The financial industry brought the economy to its knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black offers his analysis of what went wrong and his critique of the bailout.

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Category: Bailouts, Credit, Video

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One Response to “Bill Black on Moyers on “Banksters””

  1. Bill Werner says:

    This is an extraordinary interview with a former senior regulator during the 1980′s S&L crisis. The youtube version is only the first 9 minutes of the full PBS 28 minute interview. The number of fraud, other law breaking and cover ups went by so fast I felt it necessary to print out a full transcript. (The Prompt Corrective Action Law requiring insolvent banks to be shut down?)

    Here are some excerpts past where the youtube ” fraud” version leaves off:

    …if we put honest people in, who didn’t cause the problem, their first job would be to find the scope of the problem. And that would destroy the cover up…Just like Paulson did before him. Geithner is publicly saying that it’s going to take $2 trillion – a trillion is a thousand billion – $2 trillion taxpayer dollars 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…

    first, the policies are substantively bad. Second, I think they completely lack integrity. Third, they violate the rule of law. This is being done just like Secretary Paulson did it. In violation of the law. We adopted a law after the Savings and Loan crisis, called the Prompt Corrective Action Law. And it requires them to close these institutions. And they’re refusing to obey the law… What would happen if after a plane crashes, we said, ‘Oh, we don’t want to look in the past…’ ”

    “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? ”

    “Absolutely, because they are scared to death. 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… AIG was being used secretly to bail out favored banks like UBS and like Goldman Sachs. Secretary Paulson’s firm, that he had come from being CEO. It got the largest amount of money. $12.9 billion. And they didn’t want us to know that. And it was only Congressional pressure, and not Congressional pressure, by the way, on Geithner, but Congressional pressure on AIG… The Reagan Administration’s central priority, at all times, during the Savings and Loan crisis, was covering up the losses… ”
    “…Because it is a fundamental lack of integrity…Now, going forward, get rid of the people that have caused the problems. That’s a pretty straightforward thing, as well. Why would we keep CEOs and CFOs and other senior officers, that caused the problems? That’s facially nuts. That’s our current system…So stop that current system. We’re hiding the losses, instead of trying to find out the real losses. Stop that, because you need good information to make good decisions, right? Follow what works instead of what’s failed. Start appointing people who have records of success, instead of records of failure. That would be another nice place to start.
    There are lots of things we can do. Even today, as late as it is. Even though they’ve had a terrible start to the administration. They could change, and they could change within weeks. And by the way, the folks who are the better regulators, they paid their taxes. So, you can get them through the vetting process a lot quicker. “