x close  
To rob a country, own a bank Pt2
NO ADVERTISING, GOVERNMENT OR CORPORATE FUNDING
DONATE TODAY


  March 20, 2010

To rob a country, own a bank Pt2


William Black: The finance sector is a huge parasite, it transfers wealth from the poor to the rich
Members don't see ads. If you are a member, and you're seeing this appeal, click here
   


audio

Share to Facebook Share to Twitter



TRNN is a rare source of objective facts, analysis and commentary, not available in mainstream news. - Robert
Log in and tell us why you support TRNN


transcript

To rob a country, own a bank Pt2PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. We're joined again by William K. Black. He's joining us from Amherst, Massachusetts, and he's at the PERI institute today. And he's the author of the book The Best Way to Rob a Bank Is to Own One. And we've been talking to Bill in the first segment of the interview about the current financial crisis and what he calls "control fraud", which is fraud controlled from the highest levels of financial institutions and the government. Thanks for joining us again, Bill.

WILLIAM K. BLACK, PROF. ECONOMICS AND LAW, UNIV. MISSOURI-KANSAS CITY: Thank you.

JAY: When President Obama sold the bank bailout to the nation—and President Bush said more or less the same thing before him—they're doing this for Main Street, not for Wall Street, that we need this financial sector to work, we need credit, we need a financial system that's doesn't collapse on us. So was there any choice? You described in the first segment that these institutions are essentially now run by psychopaths. But was there a choice?

BLACK: Yes. All of these institutions were insolvent, on a market value basis, without the government bailout, and we're in imminent liquidity crises. The United States government had leverage that it's never had in the history of the republic, and it could have produced any of the reforms out of that leverage that it needed. And finance desperately needs reform. Finance has grown from about 5 percent of the profits of America to about 40 percent of the profits of America. It is a huge parasite. Instead of the theory, which is that it's supposed to help Main Street, think of it as a giant engorged leech on Main Street. And it has made Main Street far more sluggish. And, by the way, it doesn't just take money out of Main Street; it takes it out of the poorer parts of America and it transfers it to the richest parts of America. So finance is largely responsible for the massive growth in inequality. And it means that even when our economy is supposedly performing like last decade before the crash, in fact middle-class Americans were no better off at the end than they were at the beginning, after a full cycle of recovery, and that's the first time in US history. And so when that market supposedly is working well, it's bad for Americans, and when the market goes and takes us into its latest crisis—and it is set up now to bring us from one crisis to another—then it is horrific for America. So finance desperately needs to be tamed.

JAY: And there was an opportunity, you're saying, to deal with this leech in a more fundamental way, but first there had to be an acknowledgment on the part of the Obama administration that there needed fundamental change in the financial system. But that doesn't seem to be what we've seen.

BLACK: Well, you didn't, and the Obama administration, we knew from the beginning, was going to be, at best, very poor on finance. And it's because it chose as its leadership Larry Summers and [Timothy] Geithner. Well, Larry Summers was an architect of the deregulation under the Clinton years. You know, this is a protege of [Robert] Rubin, Goldman Sachs, that helped produce this disaster. Now, that was a bipartisan effort. Phil Gramm was also a leader. But the Clinton administration was a major contributor to this problem, and Larry Summers was a big part of it. Geithner was a completely failed regulator. He was supposed to regulate most of the largest bank holding companies in America because he was president of the Federal Reserve Bank of New York. He never saw the crisis coming. He gave no warning of the crisis. He took no effective regulatory steps. And as a result of him being a complete failure, we promoted him and made him Treasury secretary. [Ben] Bernanke had been a complete failure, so we reappointed him. And Bernanke just appointed Patrick Parkinson to be in charge of all examination and supervision at the Federal Reserve. This was in late fall of last year. Well, who is Patrick Parkinson? No one's heard of him, obviously, any more than they've heard of Bill Black, but Patrick Parkinson was the person that Alan Greenspan used to lead the charge against Brooksley Born in 2000 and 1999 when she wanted to regulate credit default swaps, which is what blew up AIG and is where we bailed out Goldman Sachs. And Patrick Parkinson said we shouldn't have any authority at all to regulate credit default swaps to protect the public, because there's no risk of fraud here. And, by the way, these credit default swaps get credit rating agencies. These are the same credit rating rating agencies that gave AAA rating to stuff that was known in the trade as "liars loans". So we have the wrecking crew, what Tom Frank aptly called the "wrecking crew", what Jamie Galbraith aptly called the "predator state". And what did the Obama administration do with a wrecking crew that had just destroyed much of the global economy? He promoted it and praised it. It's the most staggering thing for someone who identified as a progressive candidate in the history of this nation.

JAY: What—you would've hoped to have seen a Brooksley Born somewhere in Treasury, someone like that at those levels, to clean up this mess.

BLACK: Yeah. I have this novel idea that you should promote the people that are right and get rid of the people who are consistently wrong.

JAY: Well, one of the arguments they might give you, "they" being the people that support Obama's policies on this, and I don't think they would say this on-camera, but off-camera they might, which is the fraud and corruption is so systemic that you would have to undo the whole fundamental relationship between government and the finance sector and have a much—for example, you'd have to have some kind of public option, as they were talking about in health care, but in the finance sector, and that to do that would have caused such disorder, they say—and I've had people tell me this—that the financial meltdown would have been more profound, millions more unemployed and such, so they had to go this way. What you make of that?

BLACK: They actually tell you that?

JAY: Yeah, they tell me that.

BLACK: I've never had anyone with the gall to say that. That's extraordinary. I mean, when I describe the current crisis and its causes to people who are Indonesians, of say 15 or years or older, they have no trouble at all understanding modern America, because it looks just like Suharto. It's crony capitalism. And what you've just described is people saying our system is so embedded in crony capitalism now that if we interfere with it, there'll be a crisis. Well, if you don't interfere with it, you will have repeated, intensifying crises, because that is the nature of the beast of crony capitalism. So you'd better fix it now. If you leave it, you are giving a bequest to all our kids and our grandkids that is going to turn America into Indonesia under Suharto.

JAY: Well, in the next segment of our interview let's talk about the next shoes to drop. You mentioned in the first segment of the interview something like $1 trillion of bad assets that are not being shown on the books to make the profit look better. In the next segment I'm going to ask you—someday those real losses have to be accounted for, and more than that. So in the next segment of our interview, let's explore what comes next, with Bill Black on The Real News Network.



Comments

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

The Empire Files: How Palestine Became Colonized
Police Kill Unarmed Mentally Ill Black Man As Report Finds Law Enforcement Shootings Reminiscent of Lynchings
Trump and the Social Basis of Fascism
Danny Glover: Upcoming Haitian Election an Opportunity for Self-Determination
Intelligence Agencies Are Gathering Information Against You in Case of Your Dissent
Mexicans Protest on Second Anniversary of Disappearance of 43 Students
Baltimore City Council Candidate: Gentrification is Not A Development Plan
Balochistan: India Opening the Pandora's Box
Clinton vs. Trump Debate: Is One Section of the Oligarchy More Dangerous?
Did America Dodge a Bullet?
24 Arrested Outside Hofstra University While Demanding An Open Presidential Debate
Trump's Position on Jerusalem Puts Him on the Side of the Settler Movement
Comply or Die: What the Shootings in Tulsa and Charlotte Reveal About Policing in America
BDS Town Hall with the Former Green Party of Canada Justice Critic
Corbyn Wins Leadership, But Can He Unite the Labour Party?
Danny Glover on the Struggle for Democracy in Haiti
Should Third Parties Be Included in Televised Debates?
Anti-BDS Campaign Aims to Undermine Academic Freedom and Free Speech on Palestine
Ecuador Proposes Worldwide Elimination of Tax Havens
Did America Dodge a Bullet?
Why the Federal Reserve Needs To Go Beyond Interest Rate Policy
'Hands Dripping with the Blood of the Afghan People': US Agrees to Pardon and Reward Warlord
Recall Referendum on Maduro Moves to Next Phase in spite of "Irregularities"
Gary Johnson Supporters: Privatize Everything, But Not the Commission on Presidential Debates
TPP Will Effectively Kill Climate Treaties
US National Security Policy for Climate Change Seeks Security for Corporate-Controlled Assets
U.S. Policy in Syria: Regime Change or Regime 'Facelift'?
Berlin Election Outcome Signals Merkel's Tenuous Grip on Chancellorship
Charlotte Protests Escalate as Police Refuse to Release Video
Dangers of the Proposed Bayer-Monsanto Merger

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