Last week, William Black, a former investigator of the Savings and Loan scandal, went on Bill Moyers Journal and repeated a charge which a growing number of experts agree with: the chief executives of many of America’s largest banks knowingly engaged in the fraud which has now brought the economy to the brink of catastrophe.
Black is a former Director of the Institute for Fraud Prevention who now teaches Economics and Law at the University of Missouri, Kansas City. Moyers recalled that it was Black who accused then-House Speaker Jim Wright and five U.S. Senators, including John Glenn and John McCain, of doing favors for the S&Ls in exchange for contributions and other perks. “The senators got off with a slap on the wrist,” said Moyers, “but so enraged was one of those bankers, Charles Keating—after whom the senate’s so-called ‘Keating Five’ were named—he sent a memo that read, in part, ‘get Black—kill him dead.’ Metaphorically, of course.”
Here are some of the most important observations Black made to Moyers about the current crisis:
* The CEOs of major banks and mortgage companies knowingly made billions of dollars of bad loans, to make huge short term profits for their institutions and themselves
* These were known among financial execs as “NINJA” loans—no income verification, no job verification, no asset verification.
* One company, IndyMac, produced as many losses as the entire S&L debacle. In 2006, IndyMac sold $80 billion of these essentially worthless loans to other companies.
* “The exotic stuff was created out of things like liars’ loans, that were known to be extraordinarily bad. And now it was getting triple-A ratings…A triple-A rating is supposed to mean there is zero credit risk. So you take something that…has crushing risk. That’s why it’s toxic. And you create this fiction that it has zero risk.”
* As a result, much of the American financial system “became a Ponzi scheme: Everybody was buying a pig in the poke. But they were buying a pig in the poke with a pretty pink ribbon, and the pink ribbon said, ‘Triple-A.’”
* Treasury Secretary William Geithner is continuing the cover-up started by his predecessor, Henry Paulson: “Geithner is publicly saying that it’s going to take $2 trillion to deal with this problem. But they’re allowing all the banks to report that they’re not only solvent, but fully capitalized. Both statements can’t be true. It can’t be that they need $2 trillion, because they have masses losses—and that they’re fine.”
* After 9/11, the Justice Department transferred 500 white-collar specialists in the FBI to International Terrorism—and the Bush administration never replaced those agents. “This crisis is [at least] 100 times worse than the S&L crisis [and] there are one-fifth as many FBI agents as worked the Savings and Loan crisis.”
* The Prompt Corrective Action Law, passed in the wake of the S& L crisis, requires the current administration to close insolvent institutions, “and they are refusing to obey it. They ignore it, and nobody calls them on it.
All of which cries out for a repetition of the Pecora investigation into the causes of the Great Depression. Back then, we said, “Hey, we have to learn the facts. What caused this disaster, so that we can take steps, like pass the Glass-Steagall law, that will prevent future disasters? Where’s our investigation?”
The bottom line here is that the government’s failure so far to investigate or indict any of the financial titans most responsible for destroying the economy is a much larger scandal that the bonuses being paid by AIG or anybody else.
The one thing Black didn’t mention in his conversation with Moyers was the fact that all fifty state Attorneys General were aware of the massive loan fraud being committed and eager to prosecute it. But as Eliot Spitzer pointed out in The Washington Post last year, the Bush administration used the Office of the Comptroller of the Currency to embark “on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.”
In almost every scandal like the derivatives meltdown, there is one person who spotted the dangers inherent in a financial extravaganza like this one years before everyone else. In this case, our unsung heroine was a brilliant lawyer named Brooksley Born, who was Bill Clinton’s first chief of the Commodity Futures Trading Commission. As detailed by Rick Schmitt in a startling article published by the Stanford Alumni Magazine, Born fought fiercely to expand her agency’s regulatory powers over the burgeoning derivatives market at the end of the 1990s.
Her efforts were defeated by Alan Greenspan, Arthur Levitt Jr., Robert Rubin, and Larry Summers. The mindset she was up against was best summarized by a conversation Born recalled having with Greenspan:
“Well, Brooksley, I guess you and I will never agree about fraud,” said Greenspan.
“What is there not to agree on?” Born replied.
“Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud.”
Greenspan disputed Born’s recollection; the former regulator stands by her story.
- 1
- 2
Black's credibility might be higher if he had bothered to realize that "Treasury Secretary William Geithner" does not exist.
Posted by cassandra on Sun 12 Apr 2009 at 12:45 PM
Your dumb comment might have speck of merit if you checked the transcripts to see that Black referred to him as Secretary Geithner and Timothy Geithner.
Posted by Les on Mon 13 Apr 2009 at 05:20 PM
I agree that some of our financial wizzards should be indicted, however, we also have numerous congressman and senators who should be indicted as well. We should take a list of those who received the most financial contributions from these financial organizations and indict them as well.
Posted by Frank Johnson on Mon 13 Apr 2009 at 06:26 PM
Basic arguments for a legitimate American revolution.
Tom Dennen
There are many steps toward revolution - These are the basics
“Work is the basis for all well-being, while monopoly and cartels are obstacles for the beneficial processes.” – Adam Smith, ‘The Wealth of Nations’ – 1776 (The year Congress declared the United States of America independent.).
There are two peoples in America today: We the People, and the people running the illegitimate regime called the federal government. Illegitimate because it does not represent us, the People.
Those two peoples need to separate from one another.
The current illegitimate American government is carrying on its illegitimacy with the money from your work using your money to wage imperialistic, materially beneficial wars instead of directing it toward your well-being.
The material benefits of your work are going to the companies (the monopolies and cartels) that make the products and systems used for war – tanks, guns, planes, weak body armor, all through monopolistic no-bid contracts to cartels and so on – but not for your well-being.
Your money was not used to maintain the New Orleans levees. Your money was not used to clear out the California underbrush now burning and so devastating that state.
Your money has not been used to maintain your roads, schools, bridges, and medical schemes.
Your money is not being used for your well-being.
You can change that by holding your money back until it is spent on your well-being – After all is said and done, it is your money!
And you can legitimally, constitutionally, withhold it by not paying taxes that are not used for your benefit.
Ask your firm to pay for your work in cash that you can put directly toward your well-being.
Put the cash under the mattress, buy (and learn how to use) a gun to protect it – you still have that Constitutional right to bear arms thanks to the present Supreme Court.
But you may soon have to protect those rights and other rights once guaranteed by your Constitution.
TAXES ARE ILLEGAL
The Sixteenth Amendment to the United States Constitution was never properly ratified (ignore Wikipedia) and therefore there is no legal imperative or obligation to pay taxes to the federal government. See, Tax protester constitutional arguments
So basically, you do not legally have to pay taxes. The reason you think you do is because you believe your money has been spent on your well-being for all these years, looking after you and your interests and your family’s interests and your country’s state and regional interests.
You have been paying taxes because you believe that.
But your money is not going toward your benefit; it is going toward the benefit of the monopolies and the cartels of Big Business, Big Government, Big Armament and Big Pharma (which, as you have no doubt heard, is murdering you and your children for your money – The single biggest cause of death in America is the ‘Health Care’ system!)
It’s a sad state of affairs, but it makes the present sitting government illegitimate not only in terms of it not working in the interests of your well-being, but also of it saddling you with ‘odious debt’
.
What if all this global debt was illegal and we, the people, can prove it and get out of it profitably?
2009-04-09
NEVER ENDING DEBT EQUALS SLAVERY IF WE ARE FORCED TO BUY INTO IT – DEBT BY COERCION
Tom Dennen, Infosight editor
If you cannot say, “no”, you are a slave.
Let’s start with the legalities of usury, which is compound interest, which Albert Einstein said was “the most powerful force in the universe."
Usury has been against the laws of every society from biblical times to the Roman Empire, after which the laws seem to have disappeared because they raise the legal concept of ‘Odious Debt’.
Odious debt is a powerful legal doctrine, which holds that debt incurred by a regime for purposes that do not serve the interest of the nation, or the people of that nation’s ruling regime, should not be enforceable, as the debt was not incurred by the nation or its people, but solely by the interests of the regime.
I cannot buy something in your name for my own use and make you pay for it.
Such debts are considered by this doctrine to be personal debts of the individuals running the regime that incurred them and not debts of its peoples.
This concept is analogous to the invalidity of contracts signed under coercion or confessions taken under torture.
The Argentina Baring Collapse, an ABC of Predatory Banking and how Odious Debt has recently robbed you of your pension, is relevant to this observation.
In 1824 Barings Bank signed a deal with Argentina’s first president, Bernardino Rivadavio, which ended after the ratification of debt as an economic policy in 1979 by a military dictatorship, in the financial collapse of one of South America’s richest countries after almost two hundred years of impoverishment and debt.
The debt was used to control the country’s finances, enrich the country’s bankers and empty the country- which means its people - of its wealth, much the same as that which is happening in the former, now ‘debt-ridden’ African colonies, Europe, England, America and most of the western world.
Debt is an avoidable curse.
Today, America’s sub prime borrowers, as well as ordinary, everyday, 20-year mortgage (death cage), borrowers across the planet, former tenants of the huge empty office and mall shop spaces are in the grip of odious debt.
Regardless of monetary theories, results can be taken as fact: Usurious indebtedness as a financial, political and economic policy needs the collusion of the leaders of those sectors of society which produces generations of politicians, technocrats, bureaucrats (and bankers) who favor banks and international institutions over the people – those individuals who are the producers of commodities - in their own countries, something we are now seeing worldwide.
After the Viet Nam war Argentina was somehow $53b in debt, half of which was owned by multinational corporate private enterprise, the other half by banks.
Who borrowed the money? The people?
No. The illegal Argentinean regime contracted the debt. Must the people (along with their grandchildren) pay back an odious debt not taken out knowingly by themselves?
No. But I think that today, we the people need a global representative (and a platform) to argue for the peoples of this stolen planet against any further odious debt and the abrogation of any such debt so far illegally incurred.
“If the public does not benefit, then there is no public debt.”
The doctrine was formalized in a 1927 treatise by Alexander Sack, a Russian emigré and legal theorist, based upon 19th Century precedents including Mexico's repudiation of debts incurred by Emperor Maximilian's regime, and the denial by the United States of Cuban liability for debts incurred by the Spanish colonial regime.
According to Sack: "When a despotic regime contracts a debt, not for the needs or in the interests of the state, but rather to strengthen itself, and to suppress a popular insurrection, etc, this debt is odious for the people of the entire state.
”This debt does not bind the people of the nation; it is a debt of the regime, a personal debt contracted by the rulers, and consequently it falls away with the demise of the regime.“
The reason why these odious debts cannot attach to the territory of the state - the people, you and I - is that they do not fulfill one of the conditions determining the lawfulness of State debts, namely that State debts must be incurred, and the proceeds used, for the needs and in the interests of the peoples of the State - you and I.
Odious debts, contracted and utilized for purposes, which, to the lenders' knowledge, are contrary to the needs and the interests of the peoples of the nation, are not binding on those peoples – when it succeeds in overthrowing the government that contracted them – unless the debt is within the limits of real advantages that these debts might have afforded if they were in the interests of the advancement of the people and not the banking elite.
The lenders have therefore committed a hostile act against the people, and they cannot afterwards expect a nation which has freed itself of a despotic regime to assume these odious debts, which are the personal debts of the rulers - but we must first free ourselves from this regime in order to do this.
The African Third World debt is, to me, completely odious.
Patricia Adams, executive director of Probe International (an environmental and public policy advocacy organization in Canada), and author of Odious Debts: Loose Lending, Corruption, and the Third World's Environmental Legacy (from which came much of the content herein), has stated that there is a solution:
“…by giving creditors an incentive to lend only for purposes that are transparent and of public benefit, future tyrants will lose their ability to finance their armies, and thus the war on terror and the cause of world peace will be better served.”
In other words, it should be illegal for anyone to sell me something in your name for my own use and expect you to pay for it.
On the other hand, If the repayment of interest on legitimate, non-odious debt was applied to a reduction of the original capital (i.e. non-usurious interest) by national, federal or international law or other regulatory lending system, the problem would at the very least be minimized, depending on the regularity and amount of capital recovered as part of interest payments.
Also, if ‘pooling’ or accumulation of non-working capital were limited and any excess of earnings or profit be forced into use as in corporate social consciousness programs, the processes involved in the alleviation of poverty could be far better served than they are now.
My own theory that the embedded ‘growth requirement’ of modern capitalist business arose from a postindustrial population expansion which eventually stopped.
An understanding of this ‘embedded growth’ can have some positive applications if the ‘embedded growth’ requirement is removed and sustainability is substituted.
That Capitalist driver, population expansion, is gone.
First World Populations are stabilizing. We are now in a situation where fair, not odious, financial balance must be sought.
The next level of revolution is from the individual states once protected under a law called the Posse Comitatus Act.
The Posse Comitatus Act and the Insurrection Act substantially limit the powers of the federal government to use the federal military for law enforcement – and a legitimate revolution with legitimate grievances against an illegitimate government is, of course, against that illegitimate government’s ‘law’.
In other words, if you revolt against a United States government that you consider illegitimate, that government cannot Constitutionally use its armies to put down your revolution.
It will probably try, but this Constitutional right of yours to protest is enshrined in the Posse Comitatus Act, which is enforced by the State Militias, and protects even revolt against an illegitimate federal government.
If an illegitimate federal government tries to put down a popular revolution or insurrection, the governor of your state has a local standing army in place (the State Militia) to protect you from that illegitimate government’s use of your own troops against you.
No longer.
Your Constitutional right to a local Posse Comitatus (State Militia) to fight an illegitimate federal government has been taken away from you.
It has come to that.
The next step should be a referendum calling for all states’ governors to ratify amendments to state Constitutions reinstating the Posse Comitatus Act state by state.
As Americans, We the People are now extremely vulnerable.
We need the basis of our well-being, the benefits of our work, returned to us.
Unless we take back the basis of our well-being, the work that we do and make sure that it once again serves us and not monopoly or cartels, we are slaves.
Here’s the key:
IN CONGRESS, JULY 4, 1776
The unanimous Declaration of the thirteen united States of America
hen in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.
Another key is that we all have to act together.
And soon.
Posted by Tom Dennen on Tue 14 Apr 2009 at 05:58 AM