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Bill Black: Our System Is So Flawed That Fraud Is Mathematically Guaranteed

Tyler Durden's picture




 

Submitted by Adam Taggart via Peak Prosperity blog,

“When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it."

- Frederic Bastiat

Bill Black is a former bank regulator who played a central role in prosecuting the corruption responsible for the S&L crisis of the late 1980s. He is one of America's top experts on financial fraud. And he laments that the US has descended into a type of crony capitalism that makes continued fraud a virtual certainty - while increasingly neutering the safeguards intended to prevent and punish such abuse.

In this extensive interview, Bill explains why financial fraud is the most damaging type of fraud and also the hardest to prosecute. He also details how, through crony capitalism, it has become much more prevalent in our markets and political system. 

A warning: there's much revealed in this interview to make your blood boil. For example: the Office of Thrift Supervision. In the aftermath of the S&L crisis, this office brought 3,000 administration enforcements actions (a.k.a. lawsuits) against identified perpetrators. In a number of cases, they clawed back the funds and profits that the convicted parties had fraudulently obtained.

Flash forward to the 2008 credit crisis, in which just the related household sector losses alone were over 70x greater than those seen during the entire S&L debacle. So how many criminal referrals did the same agency, the Office of Thrift Supervision, make?

Zero.

Similar dismal action was taken by such other financial regulators as the Office of the Comptroller of the Currency, the Federal reserve and the FDIC. 

Where is the accountability?, you may be asking. Or perhaps, how did we allow things to get this bad?

Fraud is both a civil wrong and a crime and it's when I get you to trust me and then I betray your trust in order to steal from you. As a result, there’s no more effective acid against trust than fraud and, in particular, elite fraud, which causes people to no longer trust folks, economies break down, families break down, political systems break down and such if you don’t have that kind of trust. So that’s what fraud is.

 

But what my work focuses on is: what kind of frauds are the most devastating? And it turns out that the most kind of problems that we’re seeing, systemic problems and such, arise when we have, what we call in criminology, control fraud. And control fraud simply means when you have a seemingly legitimate entity and the person who controls it uses it as a weapon to defraud others. And so in the financial sphere the weapon of choice is accounting and the losses from these kinds of control frauds exceed the financial losses from all other forms of property crime combined.

 

So for example, in the current crisis, as with the prior ones, if you’re a lender there’s an easy recipe for maximizing fake accounting income. And it goes like this. You need four ingredients:

  1. grow like crazy
  2. by making really, really crappy loans but at a premium yield (yield just means 'interest rate')
  3. while employing extreme leverage, and
  4. while setting aside only the most trivial reserves or allowances for the inevitable losses this kind of behavior produces.

George Akerlof and Paul Romer wrote the classic article in economics about this in 1993. And their title really says it all in terms of the dynamic: Looting the Economic Underworld of Bankruptcy for Profit. The idea is you have a seemingly legitimate entity, the person at the top is looting it. They loot it by destroying it but they walk away wealthy. Of course, in the modern era we don’t necessarily, we may bail out the entity. So it may not even fail in that sense.

 

But here’s what Akerlof and Romer also said that was so critical as an understanding. They said these four steps, these four ingredients: it's just math. It is – and I’m quoting them now “a sure thing.” So you’re mathematically guaranteed if you do these four things to report, not just substantial income, but record levels of income.

 

The big thing about the seemingly legitimate entity when the CEO is the crook is, first, everybody reports to the CEO ultimately, right? So the CEO is the point failure mechanism where if he or she goes bad, almost everything may go bad as well. So all those things that we call internal and external controls, all report to the CEO and the CEO therefore can, as I’ll describe, use compensation, hiring, firing, praise, and such to produce the environment that will commit, create allies for his fraud. Now, note that what I’m saying. The CEO, the art of this is not to defeat your controls. The elegant solution as in mathematics is to suborn the controls and turn them into your most valuable allies. And therefore, for example, when you’re running accounting control fraud where your weapon of fraud is accounting and that weapon of choice in finance is accounting. You’re going to want to hire the most prestigious accountants as your outside auditors because it is precisely their reputation that is most valuable when you can suborn them. And, they give you that clean opinion that you just described that will help you deceive other shareholders. So one enormous advantage is internal and external controls come to the CEO level.

 

A second incredible advantage is the CEO can optimize the firm as a weapon of fraud. And the< CEO can do that. Basically, this falls into two big categories. One, you can put it in assets that have no readily verifiable market value because then it's a lot easier to inflate asset valuations and to hide real losses. And the second thing you do is grow like crazy. And, of course, that is the essence of something your listeners have all heard about, and that is a Ponzi scheme. And so these accounting control frauds have strong Ponzi-scheme like elements, which is why they tend to cause such catastrophic losses.

Click the play button below to listen to Part I of Chris' interview with Bill Black (58m:28s). Part II can be accessed by clicking here.

 

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Sat, 05/25/2013 - 15:37 | 3598654 unirealist
unirealist's picture

"America isn't a country.  It's a business.  Now give me my fucking money!"

I love this quote from "Killing Them Softly" as spoken by Brad Pitt.  Sums it up for me.  The President = the CEO.  Eric Holder and his Justice Dep't = internal controls.

The rest of us = the low-level employees.

 

Sun, 05/26/2013 - 13:30 | 3599829 Marco
Marco's picture

If that is true why aren't they Billionaires?

Government is just the lender and auditor, the real CEOs are far above them ... hidden behind 7 proxies.

Sat, 05/25/2013 - 15:39 | 3598659 B2u
B2u's picture

Sounds like what IndyMac Bank did. 

http://en.wikipedia.org/wiki/IndyMac_Bank

The primary causes of IndyMac’s failure were largely associated with its business strategy of originating and securitizing Alt-A loans on a large scale. This strategy resulted in rapid growth and a high concentration of risky assets. From its inception as a savings association in 2000, IndyMac grew to the seventh largest savings and loan and ninth largest originator of mortgage loans in the United States. During 2006, IndyMac originated over $90 billion of mortgages.

IndyMac’s aggressive growth strategy, use of Alt-A and other nontraditional loan products, insufficient underwriting, credit concentrations in residential real estate in the California and Florida markets, and heavy reliance on costly funds borrowed from the Federal Home Loan Bank (FHLB) and from brokered deposits, led to its demise when the mortgage market declined in 2007.

IndyMac often made loans without verification of the borrower’s income or assets, and to borrowers with poor credit histories. Appraisals obtained by IndyMac on underlying collateral were often questionable as well. As an Alt-A lender, IndyMac’s business model was to offer loan products to fit the borrower’s needs, using an extensive array of risky option-adjustable-rate-mortgages (option ARMs), subprime loans, 80/20 loans, and other nontraditional products. Ultimately, loans were made to many borrowers who simply could not afford to make their payments. The thrift remained profitable only as long as it was able to sell those loans in the secondary mortgage market. IndyMac resisted efforts to regulate its involvement in those loans or tighten their issuing criteria: see the comment by Ruthann Melbourne, Chief Risk Officer, to the regulating agencies.[14][15][16]

Sat, 05/25/2013 - 16:46 | 3598739 JR
JR's picture

Not to mention the shadow figures lurking in the background waiting for developments to take advantage of the deal, such as the performance of George Soros in the shameful saga of IndyMac.

Again, cui bono?

Why did New York Senator Charles Schumer damage Indymac liquidity so that IndyMac would be immediately bankrupted?  Who profited?  It was Soros, Mnuchin and John Paulson.

The OneWest Boys Who Got the Sweetheart Deal is a video produced by TBWS Daily.com, founded by a group of real estate and mortgage industry entrepreneurs to provide tools and industry integrity for their businesses. Here is the transcript:

Consider this! Like many other banks, Indymac Bank closed its doors and was seized by the FDIC in July 2008.  The assets of Indymac Bank were sold to OneWest Bank by the FDIC in March 2009.

Well, guess who owns OneWest Bank?  That would be Goldman Sachs’ VP Steven Mnuchin and big time Sachs’ investors and billionaires George Soros and John Paulson (of no blood relation to ex-Goldman Sachs CEO Hank Paulson who’d be the ex-secretary of the treasury) … 

All current residential mortgages were purchased at 70% of the par value.  All HELOC’s were purchased at 58% of the value.  But just to make sure these guys remained cozy and warm, the FDIC decided to step up and cover 80% to 95% of the losses they might incur from any of those naughty Indymac mortgage homeowners. 

So you’re probably asking yourself why we think you should know this.  Well, in the event of a short sale or a foreclosure, the loss is calculated using the original loan balance and not the amount OneWest Bank paid for the loan. 

Here’s an actual example from a client of one of our viewers.  Take an actual loan balance of $478,000 plus 6 months’ missed payments for a grand total of $485,200.  OneWest Bank paid $334,600 for that loan.  Okay. Now, the underwater homeowner has an all cash offer that nets $241,000 for OneWest Bank.  Well, according to the FDIC formula, you take the original loan amount, $485,200 minus the amount of the offer $241,000, and that leaves you with $244,200 bucks. 

Next, according to the sweetheart deal, the FDIC writes a check to OneWest Bank for 80% of the net loss ($244,200).  So in this case, OneWest Bank gets a check from the taxpayer courtesy of the FDIC for $195,360.  So, now, add the $195,360 from the government to the $241,000 cash offer and OneWest Bank just made $436,360 on a loan that they bought for only $334,600 and all they had to do is sell it for whatever they wanted to. 

Guys, they can’t loss money on this deal. Think about it. So OneWest Bank just profited from the short sale to the tune of  $101,760--all thanks to the insane arrangement that they have with the FDIC… Hey, whoever said it’s good to have friends in high places wasn’t kidding around. 

So the next time you ask yourself why it is so hard to get a loan modification, the answer is because there’s too much money to be made with short sales and foreclosures.

Now, are you ready for an encore?  Now remember, even though OneWest Bank profited by more than $100,000, the house was still sold for less than the full loan amount.  In this actual scenario, the borrower was forced to sign a promissory note for $75,000 with OneWest Bank. So who really pays in the end? … Well, we’ll just let you decide. 

Oh, and by the way, the FDIC just announced it’s to start borrowing money from the treasury, the treasury being the place where all those Goldman Sachs guys called home before they called OneWest Bank home. If you’re as mad about this as Frank and I are, share this video with everyone you know.  Help us reveal where the real problems lie in the industry that we all care so deeply about.  (End)

http://www.youtube.com/watch?v=ssl5yb7FewA

OneWest Bank’s Chief Executive Officer is Terry Laughlin, a veteran banking executive with over 30 years of banking experience who has held senior positions at Merrill Lynch Bank & Trust, FleetBoston and Mellon Bank.

Let the hands-off markets decide, not the hands-on bankers!

As for Mnuchin, BloombergBusinessWeek related: Steven Mnuchin never dreamed of running a regional bank. He didn’t ever imagine moving to Los Angeles. A true creature of Wall Street—a former Goldman Sachs (GS) partner and active hedge fund manager—he was making plenty of money in New York. Yet he had carefully weighed the risks of buying IndyMac Bank, the Pasadena (Calif.)-based lender that collapsed in 2008. IndyMac’s distressed mortgages and mortgage-backed securities had no place to go but up; the Federal Reserve, through its discount window, was practically giving money away; and Southern California was a rich, relatively underserved banking region. So in December 2008, Mnuchin put together a partnership and bought IndyMac. …

Mnuchin and his team had experience in virtually every aspect of IndyMac, except one: actually running a bank… “

From the start, Mnuchin envisioned the building of OneWest as a three-step process. The first was the acquisition of IndyMac itself. The second was to build the bank’s asset base by taking over additional failed banks, including First Federal Bank of California, purchased in 2009, and La Jolla Bank, acquired in 2010, which added over 40 branches to the existing IndyMac branches. To get a foothold in the commercial real estate loan market, OneWest also purchased a $1.4 billion portfolio from Citi Holdings (C) in 2010. From December 2009 to November 2010, OneWest more than doubled its capital base. “That had been the plan from day zero,” Mnuchin says. …

http://www.businessweek.com/articles/2012-03-22/from-indymac-to-onewest-steven-mnuchins-big-score

Sat, 05/25/2013 - 20:00 | 3598949 WillyGroper
WillyGroper's picture

And weren't the short sale laws changed so that after 2012 the homeowner had to claim the difference between the short sale & the mortgage amount as income?

This crap sets my hair on fire!

Burning at the stake would be to compassionate for these thieves.

Sun, 05/26/2013 - 07:59 | 3599454 Meme Iamfurst
Meme Iamfurst's picture

 

If you tell, show, explain all this to 98% of the American people, they will stare at you like a cow.  Nothing will happen...not to these guys, politians....,no one will pay for these crimes against the welfare and health of this once great nation ( well if LAW made them ok to do, then they are not crimes in the 'eyes' of the law....thank you Mr  congressman).

None of this has happened by accident, it couldn't.  It is a plan, and has been in the works for years, just like 'moles' who get planted into a government.

People just shrug their shoulders, and say..."yea, well, what can i do about it".  And the sad answer is nothing, and these guys know it.  So until it all breaks down into nothingness, and the hounds hunts down the criminals, all 'we litle people' can do is take a deep breath and get the hell out of the way.

No force can stop this except for the military, and that dear HZ readers is the truth.

Sun, 05/26/2013 - 14:06 | 3599864 BLOTTO
BLOTTO's picture

'Their' dysfunction will eventually bring themselves down.

.

Evil = dysfunctional.

.

Good always wins in the end - its has to.

Evil cant produce or give birth to anything - it can just pervert, lie and manipulate things....lol, nice try though.

<smirks>

 

Sun, 05/26/2013 - 17:32 | 3600149 Omen IV
Omen IV's picture

if there ever was a perfect profile for this recipe for fraud it was Mozillo - if they are not going after him then nothing will ever happen -

all you can do is not play - if you play you will get burned this year or next year or sooner or later - system is designed to fail and each time fortunes are made and politicians get paid for that to happen

it is inevitable to happen all again

 

Sat, 05/25/2013 - 15:39 | 3598661 max2205
max2205's picture

The de evolution of the sec....ect

They really are going to ruin a good racket for the rest of legit public companies...oh wait...

Sat, 05/25/2013 - 15:55 | 3598676 km4
km4's picture

Excellent interview, well explained, extremely lucid so well done Bill Black and unfortunate there are few people like you today.

If more Americans listened to this there would be riots in the streets 

 

 

Sat, 05/25/2013 - 16:09 | 3598690 km4
km4's picture

but NOT going happen because the elites have all bases covered and bought and paid so the NET NET is unless you can get into the 2% club you're pretty much a HAVE NOT ;-)

Sat, 05/25/2013 - 19:50 | 3598942 km4
km4's picture
Gretchen Morgenson on Why Banks Are Still Too Big To Fail May 24, 2013 http://billmoyers.com/segment/gretchen-morgenson-on-why-banks-are-still-...

Pulitzer Prize-winning New York Times columnist Gretchen Morgenson tells Bill that, five years after the country’s economic near-collapse, banks are still too big to fail, too big to manage, and too big to trust. Stockholders’ reaffirmation of Jamie Dimon as JP Morgan Chase’s chairman and CEO this week — despite a year of accusations and investigations at the bank — is further evidence, she says, of an unchecked system that continues to covet profits and eschew accountability, putting our economy and democracy at risk. Morgenson also discusses how behemoth companies like Apple manipulate the system and avail themselves of the biggest tax loopholes money and influence can buy.

“These banks are not getting smaller; they’re getting larger. There are now more too-big-to-fail institutions than there were prior to the 2008 crisis,” Morgenson tells Bill.

And while the Dodd-Frank Act was supposed to prevent that from happening, Morgenson says the law itself is less powerful than those it hopes to regulate.

“Dodd-Frank set up a system to unwind troubled institutions when they become troubled. But it requires regulators taking a really firm stand against large, politically-interconnected, and powerful companies… I just think it’s too easy to put the taxpayer on the hook and bail these people out. So of course the response from these people is going to be, I’ll just do it bigger next time, the taxpayer will be there to bail me out, and we’ll go on our merry way.”

Sat, 05/25/2013 - 15:58 | 3598678 moneybots
moneybots's picture

The FED is a control fraud.  

1. Grow like crazy- FED is running balance sheet to 4 trillion.

3. while employing extreme leverage- FED is leveraged over 50 to 1, more than the investment banks which crashed.

 

 

 

 

Sat, 05/25/2013 - 16:09 | 3598691 spinone
spinone's picture

thats a scary thought

Sat, 05/25/2013 - 16:20 | 3598704 blindman
blindman's picture

right. the feral reserve note is a control fraud
monetary unit therefore you are guaranteed , by the nature
of the money itself, control fraud as the only viable means
of financial survival. that is my opinion and I am not alone
in entertaining it.

Sat, 05/25/2013 - 16:28 | 3598716 Seasmoke
Seasmoke's picture

what happened to #2 ??

Sun, 05/26/2013 - 16:23 | 3599887 prains
prains's picture

interesting that Tyler is now scrubbing entire comments;

my comment on Anderson Accounting, Ken Lay, Enron was all factually correct and not a Libel comment yet it has been completely removed from its original #2 comment on this article without notice.

 

Why???

Sat, 05/25/2013 - 21:17 | 3599037 Thisson
Thisson's picture

They are actually infinitely leveraged, because they have no real capital.  They just print $ and use it to buy financial assets.

Sat, 05/25/2013 - 16:06 | 3598688 bugs_
bugs_'s picture

too flawed to be honest

or too rigged to be a system?

Sat, 05/25/2013 - 16:12 | 3598693 Clowns on Acid
Clowns on Acid's picture

Ya mean that this has not been obvious..?

Sat, 05/25/2013 - 16:40 | 3598729 falak pema
falak pema's picture

The coming age of China, India, Brazil, Africa in 2030 ...

When the west regresses, the east and the south progress.

Sat, 05/25/2013 - 16:56 | 3598750 Duke Dog
Duke Dog's picture

I was involved with the RTC in the early 90's. I was convinced then, and even more so now, that the S&L crisis was intentionally concocted. The lack of control in one of the most "regulated" industries in the World was beyond believability.

There is absolutely no doubt in my mind, it was simply a "test" run to perfect the method(s) to conduct the greatest theft in World history, which is occuring as I type.

Sat, 05/25/2013 - 20:05 | 3598953 WillyGroper
WillyGroper's picture

Yes, and many of the major players today are still in the halls of power.

Sat, 05/25/2013 - 17:07 | 3598761 The Heart
The Heart's picture

Ah yes, the good Professor speaks out. A square example of what real men are like when they speak truth to power, and ware no lace-panties. It all makes a difference right now. This light called Ma At speaks softly, carries a huge double-edged Sword of Truth and Justice, shines brightly on the intrepid criminal war mongering murderous bankster empire. Let us reminisce.:

O Lord our Heavenly Father, High and Mighty King of Kings, and Lord of Lords, who dost from thy throne behold all the dwellers on earth and reignest with power supreme and uncontrolled over all the Kingdoms, Empires, and Governments; look down in mercy, we beseech thee, on these our American States, who have fled to thee from the rod of the oppressor and thrown themselves on Thy gracious protection, desiring to be henceforth dependent only on Thee….Give them wisdom in Council and valor in the field; defeat the malicious designs of our cruel adversaries;…constrain them to drop the weapons of war from their unnerved hands in the day of battle!

Be Thou present, O God of wisdom, and direct the councils of this honorable assembly; enable them to settle things on the best and surest foundation. That the scene of blood may be speedily closed; that order, harmony, and peace may be effectively restored, and truth and justice, religion, and piety, prevail and flourish amongst the people….All this we ask in the name and through the merits of Jesus Christ, Thy Son and our Savior. Amen.

The First Prayer offered in Congress
September 7, 1774 by Jacob Duche

Kinda funny how what rings truthfully century after century never fades away. May the greatness of these kinds of words engraved in the foundational stones of the world be remembered this Memorial Holiday as we salute those who gave their all just so we ALL could be here today to say; we love you all and thank you all for all you all do for the ALL that is that always loves you.

Let us give reverence in the memories of our fallen families of man that have marched off to wars for the banksters profits and population control agendas. Let us ALL embrace the truthful fact that it is NOT too late to change it all now. There is the heart/brain power on ZH alone that can do this. The full support is in the soul of man. Lets just skip the war mongering, false flag events, population murder, and redistribute the wealth instead. Let everybody continue being prosperous working towards being a peace filled world all around so we can all successfully face what comes next. It will take every single soul on board thinking as One to change that then, and this is a story for another day.

May Peace and Goodwill go out to all and every single soul world-wide. You are loved and very integral in the big picture. God bless you ALL.

Sat, 05/25/2013 - 21:10 | 3599022 Josey Montana
Josey Montana's picture

Amen.

Sat, 05/25/2013 - 17:26 | 3598780 Downtoolong
Downtoolong's picture

The biggest scam of the financial industry has been to get everyone accepting savings accounts and the government T-Bills as reasonable foundation investments. Never mind the increased risk of owning these assets in the last few years. Simply recognize that both now have negative real rates of return. This forces every small investor and saver into even riskier ventures to try and get back the portion of their savings constantly being stolen from them by the government and Wall Street controlled Central Banking System before they have any chance of earning a true income on their money. Every investment option now implicitly has this theft feature imbedded in it.

If there were one investment among the tens of thousands of so-called great opportunities pitched by every sell-side analyst and financial advisor from San Diego to Portland Maine which simply guaranteed the purchasing power of my money, I would put every nickel of my retirement savings into that investment tomorrow. That’s right, I would opt for a guaranteed zero real yield after inflation and taxes over anything else out there. I suspect many others would too which, of course, is precisely the reason none of TPTB will ever permit that particular investment option to exist. Don’t believe it? Just try me Wall Street. I dare you. And if you can't or won't provide this simplest of all possible investments, then why are you so f%^cking proud of yourselves all the time?

Sat, 05/25/2013 - 17:45 | 3598813 FreeMktFisherMN
FreeMktFisherMN's picture

A lot of people (including Eastern nations) are NOT buying the bonds anymore. That's why the Fed owns so much of that 'market' (and soon will own all of them). I think many among the people who invest in bonds are not really investing because they think getting 2% or less for 10 years is a good deal but more so are buying them because it is a sucker trade and so they buy bond funds and are waiting for rates to go down even more when they can dump them. This is a total ponzi. And then the remaining bond buyers simply are so used to laddering and rolling over and just default turn to them, not wary of what inflation actually is or don't get why gold is the prudent choice.

Sat, 05/25/2013 - 19:22 | 3598916 LongBallsShortBrains
LongBallsShortBrains's picture

Buy a herd of cows.

Sat, 05/25/2013 - 17:18 | 3598781 venturen
venturen's picture

What ever happend to Angelo Mozilo? Is he out golfing and getting a tan with Corzine?

Sat, 05/25/2013 - 17:58 | 3598834 Peter Pan
Peter Pan's picture

There are three reasons these low lifes are free.

Firstly as Holder said they don't touch them because they don't know if prosecution will succeed and what effect it will have on the system.

The second reason is that both sides of politics have them, so it is case of you don't hurt me or I will hurt you.

Third, these crooks know secrets of the administration and others and nobidy wants to see thembecome whistleblowers to save their skin.

Sun, 05/26/2013 - 10:35 | 3599614 moneybots
moneybots's picture

"Firstly as Holder said they don't touch them because they don't know if prosecution will succeed and what effect it will have on the system."

 

Firstly, as Holder has lied that they won't touch them because they don't know if prosecution will succeed and the effect it will have on the system.

William Black who prosecuted savings and loan fraud, says we can and must prosecute as well as stating that Holder should resign.  Black is telling the truth.

Sat, 05/25/2013 - 17:33 | 3598799 Peter Pan
Peter Pan's picture

These crooks will never be brought to account for the simple reason that they will cover their backs by creating a war, or some other disaster to focus people's attention on some other issue.

Sat, 05/25/2013 - 17:43 | 3598808 Atomizer
Atomizer's picture

Dear Bill Black,

 

Many of us have been preaching 2+2 doesn’t equal 5 since 2007. Welcome aboard my friend [sarc, you taught me]. If you need any material to help spread the word, please inquire.

PS: I would of dropped the crash course link to educate the lemmings. Just me though.

Sat, 05/25/2013 - 17:58 | 3598833 Walt D.
Walt D.'s picture

Bill Black misses the whole point. The money that was lost in the 2008 crisis was the money that was given away by Congress.

$1.5 billion of segregated client funds were lost ("Corzined") by MOFO Global - there is nothing mathematical about $1.5 billion disappearing out of clients accounts - this is an in flagrante delicto fraud.

It is not that fraud "is difficult to prove", it is just that this was an inside job and the crooks control the justice system.

Robosiging is de facto fraud - there really is nothing to prove. However, the justice system will not go after TBTF banks. However, they will go after penny ante cases of mortgage brokers giving NINJA loans to illegal aliens in California, while ignoring the fraud that was going on in New York.

Sat, 05/25/2013 - 19:49 | 3598941 James_Cole
James_Cole's picture

Did you listen to the interview? Methinks not. 

Sat, 05/25/2013 - 18:02 | 3598835 q99x2
q99x2's picture

I listened to it but part you have to pay for so I didn't listen to that but here is what I think he says. A paramilitary team of a 1000 troops has been established to move into wall street on tuesday with tanks and helicopters. The effort is to take the headquarters of JP Morgan and Goldman Sachs peacefullly. At the same time an advance team of another 1999 marines is set to move in on the Justice department to arrest eric holder. A third team is set to move in on the Federal Reserve and Arrest Ben Bernanke. Once the criminals are in the prisons a systematic re-establishment of lawand order will be made and the Constitution will become the supreme rule and law of the land.

Sat, 05/25/2013 - 18:40 | 3598848 Peter Pan
Peter Pan's picture

.

Sat, 05/25/2013 - 18:10 | 3598853 Peter Pan
Peter Pan's picture

I think you've got it back the front. On Tuesday paramilitary teams from JP Morgan and friends will be descending on the FED.,,,,,,errrr sorry, someone just reminded me that JP already owns the FED and the government and the army and everything thing else including the minds of the sheeple.

Sat, 05/25/2013 - 18:39 | 3598882 MedicalQuack
MedicalQuack's picture

It's not the data, it's the "model" stupid...title of what is happening here and what we are facing is unlike anything we have ever seen due to technology.  All of this is mathmatically modeled and the average consumer can't see it or keep up.

http://ducknetweb.blogspot.com/2013/05/its-not-data-its-models-stupid-bi...

Christopher Steiner also did a nice TED talk about algorithms taking over the world and it's more than just markets.  He talks about how the algos record your conversations for evaluation, etc.  I wrote about software that does this a few years ago that gives an on screen window of what the software anticipates as far as your current state of mind, was developed in Israel.  It's a good watch and discusses how the financial markets have gone from using technology as a utility to "menace"...that's what we have now, menaces using technology for control and who gets to play God to determine who has the control. 

http://ducknetweb.blogspot.com/2012/11/algorithms-are-taking-over.html

 

Sun, 05/26/2013 - 22:16 | 3600475 NaN
NaN's picture

Menacing algorithms? The power of nightmares has been operational for many decades without any help from algorithms. 

 

Sat, 05/25/2013 - 19:35 | 3598929 JR
JR's picture

“He [Bill Black] laments that the US has descended into a type of crony capitalism that makes continued fraud a virtual certainty.” – Adam Taggart

 “Crony capitalism' is an oxymoron.  And it’s dangerous to use it. The ill-formed begin to think that capitalism is the problem - unless, of course, that is the objective.

A Pew Research Center poll a little more than a year ago that aimed to measure American sentiments toward different political labels revealed that among the 18-29 crowd, 49% “say they have a positive view of socialism; only 43% say they have a negative view,” while just 46% of people age 18-29 have positive views of capitalism, and 47% have negative views.

There is no opportunity for corrupt capitalism unless there is a power behind the currency that allows this kind of corruption when you are connected to the government. And, then, in cooperation with the government you own the means of production, the currency. That’s not capitalism; it’s fascism.

And fascism is Fabian socialism.

It is a dangerous practice to say our troubles are crony capitalism. Our trouble is two words – central banking.  A private enterprise that is squeezing all the entrepreneurial spirit and free market mechanisms out of the world is not capitalism, crony or otherwise.

These people are psychopaths. They hang onto the hems of the rulers; they are not capitalists; they are parasites.

If you want to solve the problem, identify the problem.

And, btw, capitalism is a wonderful concept. To call it crony capitalism is like calling Trotskyism neoconservatism. Neocons are not conservative; they are psychological cheaters in that they take advantage of someone’s feelings, i.e., conservatives, when what they want is to dominate the world.  That’s not conservatism; that’s Trotskyism.

Alexander Eichler on The HuffingtonPost says: “It's not clear why young people have evidently begun to change their thinking on socialism. In the past several years, the poor economy has had any number of effects on young adults -- keeping them at home with their parents, making it difficult for them to get jobs, and likely depressing their earning potential for years to come -- that might have dampened enthusiasm for the free market among this crowd.”

It is clear to me, Mr. Eichler. You and the HuffingtonPost helped orchestrate this falsehood by promoting your socialist agenda rather than by revealing the truth, by blaming capitalism for the results of socialism.

Sun, 05/26/2013 - 01:58 | 3599311 Sambo
Sambo's picture

The problem is not even the CBs...it is greed.

And....the solution is very simple:  stop being greedy!

Sun, 05/26/2013 - 12:54 | 3599794 e-recep
e-recep's picture

can you ensure that capitalism won't converge to crony capitalism? can you make sure that rulers and rich men won't do secret deals behind the curtains?

methinks you can't.

Sat, 05/25/2013 - 23:14 | 3599170 yogibear
yogibear's picture

"The best way to rob a bank is own one."

The federal reserve and government gives  incentives for fraud, so what do you expect? 

What's the penalty for criminal behavior?  A small fee or no penalty. 

Eric the  Place Holder said he won't prosecute any of the too big to fail.

Cook the books, pull out the reserves and ship overseas, bankrupt and cry for a bailout.

Rinse and repeat. 

 

Sun, 05/26/2013 - 07:17 | 3599426 blindman
Sun, 05/26/2013 - 07:29 | 3599433 blindman
blindman's picture

N.R.B.Q. - Blues Stay Away From Me written by A. Delmare, R. Delmare & Lois
http://www.youtube.com/watch?v=SHOvwb4sMMo
.
NRBQ's Terry Adams and Steve Ferguson perform Smackin' the Blues and Dutchess
county jail, hard times I know.
http://www.youtube.com/watch?v=u-aM7Sgll9I
.

Sun, 05/26/2013 - 11:25 | 3599687 CustomersMan
CustomersMan's picture

Note; With everything else going on this is just one more case of American's having salt rubbed into the wound, like why prescription drugs invented here (an subsidized by American Taxpayers) are sold overseas for 1/10th the price. Now this car that's been selling overseas for quite some time, but NOT here in U.S.

Volkswagen: SEAT Toledo

Not Sold In America, But In Mexico and Spain, Gets  75 MPG

Ask Why Not In U.S.

from jimstonefreelance.com

"Not on the American market but this car does exist. And it proves that hybrids are a scam. This 2013 Seat Toledo is close to the same size as the 2013 4 door Cadillac CTS and it gets an astonishing 74 mpg with what by all accounts is just an ordinary engine. Perhaps all those stories about 80 mpg carburetors were true, because this car proves it can be done.

I have always known that cars should be many times more efficient than they have been allowed to be. There have been plenty of examples of extraordinarily efficient cars, Volkswagen made a little pickup truck that could easily get 60 MPG, and a few of the Geo Metros could get 55 mpg, and then, all of a sudden, hybrids could not seem to squeak out over 45."

Sun, 05/26/2013 - 13:19 | 3599821 brown_hornet
brown_hornet's picture

I've said it before and I'll say it again. There is nothing wrong with greed if it is controlled by a corresponding amount of fear. It is the elimination of this fear by bailouts and subsidies that is the problem.

Sun, 05/26/2013 - 14:01 | 3599861 btdt
btdt's picture

Bill Black is a 99 yard liner, drops the ball on the 1 yard line. Great runner, excellent catcher, but always drops the ball on the 1 yard line.

Which ever way one approaches the stink (regulatory capture, crony capitalism, economic fascism, socialism, power elite analysis, etc.) - stink that becomes overwhelming enough to make dogs leave home - involves a seamless connection among those outside and inside the guv. But for Black (based on what I have read), cause and effect is always one way, its the prviate market black hats being checked by the guv white hats. This bias kills his credibility for me.

Black bemoans that we are now beyond redemption - ala Akerlof and Romer - and points out that when he was the cop on the beat, heads were craciked.

Well Bill, that may be true but where were you when it was time to clean up the police department after the S&L fiasco, to get rid of the dead wood and the incentive systems that led cops to donut shops and naps in back alleys?

Absent as far as I know.

(and he certainly doesn't appear interested in performng a root cause analysis, like tracing this back to the FED for a start, as other posters note.)

 

I say control fraud is fractal in nature. Where it exists, look for it at lower and especially higher levels.

 

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