US collapse driven by 'fraud'; Geithner covering up bank insolvency

In an explosive interview on PBS' Bill Moyers Journal, William K. Black, a professor of economics and law with the University of Missouri, alleged that American banks and credit agencies conspired to create a system in which so-called "liars loans" could receive AAA ratings and zero oversight, amounting to a massive "fraud" at the epicenter of US finance.

But worse still, said Black, Timothy Geithner, President Barack Obama's Secretary of the Treasury, is currently engaged in a cover-up to keep the truth of America's financial insolvency from its citizens.

The interview, which aired Friday night, is carried on the Bill Moyers Journal Web site.

Black's most recent published work, "The Best Way to Rob a Bank is to Own One," released in 2005, was hailed by Nobel-winning economist George A. Akerlof as "extraordinary."

"There is no one else in the whole world who understands so well exactly how these lootings occurred in all their details and how the changes in government regulations and in statutes in the early 1980s caused this spate of looting," he wrote. "This book will be a classic."

But that book only covers the fallout from the 1980s Savings & Loan crisis; Black's later first-hand involvement in that scandal being the ensuing liquidation of bad banks.

"A single bank, IndyMac, lost more money than the entire Savings and Loan Crisis," reported PBS. "The difference between now and then, explains Black, is a drastic reduction in regulation and oversight, 'We now know what happens when you destroy regulation. You get the biggest financial calamity of anybody under the age of 80.'"

That financial calamity, he explained, was brought about not by mishap or accident, but only after a concerted effort to undermine and remove all regulations, allowing a creditor free-for-all that hinged on fraudulent risk ratings for bad loans.

"[T]he way that you do it is to make really bad loans, because they pay better," he told Moyers. "Then you grow extremely rapidly, in other words, you're a Ponzi-like scheme. And the third thing you do is we call it leverage. That just means borrowing a lot of money, and the combination creates a situation where you have guaranteed record profits in the early years. That makes you rich, through the bonuses that modern executive compensation has produced. It also makes it inevitable that there's going to be a disaster down the road.

"...This stuff, the exotic stuff that you're talking about was created out of things like liars' loans, that were known to be extraordinarily bad," he continued. "And now it was getting triple-A ratings. Now a triple-A rating is supposed to mean there is zero credit risk. So you take something that not only has significant, it has crushing risk. That's why it's toxic. And you create this fiction that it has zero risk. That itself, of course, is a fraudulent exercise. And again, there was nobody looking, during the Bush years. So finally, only a year ago, we started to have a Congressional investigation of some of these rating agencies, and it's scandalous what came out. What we know now is that the rating agencies never looked at a single loan file. When they finally did look, after the markets had completely collapsed, they found, and I'm quoting Fitch, the smallest of the rating agencies, "the results were disconcerting, in that there was the appearance of fraud in nearly every file we examined."

He equated the entire US financial system to a giant "ponzi scheme" and charged Treasury Secretary Timothy Geithner, like Secretary Henry Paulson before him, of "covering up" the truth.

"Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?" asked Moyers.

"Absolutely, because they are scared to death," he said. "All right? They're scared to death of a collapse. They're afraid that if they admit the truth, that many of the large banks are insolvent. They think Americans are a bunch of cowards, and that we'll run screaming to the exits. And we won't rely on deposit insurance. And, by the way, you can rely on deposit insurance. And it's foolishness. All right? Now, it may be worse than that. You can impute more cynical motives. But I think they are sincerely just panicked about, 'We just can't let the big banks fail.' That's wrong."

Ultimately, said Black, the financial downfall of the United States in the wake of the Bush years is due to "the most elite institutions in America engaging in or facilitating fraud."

"When will Americans wake up and hold the real criminals - Banksters - accountable for their actions, and pressure the government to enact systemic changes to prevent future abuses?" asked Huffington Post blogger Mike Garibaldi-Frick.

The Raw Story | Economist: US collapse driven by 'fraud'; Geithner covering up bank insolvency

Vídeo de la entrevista: Bill Moyers Journal . Watch & Listen | PBS

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la española también

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Muy buena.

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Así que ya saben: quiten todas las regulaciones y leyes, que así todo va mejor. Mejor para los cuatro eatafadores de siempre, claro.

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El sistema bancario es de las actividades más reguladas de USA, quizás la que más. Dime de que está sirviendo? Está sirviendo para que el gobierno quite el dinero a la gente y se lo de a los bancos. Los bancos deberían quebrar y no debería estar el gobierno interviniendo para salvarlos.

Todos estos timos han sido hechos en la cara de la SEC y del gobierno que en teoría estaban ahí para vigilar a los bancos. Tú sigue confiando en que la corporación gobierno vela por tus intereses, pero no te olvides de poner el culo.

Siempre que hablas de ésto me pregunto a qué tipo de "socialismo" te refieres (dejémonos por un momento de lado la discusión del término que tántas discusiónes provoca aquí):

- ¿Nacional-Socialismo?
- ¿Estado Central Socialista?
- ¿Estado Corporacionista Socialista?
- ¿Algúna otra?

nosotros vamos siguiendo sus pasos con 18 meses de diferencia

Si te quieres poner exacto, en mi opinión USA se parece bastante al socialismo de Musolini, el corporativismo. Pero vamos, no soy un experto yo en socialismo. He preguntado varias veces por el foro a diferentes "socialistas" y nunca recibo una respuesta.

Aunque mucha gente piensa que EEUU es un país capitalista su economía política en realidad se acerca más a una mezcla entre capitalismo y estado socialista democrático - la misma mezcla con diferentes variaciones que constituyen las economías políticas de Europa Occidental y Japón. Esto se denomina economía mixta

Esto suele confundir y desorientar a muchos foreros así que voy a explicarlo un poco mejor. En este contexto con socialista nos referimos a la economía política de los países, no a la ideología de partidos políticos que los gobiernan. No digo que EEUU sea socialista sino que tiene elementos de las economías socialistas. Uno de ellos es que el estado planifica e interviene con diversas regulaciones. Además algunos estudios indican que al menos un tercio y algunos dirían que la mitad de todos los americanos reciben todo, o la mayoría de sus ingresos de empleos en la administración pública, Seguridad Social, pensiones y asistencia social. Unas veces el estado es más intervencionista y otras es menos.


Espero que esto aclare las confusiones que se producen en el foro.

Ya, algo así como falangistas socialistas. Lo que despunta sin lugar a dudas es el Nuevo Orden Mundial y a su élite le importa un huevo el apellido que le demos. ¿Como llamaríamos a "1984" o a "Un mundo feliz"?

Creo que la macedónia de ideologias/sistemas monetarios de los últimos 250 años ya está agotada y comída, pero no digerída. Volver a una concentración de capital en menos manos es retroceder a una aristocracia y a una neoesclavitud posfeudalista puesta al día. Hablar de emancipación y responsabilidad individual frente a ello pasa por tratar la condición humana desde un nuevo punto de vista que pocos están dispuestos a asumir y menos a dejar de lado estereotipos agotados, muletas ideológicas fallidas, de un lado a otro.

Solo queda, de todas las respuestas, la única que apenas tuvo su tiempo de acción y cuando lo tuvo demostró su eficacia, ganándose el repudio y silenciamiento del resto de las partes. Preveo un buen futuro para el anarquismo. No ese al que ciertos neoliberales se arrejuntaron, eso solo es codicia. Me refiero al útopico y al real, capaz de dar la respuesta radical y revolucionaria, capaz de adaptarte a los nuevos tiempos científicos, tecnológicos, sociales y hasta madmaxistas.

Solo espero que ésta vez la abundancia de comedores sociales y miseria, ética y económica, haga despertar al desaparecido ciudadano y se le hinchen los huevos.