At least financial fraud did not have complete air cover from the federal government in those days. Michael Milken, Ivan Boskey and the junk bond scandal is the last serious financial fraud investigation I recall, excepting Bernie Madoff and his Ponzi investment scheme which targeted the rich. Now the Obama administration openly defends 'regulatory forbearance'. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
And what Milken did was nothing near as fraudulent (in the common sense, not the legal sense) as what Peterson and Schwarzman did.
Of course Black's mission did not extend to Citi and the Latin American debt crisis. Black prosecuted SMALL TIME CROOKS not members of the power elite.
I would argue that the problem was not the efficacy of the prosecutions in the S&L scandal, but the limited scope of their investigation, and that subsequent fraud succeeded in spite of this, because more effective re-regulation was prevented by both Democrats and Republicans. The problem is bi-partisan. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Allowing financial fraud to flourish, as Black has noted, creates a criminal environment and Gresham's Law comes into play, putting at a disadvantage all banks which do not engage in the lucrative frauds which are not prosecuted. I fail to see how that is 'progressive'. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Great.
(UPI)The Justice Department said Monday it has charged more than 1,100 people so far in nearly four years of prosecuting the multibillion-dollar savings and loan scandal, winning 905 convictions but less than half a billion dollars in restitution. The department, in a release containing statistical information about the major savings and loan prosecutions, said 905 of 1,188 people charged in the scandal had been convicted in cases between Oct. 1, 1988, and June 30, 1992. Only 71 defendants were ac-quit-ted.The cases prosecuted represented $8.3 billion in losses to the thrifts. Of the 750 cases in which sentences have been handed down, judges imposed $11.2 million in fines and ordered $439 million in restitution. They ordered prison terms for 582 defendants but let off 168 without jail time. Among those charged, 137 were chief executive officers, board chairmen or presidents of savings and loan institutions. Of the high-level executives charged, 102 were convicted and 10 were acquitted. The Justice Department said 166 of the 195 other thrift officers charged were convicted while seven were acquitted. The department said the statistics covered only those cases in which the fraud involved $100,000 or more, the defendant was a director or owner of the thrift or there were multiple borrowers involved.
The department, in a release containing statistical information about the major savings and loan prosecutions, said 905 of 1,188 people charged in the scandal had been convicted in cases between Oct. 1, 1988, and June 30, 1992. Only 71 defendants were ac-quit-ted.The cases prosecuted represented $8.3 billion in losses to the thrifts. Of the 750 cases in which sentences have been handed down, judges imposed $11.2 million in fines and ordered $439 million in restitution. They ordered prison terms for 582 defendants but let off 168 without jail time.
Among those charged, 137 were chief executive officers, board chairmen or presidents of savings and loan institutions. Of the high-level executives charged, 102 were convicted and 10 were acquitted. The Justice Department said 166 of the 195 other thrift officers charged were convicted while seven were acquitted.
The department said the statistics covered only those cases in which the fraud involved $100,000 or more, the defendant was a director or owner of the thrift or there were multiple borrowers involved.
A 50% conviction rate is not bad and acquittals do not exonerate the accused. And a billion dollars is not what it used to be. My point is not that more of this is what is called for today, though it is necessary to continue this level of enforcement. The scale of the problem today dwarfs that in the S&L crisis. We are dealing with trillions, not single or double digit billions this time and the problem has been shown clearly in 2008 to threaten the very functioning of the society. So a much greater effort is needed now.
The point is that this is possible, that it could and should be extended to Wall Street and that doing so on an appropriate scale would disable most of the currently dominant players and set the table for real reform. Though they are operating on a vastly greater scale, todays fraudsters are breaking the same laws as did those in the S&L crisis. And this is something that can be made understandable to the average citizen, were the Obama Administration to even try. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
And these high level executives were high level executives of small/medium banks.
So if Black were boasting more accurately, we'd get something stirring like "barely over 100 regional bank execs were convicted". Wow!
No comparison.
(1) there has never been an actual settlement - just years of uninformed speculation - you have no idea whether it is bank friendly or not, just a naive reliance on what people with agendas leak.
(2) the decision is not up to the Federal government alone, the state AGs are independent agents
(3) People who actually know something about litigation understand why settling for sub-optimal terms is often a good idea. Particularly when we have the right wing judiciary to consider: the DOJ would have to be fucking stupid not to worry about losing.
(4)nobody who is not participating in the negotiations has any idea about what is on the table and only the various representatives know the difference between stated position and actual position. This is a common "progressive" mistake: staring at the poker table and without looking at the cards panicking about what faces people make.
So you have ZERO IDEA what the Obama administration is doing. You are just making use of circular reasoning to agree with yourself.
is based on what? You are party to the negotiating strategy of the DOJ team? You have the ability to evaluate the terms of a settlement that nobody has seen as "bank friendly" based on what? You know that, despite all indications, DOJ wants to be able to end state investigations via the settlement - how exactly?
I bet you don't know anything at all, but are just using the standard progressive circular logic.
I'm talking about the latter, and you misdirect with the former. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
On the other hand, the Obama team has reversed the tide of regulation with Dodd-Frank...
And, it's also very annoying to keep seeing this "progressive" insistence that their hobbyhorse on bank regulations is more important than anything else: more important than getting a handle on the military so that the Iraq war could be wound down, more important than student loans, more important than health care reform, more important than anything, because WAAA!
because WAAA!
You seem to be attempting to maneuver optimally within that losing environment while I want to change the environment. I do not see how we are likely to do anything but delay the tide of anti-progressive reaction without changing the environment. Fortunately, more people are coming to understand that. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Wow! You are an optimist. I had a completely different idea of the "moment". My idea was that the best we could hope for was a pause in the slide toward fascism and that during that pause, there might be a slim opportunity to organize popular support for a step back from the brink.
http://krebscycle.tumblr.com/post/14171228736/slavoj-zizek-for-the-win
Banking System Rotten to the Core | William K Black PhD | FINANCIAL SENSE
I told you I would bring you a message of hope. I will disagree a little bit with a fact pattern about the Reagan administration and re-regulation on Savings and Loans, because that's where I was. I will tell you this: everyone opposed our re-regulation of the industry. The big deregulation bill, the equivalent of the repeal of Glass-Steagall and such, occurred in 1982 and became effective in 1983. By November 1983, we were already re-regulating the Savings and Loan industry. And we were called re-regulators because that was the greatest swear word the Reagan administration believed existed--to call people re-regulators. But this was not partisan--a majority of the members of the House at the time it was controlled by Democrats co-sponsored a resolution saying do not go forward with re-regulation. Five US Senators who became known as the Keating 5 because the most infamous fraud of that era got them together--and who, by the way, did Charles Keating and that fraud use to recruit the Keating 5? Brought him as a lobbyist to walk the halls of the Senate--a guy named Alan Greenspan. Who also put in writing Lincoln Savings posed no foreseeable risk of loss. It was only the most expensive failure--a 3000 position error. And after he got everything wrong in the most important issues he had ever dealt with, after that fact we named him Chairman of the Federal Reserve because we promote incompetence if it helps the 1%. The Reagan administration was so outraged that we were closing insolvent Savings and Loans with great political support that the Office of Management and Budget threatened to file a criminal referral against the head of our agency on the grounds that he was closing too many insolvent banks. Do we have that problem recently? You see Geithner out trying to close the big powerful banks? And that Reagan administration tried to appoint two members--there were only three members running the place--so this would've given control to Charles Keating, the most notorious fraudster in the Savings and Loans crisis, who selected two individuals to run the agency that would then not regulate him. One of them got knocked out on ambiguous political grounds and the other I had to blow the whistle to get him to resign in disgrace, but of course they didn't prosecute him. We can prosecute these frauds.
I told you I would bring you a message of hope. I will disagree a little bit with a fact pattern about the Reagan administration and re-regulation on Savings and Loans, because that's where I was. I will tell you this: everyone opposed our re-regulation of the industry. The big deregulation bill, the equivalent of the repeal of Glass-Steagall and such, occurred in 1982 and became effective in 1983. By November 1983, we were already re-regulating the Savings and Loan industry. And we were called re-regulators because that was the greatest swear word the Reagan administration believed existed--to call people re-regulators. But this was not partisan--a majority of the members of the House at the time it was controlled by Democrats co-sponsored a resolution saying do not go forward with re-regulation.
Five US Senators who became known as the Keating 5 because the most infamous fraud of that era got them together--and who, by the way, did Charles Keating and that fraud use to recruit the Keating 5? Brought him as a lobbyist to walk the halls of the Senate--a guy named Alan Greenspan. Who also put in writing Lincoln Savings posed no foreseeable risk of loss. It was only the most expensive failure--a 3000 position error. And after he got everything wrong in the most important issues he had ever dealt with, after that fact we named him Chairman of the Federal Reserve because we promote incompetence if it helps the 1%.
The Reagan administration was so outraged that we were closing insolvent Savings and Loans with great political support that the Office of Management and Budget threatened to file a criminal referral against the head of our agency on the grounds that he was closing too many insolvent banks. Do we have that problem recently? You see Geithner out trying to close the big powerful banks? And that Reagan administration tried to appoint two members--there were only three members running the place--so this would've given control to Charles Keating, the most notorious fraudster in the Savings and Loans crisis, who selected two individuals to run the agency that would then not regulate him. One of them got knocked out on ambiguous political grounds and the other I had to blow the whistle to get him to resign in disgrace, but of course they didn't prosecute him.
We can prosecute these frauds.
So deregulation caused the crisis, re-regulation is necessary and prosecution of fraud is part of re-regulation, but it is a constant battle.
I don't see a description of old fashioned righteous regulation. I see a claim that prosecution is a necessary part of re-regulation, then and now. There may or may not be an assumption of pre-80ies old fashioned righteous regulation underpinning his worldview. A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
Huh? Black doesn't talk of a few bad apples but of systemic control fraud, that is, widespread criminal behaviour by the management. That is "a systemic change" in finance: in the culture of it, in the practice of it, and in the regulation of it. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
