Wall Street's Latest Scheme Will Cost You More at the Gas Pump

Wall Street's Latest Scheme Will Cost You More at the Gas Pump

The EPA allows banks to speculate on ethanol credits which drives up prices 20-fold -   September 24, 2013
Members don't see ads. If you are a member, and you're seeing this appeal, click here


Share to Facebook Share to Twitter

This interview is why I support TRNN. Both interviewer and interviewee want the truth! - David
Log in and tell us why you support TRNN


William K. Black, author of The Best Way to Rob a Bank is to Own One, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics.

Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement.

Black developed the concept of "control fraud" frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management.


Wall Street's Latest Scheme Will Cost You More at the Gas PumpJAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I'm Jaisal Noor in Baltimore. And welcome to this latest edition of The Black Financial and Fraud Report.

Now joining us is Bill Black. He's an associate professor of economics and law at the University of Missouri-Kansas City. He's a white-collar criminologist, a former financial regulator, author of The Best Way to Rob a Bank Is to Own One, and a regular contributor to The Real News.

Thank you so much for joining us, Bill.


NOOR: So, Bill, The New York Times is reporting that Wall Street is speculating on ethanol credits, prompting a 20-fold spike in only six months. This impacts consumers at the pump, of course. Can you explain the basics of the ethanol credit market, why the program began, and what its original intention was?

BLACK: Sure. So this is what happens when four really bad ideas come together at the same time.

The genesis of the program was all about Iowa politics. So this is one of those quasi-green projects, sort of like an okra project: green on the outside, but a lot of brown seeds on the inside. Ethanol doesn't turn out to be all that good a thing in terms of renewable, but you can make it from corn, and that means that Iowa loves it. And the first big presidential get-together on who will get the nomination is in Iowa. And so the Bush administration created this big ethanol trading credit program. That's one.

The second thing was that [incompr.] the Bush administration had decided there should be no real controls or regulation, because regulation is bad. So they put it under the EPA, but with no enforcement program, no safety and soundness, no system for looking at people who were speculating and manipulating markets, just absolutely no capacity to deal with those problems.

The third thing is they got rid of Glass-Steagall, and this has meant that the banks not only loan; they speculate and own all of these. They purchased vast amounts of these renewable credits that are created whenever a gallon of ethanol is created. And there is a federal minimum requirement for how much ethanol you have to have when you produce, or you get fined. So if these credits get scarce, the refiners have to bid up the price really high to be able to get the credits and avoid these very large fines. And that's the economics of the system. And as I said, by repealing Glass-Steagall, we put the banks in a position where they're no longer lenders but they're speculators and market manipulators in something that not only affects the price of oil but of course affects the price of food as well, because ethanol comes from crops that could be used either directly or indirectly to feed human beings. Often, of course, they are used to feed animals.

And the fourth really bad idea is that we allow the creation of these systemically dangerous institutions, these banks that are so large that they're too big to prosecute, too big to run, too big to regulate, etc. And so no one is willing to take on these large banks. And the EPA, of all things, the Environmental Protection Agency, has become a shill to the big banks, saying, we don't see any problem here. You know, so what the price is going up? Oh, we don't see manipulation. Well, they don't have any systems for even looking for manipulation. They have no expertise in looking for it and such.

So it is a complete screwup from these four disastrous roots.

NOOR: Bill Black, thank you so much for joining us.

BLACK: Thank you.

NOOR: Thank you for joining us on The Real News Network.


DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at contact@therealnews.com


Latest Stories

Why Didn't Bush/Cheney Prevent 9/11? - John Kiriakou on Reality Asserts Itself (5/10)
Behind the Music with TRNN's Stephen Janis
The Blind Spots in Alberta's Climate Change Plan
Vulture Capitalists Are the Real Winners of Argentina’s Elections
Why Didn't Bush/Cheney Prevent 9/11? - John Kiriakou on Reality Asserts Itself (5/10)
Eddie Conway Talks Indigenous People's Day and Political Prisoners
Indigenous Peoples' History is More Complicated Than a Holiday Myth
The Iraqi Pissing Match - John Kiriakou on RAI (4/10)
Turkey's Intentions Behind the Downing of a Russian Jet
Policing on Trial as Freddie Gray Case Set to Begin
Is America Powerless to Stop Pfizer Merger?
The Unbreakable Spirit of Gilmor Homes
My Reports on 1995 Human Rights Abuses in Bahrain Ignored by State Department - John Kiriakou on Reality Asserts Itself (3/10)
Wilkerson: The Hypocrisy of U.S. Syria Policy (1/2)
"Being a Founding White Father Ain't What It Used To Be:" Student Protests on College Campuses
Days of Revolt: Militarizing Education
Historic Win for the Right in Argentina's National Election
How I Joined the CIA - John Kiriakou on Reality Asserts Itself (2/10)
Sanders Defines his Social Democracy
MD Among Lowest Number of Hate Crimes in the Nation
Report: The Population of Women in Prison Has Tripled Since the '90s
Native American Genocide & Survival with Roxanne Dunbar-Ortiz
History Will Judge America on Syrian Refugee Crisis As "Shameful"
I Believed America Could Do No Wrong - John Kiriakou, Former CIA Official, on Reality Asserts Itself (1/10)
N Don't Stop - Brook Park + TBB on Rooftop Live
The Black Panthers: A Revolution In Review
What's Fueling Boko Haram Attacks in Nigeria?
Is Obama Walking Into COP21 With An Empty Hand?
Back to Square One, Obama Says Assad Must Go
Towson President Agrees to Students' Demands After Eight-Hour Occupation

RealNewsNetwork.com, Real News Network, Real News, Real News For Real People, IWT are trademarks and service marks of IWT.TV inc. "The Real News" is the flagship show of IWT and Real News Network.

All original content on this site is copyright of The Real News Network. Click here for more

Problems with this site? Please let us know

Linux VPS Hosting by Star Dot Hosting