William K. Black on Financial Fraud
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Bill Black is the author of The Best Way to Rob a Bank is to Own One and is an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.
Bill writes a column for Benzinga every Monday. His other academic articles, congressional testimony, and musings about the financial crisis can be found at his Social Science Research Network author page and at the blog
Follow him on Twitter: @WilliamKBlack
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Comments
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
February 15th, 2012 at 9:01 am
Excellent post, BR.
Bank execs and awful regulatory systems are appropriately receiving well-deserved criticism. But it took a local loan officer to originate the mortgage fraud on the original docs.
Greed and lies transcend the pay grade.
February 15th, 2012 at 10:08 am
It’s a great discussion, particularly given their differing perspectives. One thing that could have been brought up is the moral hazard produced by not investigating and prosecuting fraud. Prof. Roberts’ position is that bailouts have created enormous moral hazard in that subordinated debt holders no longer provide the market discipline that they normally should. In the back of their minds, they believe the government will step in if necessary (quite a logical belief). But if regulators swarm in following bailouts and actually seek out elite frauds, would that not be an effective way to mitigate that moral hazard?
February 15th, 2012 at 11:46 am
Black is excellent.
It might be useful for Russ Roberts to relax a bit and try and follow and listne to what Black is saying without jumping around ideaphorically, constantly interjecting his confusion into what is a very well stated narrative.
This testimony by Bill shows a) the inherent fallacy of the efficient markets hypothesis b) the propensity to fraud in human financial system that makes self-regulation based on rational expectations laughable c) the absolute necessity of Glass-Steagall type rules to cordone off the fraud in financial systems from bailouts d) the awful moral hazard in bailouts e) academic economists are often intellectually impotent in dealing with real markets, having been more used to theoretical models and obscure discussions rather than the push and pull of trade.
Not to be catty, but all one has to do is read Paul Krugman describe how speculation cannot influence the price of a commodity like oil to realize that there is more than one moon on his planet.
February 15th, 2012 at 12:18 pm
we’re not going to payoff on default swap insurances are we .. would we be that foolish? :-/ .. because that would .. seem like NEXT … $570T really (something like that) did I hear that here:
http://www.c-span.org/Events/Senate-Debates-WH-Budget-with-Treasury-Secretary/10737428278-1/
February 15th, 2012 at 3:57 pm
arthurcutten nails it, as usual.
February 16th, 2012 at 10:14 am
Awesome. Was waiting for this ever since Roberts invited Black. Thanks BR!
February 19th, 2012 at 12:48 pm
Bill Black….The Gift That Keep On Giving!
Great Post BR.
I can listen To Mr. Black all day long.