Kina's picture

    So everybody was part and parcel of the fraud. Unless they want to claim extreme ignorance and incompetence the regulators have to admit they were part of the scam, effectively against the country.


    There are some regulators that no doubt should be in prison for criminal negligence.

    Wed, 04/21/2010 - 10:50 | 310765 Cognitive Dissonance
    Cognitive Dissonance's picture

    You have quite eloquently illustrated how the big lie becomes so completely assimilated into the very fabric and core of a culture. This is precisely why everyone gets a taste or a piece of the action in organized crime. It's then in every one's interest to keep their mouths shut. It also makes for some strange (but satisfied) bed fellows. 

    Wed, 04/21/2010 - 11:12 | 310828 DaveyJones
    DaveyJones's picture

    Reminds me of the Catholic priest scandal. Everyone has something on everyone

    or as someone else described it, a banana republic without bananas

    Wed, 04/21/2010 - 13:26 | 311073 crosey
    crosey's picture

    Not true.  No doubt bad shit has happened.  Coverups for sure.  But the vast majority of Catholic clergy are clean.  Let's not impune the entire lot.

    Wed, 04/21/2010 - 14:07 | 311149 pan-the-ist
    pan-the-ist's picture

    It is a big lie- I did nothing to cause this problem.  I bought a house I could afford, I avoided a stupid ARM loan, etc - yet I suffer the bad economy because of loan sharks and goldman. As Mr. Black said, if the the existing regulators hadn't turned a blind eye to the awful loans this could have been stopped.  No McMansions, no run up on house prices.  I get angry when people say the banks were forced to make these loans - the fuck they were - they were enabled to make the loans and their agents were given bonuses to deliver.

    There are guilty people who should be punished and they are identifiable!

    Wed, 04/21/2010 - 16:36 | 311378 hbjork1
    hbjork1's picture


    Nobody in a politically vulnerable position wants to spoil the party.  "Kick the can down the road and let someone else deal with it.

    Maybe the problems will go away.


    Wed, 04/21/2010 - 10:30 | 310711 Sqworl
    Sqworl's picture

    Bravo...three snaps from me!!!

    Wed, 04/21/2010 - 10:35 | 310722 scatterbrains
    scatterbrains's picture

    I was shaking while listening to him live..   I need to chill

    Wed, 04/21/2010 - 10:43 | 310729 Rogerwilco
    Rogerwilco's picture

    Kabuki Theater -- Black is just one more character in this ongoing charade. Congress gets big bucks from the likes of GS and BAC, and how much did Mr. Obowma take from these guys during his campaign? Over $900K?

    Give the proles a false sense of justice, play to the cameras, and let the Wall Street types continue to do what they do best -- loot and pillage.

    Wed, 04/21/2010 - 10:39 | 310733 THE DORK OF CORK
    THE DORK OF CORK's picture

    I seem to remember only 2 questions directed towards Black after his opening statement.

    The committee seemed to concentrate on Fulds ramblings which was a classic stalling exercise filled with inane banking babble.

    Black rightly was pointing the finger to the top of the manure heap which was/is occupied by the Wash / NY FED

    This will not end until it is over.

    Wed, 04/21/2010 - 10:40 | 310735 sushi
    sushi's picture

    Why doesn't the administration hire the guy? Why don't Americans demand the administration hire the guy? Call it a Pecora moment and have him start busting some chops.

    Wed, 04/21/2010 - 10:46 | 310754 arkady
    arkady's picture

    You know Pecora was just a Rockefeller lackey right?  Pecora and his "findings" simply gave the Rockefellers more teeth while clamping down on the Morgan interests.  Giving birth to the famous Glass-Steagall that I am sure everyone this board just adores, along with the useless FDIC and even more useless SEC. 

    Wed, 04/21/2010 - 10:46 | 310756 THE DORK OF CORK
    THE DORK OF CORK's picture

    Sushi if I were a rat the last thing I would want in my house is a rat catcher.

    Wed, 04/21/2010 - 14:52 | 311224 sushi
    sushi's picture

    That is exactly the reason pitchforks were invented. The French improved the same technology. They called it the guillotine.

    Wed, 04/21/2010 - 10:42 | 310742 anynonmous
    anynonmous's picture

    the key phrase in all of this was:


    Kanjorski bangs the gavel



    Wed, 04/21/2010 - 10:43 | 310745 arkady
    arkady's picture

    I never understood Bill Black.  How can a guy who understands so much about our big banking be such a raging liberal working hard to get Obama elected.  Obama, who by the way, was the largest recipient of Goldman contributions.  Is Black just a finance genius and political idiot...or?

    Wed, 04/21/2010 - 10:57 | 310789 arkady
    arkady's picture

    I won't even mention that the entire point of the speech is to make it quite clear that fraud was running rampant and that our regulatory agencies FAILED.  Not because they were not in place, but because people did not want to act.  So why is the answer more regulation when existing regulation failed miserably. 

    It's hard to stomach all this especially as he advocates more Central Bank powers as if a more powerful Fed is what America needs.  How about he address the central bank involved in buying 1 trillion dollar worth of toxic paper and maintaining a liquidity pump program for 30 years using artificial interest rates. 

    What is more damaging to our economy?  Central planning of our financial industry or creating more inept regulators. 


    I cannot be the only one seeing this.

    Wed, 04/21/2010 - 11:05 | 310810 Rick64
    Rick64's picture

    I don't think he is advocating it, just destroying the FED's reasoning for not getting involved when clearly they could have stopped the madness and did have the authority. Instead they played along. As far as his political choice, maybe he was fooled just like many others. Those campaign contributors give to both sides, they cover all bases. These people always play both sides in wars,elections, and finance.

    Wed, 04/21/2010 - 11:45 | 310922 arkady
    arkady's picture

    I certainly see your point about covering bases, they certainly seem to do that which makes voting for either of the two parties a grave error.

    Imagine though Rick, if Black would advocate the dismantling of the Federal Reserve solely based on his utter failure and perhaps even complicity.

    Wed, 04/21/2010 - 12:00 | 310963 Rick64
    Rick64's picture

    He would be discredited as an extremist. It probably makes more sense to him to bring accountability to the system already in place rather than dismantling the whole system, because when they try to pass legislation against the banking cartel or corporations they are unsuccessful. If they are unsuccessful at that level then to dismantle the whole system (or the FED) is out of the question.

    Wed, 04/21/2010 - 13:32 | 311087 arkady
    arkady's picture

    You could be quite right, except that he is already saying "The Fed failed".  It would not be a stretch to add "therefore we should reconsider the system". 

    All one has to do is prove failure, most Americans have no clue what the Fed does or the consequences that we have to live with because of it. 

    Wed, 04/21/2010 - 13:46 | 311113 Rick64
    Rick64's picture

    I agree with you the FED should be abolished, but the reality is abolishing it would require a revolution whereas introducing accountability would be more acceptable and could gain support. Steps in the right direction and just maybe towards abolishing the FED. You are right most Americans don't have a clue about our monetary system or political system. There is collusion between the two.

    Wed, 04/21/2010 - 13:55 | 311127 arkady
    arkady's picture

    Fair enough, I guess it always struck me as wasted opportunity to not expose the machinations of our centrally planning masters to the public.  Then again, who is going to even watch this testimony? People who already know what's up. 


    Wed, 04/21/2010 - 12:14 | 310938 M.B. Drapier
    M.B. Drapier's picture

    Yes, in the video he's very clearly talking about what the Fed could have done with the powers it already has. Even in his written submission, where he moots structural changes at the Fed and other regulators, very few of them could be described as giving extra powers to the Fed. (Though arguably, if the Fed gets into the habit of deposing bank chiefs BoE-style, then that might be an expansion in its de facto powers, which might be problematic.)

    As far as his political choice, maybe he was fooled just like many others.

    He's been fairly open in accepting that he was rolled by the Obama campaign/administration, at least up to now.

    Wed, 04/21/2010 - 13:34 | 311091 arkady
    arkady's picture

    With all due respect to Mr. Black - he got rolled by a socialist?  What the hell did he expect to happen?  Every single person who is surprised by what Obama truly is boggles my mind.  Obama to his credit, despite being a socialist, was pretty straight forward with his intentions.  I can forgive stupid Americans enraged with 8 years of Bush to fall for the song and dance, but not people like Bill Black. 

    Wed, 04/21/2010 - 11:58 | 310956 M.B. Drapier
    M.B. Drapier's picture

    How about he address the central bank involved in buying 1 trillion dollar worth of toxic paper and maintaining a liquidity pump program for 30 years using artificial interest rates.

    He's spoken out against the Greenspan/Bernanke put and mark-to-model elsewhere. In his testimony to Congress he has to stay on-topic and (as you can see) inside his limited time.

    Wed, 04/21/2010 - 13:30 | 311084 arkady
    arkady's picture

    Fair enough, if that is true, then it certainly boosts his credibility at least in my eyes. 

    Wed, 04/21/2010 - 15:30 | 311272 Seer
    Seer's picture

    Yes and no... Doesn't matter how good people are, tossing a limited number at huge entities like a Goldman Sachs is like David vs. Goliath.  You better be sure that you can justify your time and energy: and what you use (time and energy) in one case you cannot use in another (the rest of the industry would just run wild).

    The SEC was basically gutted under the Bush administration.  The wolves go into the chicken coop and there weren't enough guardians available.

    So, yes, the SEC was a political tool, a tool to help pay back campaign supporters.

    Don't like enforcers?  Get rid of the laws: and then perhaps some of us would be free to apply some lead that we couldn't otherwise use.

    Moral of the story: careful of what you wish for (esp when not understanding the big picture).

    Wed, 04/21/2010 - 11:01 | 310800 Kina
    Kina's picture

    What did GS pay to the other side? In Australia it is common for big business to donate to both major parties.

    They (GS) can donate what they want, and if it appears that one side is going to win then donating more to them is probably usual. In the hope of gaining some leverage. It doesn't mean anything however. We shall see.


    You would think that if this issue continues to strengthen in the community on both sides of the political divide then Obama has a precious opportunity to do a number of things.


    One would be to implement some real reforms and the other to implement a full scale judicial inquiry into the activities/persons (including government)  that created the crisis with full powers to indict and so on...I am thinking of the equivalent of a Royal Commission that Commonwealth Countries use.

    Wed, 04/21/2010 - 11:05 | 310809 arkady
    arkady's picture

    But you just heard Black clearly state it was not a failure due to LACK of regulating ability, it was a failure due to a lack of ACTING on it.  We have the tools, they are just not used.  Why?  Because the line between big corporations and government is blurred?  Because politicians are bought?  Because government can't destroy the primary mechanism behind credit creation?  I have no idea.

    I am just not seeing any of the real issues ever being talked about.  We have a credit crisis in America and instead we are complaining about lack of regulation.

    Wed, 04/21/2010 - 13:56 | 310816 Rick64
    Rick64's picture

    Obfuscation. It has worked well for them. I would like to reccommend Frontline on PBS "The warning" and several on Bill Moyers Journal about lobbyists.

    Wed, 04/21/2010 - 15:42 | 311295 Seer
    Seer's picture

    I think that you're (ideologically) confusing what Black said.

    What he said was that the TOOLS -read "authority/law"- was available, but that the desire and resources were not.

    I'll be the first to admit that it's likely hopeless to expect that there's any real resolution, but understanding the facts is the least that we can do.

    Wed, 04/21/2010 - 15:35 | 311250 seventree
    seventree's picture

    How can a guy who understands so much about our big banking be such a raging liberal working hard to get Obama elected.

    If he had been a flaming conservative, and worked (successfully) to get McCain/Palin elected - what would have been different?

    This is not a simple partisan issue. It has been building through Bush -> Clinton -> Bush -> Obama admins, and will probably continue after the people, who are "mad as hell and won't take it anymore," vote in the next bunch who promise Real Change.

    Wed, 04/21/2010 - 10:43 | 310746 Objective Soul
    Objective Soul's picture

    More William Black please.

    He would make a good Leonidas for a sequel to 300

    the few who stood against the money

    Wed, 04/21/2010 - 10:45 | 310748 williambanzai7
    williambanzai7's picture

    Oouch!!! Fuld should be having breakfast ith Bernie.

    Wed, 04/21/2010 - 10:45 | 310751 potatomafia
    potatomafia's picture



    Thank you Bill Black.




    Wed, 04/21/2010 - 10:49 | 310759 lsbumblebee
    lsbumblebee's picture


    Wed, 04/21/2010 - 10:49 | 310760 kwc
    kwc's picture

    There's a wonderful expression in Chinese describing how Black exposes this pack of liars.  It's si po lian - to rip a person's face to tatters.  Why save face for such criminal scum?

    Wed, 04/21/2010 - 10:50 | 310763 Ludic Fallacy
    Ludic Fallacy's picture

    Probably just an oversight, but he says $3 Billion per month, not $300 billion.  I think it's worth correcting, lest we get accused of exaggerating the confirmation bias we all have on this site.

    Wed, 04/21/2010 - 10:51 | 310768 Rick64
    Rick64's picture

    Bravo Mr.Black. You sir are a true patriot. One that speaks the truth.

    Wed, 04/21/2010 - 11:28 | 310888 Hulk
    Hulk's picture

    +1000. Lets get him a half hour on prime time TV to explain the fraud and corruption in the system to the general public..

    (the networks wouldn't sell him the time, I am sure)

    Wed, 04/21/2010 - 16:45 | 311392 hbjork1
    hbjork1's picture

    Hulk: "Lets get him a half hour on prime timeTV.."

    Maybe Charlie Rose will pick up on this if he hasn't already had Black on.

    Thu, 04/22/2010 - 03:40 | 312213 Rick64
    Rick64's picture

    He has been on PBS many times.

    Wed, 04/21/2010 - 10:52 | 310771 fsudirectory
    fsudirectory's picture

    The only thing I dislike about this entire article is that someone useful contributes to FDL.


    Thank you ZH for going to the 7th layer of the internet for this gem

    Wed, 04/21/2010 - 10:52 | 310774 buzzsaw99
    buzzsaw99's picture

    Telling the CONgreff that shit is like complaining to Fredo Corleone.

    Wed, 04/21/2010 - 10:55 | 310781 doublethink
    doublethink's picture


    We will know that the Obama administration is serious when William Black is appointed. Until then, our financial system continues in its all-encompassing corruption...rotten to the very top.


    Unfortunately for the country, this change may only come after a total collapse.


    Wed, 04/21/2010 - 10:59 | 310793 declineNfall
    declineNfall's picture


    if pension investors were not so lazy and just handed money over to pension managers

    if pension funds were not so lazy and just handed money over to wall st

    if wall st were not able to charge these saps 2%

    if such a wall of money wasnt so enticing to politicians

    who minding your money?

    invest responsibly

    Wed, 04/21/2010 - 11:07 | 310815 DaveyJones
    DaveyJones's picture

    Love when he calls the action of the regulators criminal except, "oh wait, you're the government.

    Nice to see someone validating our anger

    Now what do we do when he's ignored

    Wed, 04/21/2010 - 11:14 | 310840 crosey
    crosey's picture

    You can tell him "thank you".  Bill's email address is:



    Wed, 04/21/2010 - 11:18 | 310853 Rick64
    Rick64's picture

    Thanks, and I most certainly will.

    Wed, 04/21/2010 - 13:10 | 311040 HonestJohn
    HonestJohn's picture

    I just emailed to thank him, he responded in about 2 minutes, and mentioned that he will be on Bill Moyer's Journal again this

    Wed, 04/21/2010 - 11:24 | 310869 Instant Karma
    Instant Karma's picture

    Nice to hear what most of us know already: making bad loans, repackaging them as good loans, getting the rating agencies to mark them "AAA" and selling them is fraud. Of course. But at any step along the way regulators should have stepped in and stopped it. How long would it have taken to do some sort of investigation to see to whom these mortgages were being made? And under what terms?

    And who had the hundreds of billions to buy these things? Was the reach for yield that great that BIG MONEY was willing to buy mortgage debt for a few basis points above Treasurys?

    What a mess. This too shall pass. And in its wake we have a stock bubble well on its way, savers are totally being crushed with 0% interest rates, and all the jobs created in the last decade in America (finance, construction, real estate) are gone.

    Local and State governements are short on cash, are are being crushed by declining revenues and continuing increases in costs for untouchable programs like Medicaid, pension benefits and union wages.

    The upshot is this for we Americans: after tax income is precious and will become more precious, due to Federal, State, and Local income taxes, property taxes, Social Security Tax, Medicare Tax, State and local sales tax, and rising health insurance premiums (which are often taken out of our income pretax).

    With the decline in after-tax income, less money is spent. Deflation. But thats here in America. In other parts of the world things are really cooking--ASIA comes to mind. And with interest rates near zero world wide theres lots of free money to speculate with.

    Sadly then, as America and Europe struggle with meager after tax income, the rest of the world is not so encumbered, and, with speculators having free money to play with, the prices of commodities and stocks and bonds is going up.

    Its a strange world but there it is.

    Wed, 04/21/2010 - 15:47 | 311304 Seer
    Seer's picture

    with speculators having free money to play with, the prices of commodities and stocks and bonds is going up.

    Yes, which means that they will go up for the folks in Asia, the ones whose energy-short economies are bubbling...  I'd be short any country that's a net energy importer...

    Wed, 04/21/2010 - 11:25 | 310876 M.B. Drapier
    M.B. Drapier's picture

    His prepared remarks can be found here (PDF).

    Here FDL links to this statement.

    Wed, 04/21/2010 - 11:25 | 310881 anony
    anony's picture

    Terrific testimony.  

    Dickie Fuld an unindicted very rich conspirator.  His contributions to AIPAC, Israel, and the UJC and ADL must be enormous.

    Wed, 04/21/2010 - 11:37 | 310902 assumptionblindness
    assumptionblindness's picture

    Paul Kanjorski:  Mr. Fuld.  Can you please tell me why Lehman failed?

    Dick Fuld:  Well....there were several things...uh, sorry the receiver in my ear piece isn't working very well.  What was your question?

    Paul Kanjorski:  The question, sir was "Why did Lehman fail?"

    Dick Fuld:  I'd like to tell you a story about a man named Jed.  You see, he needed to keep his family....

    William Black:  FRAUD!  IT WAS FRAUD!  FOR GOD'S SAKE I SAID FRAUD!  (Sound of gavel banging loudly....)

    Paul Kanjorski:  Mr. Black.  The question was directed to Mr. Fuld.  Please restrict your remarks accordingly or you will be removed from this panel.

    William Black:  I am sorry, I couldn't help myself.  The answer was too easy.  My bad...

    Wed, 04/21/2010 - 11:47 | 310927 jal
    jal's picture

    I hope to see his remarks on main stream.


    Does anyone recall what happened to the markets/stocks when Martha Stewart, Conrad Black, and B. Madoff were caught with their hands in the cookie jar?

    In comparison, it would appear that the market have reached a new plateau in the virtual world.


    Wed, 04/21/2010 - 11:48 | 310931 Segestan
    Segestan's picture

    I believe that Mr. Black will, sooner or latter,  become apart of the clean-up crew once the SHTF.

    Wed, 04/21/2010 - 11:51 | 310940 Calculated_Risk
    Wed, 04/21/2010 - 11:55 | 310955 assumptionblindness
    assumptionblindness's picture

    We're gonna' need a bigger boat!

    Wed, 04/21/2010 - 12:27 | 311029 Calculated_Risk
    Calculated_Risk's picture


    Mayor Vaughn: I don't think either of one you are familiar with our problems.
    Hooper: I think that I am familiar with the fact that you are going to ignore this particular problem until it swims up and BITES YOU ON THE ASS!


    Wed, 04/21/2010 - 11:53 | 310946 Mark McGoldrick
    Mark McGoldrick's picture

    Fantastic clip!  Unfortunately there are no committee members present to hear him. 

    At 4:28 in the clip, a different camera is used and you can see that only a quarter of the chairs are filled.  

    It always amazes me that these politicians are allowed to make their opening remarks, then leave before the hearing is over.  Or they don't show up until the afternoon, knowing that their alloted time to speak is further down the roster. It happens all the time.  When the hearing begins, the room is filled.  By lunch, half the committee is gone.  They come and go as they please, and generally demonstrate the most minimal effort to participate in important hearings such as this. 

    The Congressmen make their remarks.  It goes on record.  And then they leave. Or, if it's a hearing where they can't speak, they don't show up at all. 

    They show up when they want.  They leave when they want.  And somewhere in between, they make a statement prepared by their intern. Most will never even hear the remarks by William Black.  

    It's unthinkable to me that the financial system collapsed in our country, our banks are insolvent and politicians can't even show up to a hearing to find out why. That room should be packed, with politicians standing along the perimeter.  

    Our policy makers are the biggest group of self-serving, grandstanding charlatans I could ever imagine.  Half-empty room--unbelievable!! 

    Wed, 04/21/2010 - 12:05 | 310975 Rick64
    Rick64's picture

    He was on the last panel for this reason. I would like to see him question BB, Geithner, and Fuld. Unfortunately that won't be allowed. Their obfuscation attempts would look like blatant lies under his questioning.

    Wed, 04/21/2010 - 12:10 | 310988 David449420
    David449420's picture

    That entire hearing yesterday SHOULD have been about what Black had to say.  Those other clowns were just misdirection.

    Wed, 04/21/2010 - 15:40 | 311077 hangemhigh
    hangemhigh's picture

    It's important to see things in an historical context.  Yes, all of the spineless pukes in the Congress and the lower forms of life at the ratings agencies were bought and paid for. But, there is more to it than that.

    Listen to what Black said: We have known since Enron in 2001 that these kinds of frauds were taking place but we did nothing about it.

    Now, remember, something else happened in 2001 that turned everything financial in America into a national security issue.  

    The story actually precedes 9-11 and really begins in October 1985 when the US officially becomes a debtor nation. The next step in this sorry tale is 'globalization' and the myth of the 'service economy'.  While manufacturing is outsourced as an outdated relic, the financial sector, and all of it's misbegotten baggage, is hailed as the core component of the 'new economy'. Real producers are downgraded and parasitic wanna-be's are upgraded.

    In 1999, with the repeal of Glass-Steagall, and the removal of the last semblance of legality, the die is cast and the hounds of hell are unleashed.  As it grows as a favored sector and begins to account for a larger and larger share of  GDP,  Wall Street acquires the means to not only pay outlandish bonuses, but also co-opt the entire regulatory apparatus with either promises or payments.

    By 2001, all of the above is in place.  When the planes hit the Twin Towers it's game, set, match.

    Because of the costs associated with the War and the damage done to the economy, US GDP and sustained, rapid  growth becomes the holy grail.   During this time, exporting fraudulent paper was a major component of GDP.  The White House knew it, the Congress knew it, the regulators knew it, the rating agencies knew it. 

    The FBI warned of rampant mortgage fraud as early as 2002.  In 2005-2006 'W' officially signed  off on a legally binding order that, because of national security issues, allowed  the TBTF's to misstate their balance sheets and cook their books as part of the WOT.    In early 2009 Interpol warned that during the financial crisis drug money was being used to fund interbank loans and keep the system liquid.

    All such reports were buried; everyone was willing to play the game and continue to dip their beaks.  It was an officially sanctioned fraud that gained traction  as a result of 9-11.  Not only did the banks underlying the credit based fiat money system absolutely have to appear to be stable and solvent, but, the momo-GDP figures had to be constantly rising to legitimize and underwrite the massive deficits and resultant borrowing that occurred. 

    What's actually  happening now is that all of the fraudulent economic activity that occurred over at least the last decade is being revalued  resulting in the deflationary spiral that threatens not only the TPTB, but all of their  bought and paid for henchmen.

    Wed, 04/21/2010 - 16:04 | 311326 Seer
    Seer's picture

    Always good to see that someone has a handle on the big picture.

    I'd add that 9/11 was a planned part of all of this: when viewed in the context that you presented it fit as a necessary piece.  People should demand to know what happened to WTC 7 (likely a lot of damning evidence [to these financial scams] vanished).

    Wed, 04/21/2010 - 18:41 | 311542 hangemhigh
    hangemhigh's picture


    I won't go there for a couple of reasons.  For one thing it complicates things too much; for another it automatically brings out all of the attack dogs and tin foil hat types.

    One of the reasons that TPTB have been so successful is their ability to 'stay on message'. 

    I think it's important to do that here, too.  It enhances both the credibility and the power of what we have to say.  

    Wed, 04/21/2010 - 13:36 | 311104 Fraud-Esq
    Fraud-Esq's picture

    Bill Black has been a hero for decades. His lack of promotion in the MSM defines the MSM. The dogs that don't bark have really been barking for years with no mic. 


    Black should be promoted as much as possible on ZH. Had Obama ever reached out to Black, I'd have known he was ready to play hard....everyone would have. That hasn't happened. 

    Fri, 04/23/2010 - 11:00 | 314465 declineNfall
    declineNfall's picture

    obama did. check out some of Blacks earlier video interviews and you will see that he is angry at the situation.

    he advised obama during his election run, but was dumped after election for the usual suspects.

    this tells us a lot about the quality of BO's ethics


    Wed, 04/21/2010 - 15:19 | 311260 ThreeTrees
    ThreeTrees's picture

    Fraud was the catalyst for the recession, the recession was inevitable.  The fraud just teetered humpty dumpty over the edge.

    Wed, 04/21/2010 - 18:54 | 311550 three chord sloth
    three chord sloth's picture

    The spike in oil prices was the catalyst for the recession. The recession was in turn the trigger mechanism for the implosion of the debt fraud pyramid.

    Wed, 04/21/2010 - 15:51 | 311308 Mr Lennon Hendrix
    Mr Lennon Hendrix's picture

    Bill Black for President.

    Wed, 04/21/2010 - 19:38 | 311629 tony bonn
    tony bonn's picture

    go bill go!!! call crap on crap which means calling crap on congress, the president, and all of the captive crap of the banksters.....

    too big to fail is ipso facto a signal to break up banksters and a failed bank is ipso facto cause to hold grand jury investigations of the regulatorily captured regulators....

    nooses for congressmen; pitchforks for presidents; tar without feathers for bureaucrats....burn them all...

    Sun, 05/09/2010 - 08:37 | 338978 iGetIt
    iGetIt's picture

    This should be on CNN, nobody is watching C-Span :-(

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