CLICK HERE FOR BLOGGER TEMPLATES AND MYSPACE LAYOUTS »

Saturday, April 11, 2009

Fraudulent Banking Caused Economic Collapse

This article from Bill Moyers journal is an interview with William K Black, former bank regulator during the loans crisis of the 1980s. He puts the blame squarely on the shoulders of the Wall Street top bankers who created a scenario of trust, forcing others to invest in what turned out to be bad loans. Remember money is created when a mortgage is lent, so if you don´t check on your ability to pay, you can create money by offering loans to people who can´t pay. Create enough of these and then say that they are low-risk (whch they aren´t) and then sell them to other companies to make a profit. The executive bonus program was effectively unregulated during the Bush administration, allowing CEOs of eventual loss making companies to run up huge personal profits at the expense of others.

Even though the FBI warned in 2004 about mortgage fraud, 500 agents were transferred to handle terrorism and were not replaced, so the resources available are less than that for the previous loans crisis. This is one reason why no-one has yet been made accountable for the current woes. Also the laws created to regulate banking after the Great Depression were removed under the Clinton administration (as if we´re clever now and have learnt our lessons). Then Bush removes regulation altogether so banking fraud runs rife. At the end the government has to bail out using billions of dollars of US taxpayers money. Fraud.

The CEOs should be thrown out and replaced with people with good records of financial management, real integrity and clean out the bad blood. Will it happen under Obama, or will the illusion that the banks are solvent (when how can they be if so much money is required) and be propped up with tax dollars be used to cover the public´s eyes?

0 comments: