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  December 13, 2016

Former Financial Regulator: White Collar Crime Will Have a Field Day Under Trump


Bill Black says none of Trump's economic picks - which now include three people from Goldman Sachs - were picked for their knowledge of economics
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biography

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. Black was a central figure in exposing Congressional corruption during the Savings and Loan Crisis.


transcript

Former Financial Regulator: White Collar Crime Will Have a Field Day Under TrumpSHARMINI PERIES: Welcome to The Real News Network. I'm Sharmini Peries coming to you from Baltimore. In an early holiday present to Wall Street, President-elect Trump appointed the president of Goldman Sachs, Gary Cohn, to head up the National Economic Council. This is a non-cabinet position, but it is key in coordinating the administration's economic policies. President Bill Clinton created the role and put the NEC on par with the National Security Council in terms of stature to help reassure Wall Street and bond markets about his administration's economic measures. Trump's pick, Gary Cohn, is a life-long Goldman Sachs guy and is the third member of the Trump Administration to come from Goldman Sachs -- the other two are Steve Mnuchin for Secretary of Treasury, and Steve Bannon who is Senior White House Advisor.

Joining us now from Bloomington, Minnesota, to take a closer look at this, is Bill Black. Bill is an Associate Professor of Economics and Law at the University of Missouri, Kansas City. He's a white collar criminologist and former financial regulator and author of The Best Way to Rob a Bank is to Own One. Thanks for joining us, Bill.

BILL BLACK: Good to be here.

SHARMINI PERES: So, Bill, with this third appointment of people from Goldman Sachs it looks like the Trump Administration will be more heavily influenced by Goldman Sachs and Wall Street than he alluded to during his campaign. In fact, he criticized Hillary Clinton for being the Wall Street candidate. Bill, what do you make of all of this?

BILL BLACK: Well, he not only criticized her for being the Wall Street candidate, he ran an ad in which he said he was running against Wall Street. And the picture he flashed in the ad was the CEO, Lloyd Blankfein of Goldman Sachs, who was supposed epitomize everything that was wrong. So, as you know, I hang out and teach primarily in Kansas City, Missouri, and the then-president of the Federal Reserve, a very blunt-spoken guy, and a Conservative, told a small group of us -- on the record -- that for the last 30 years, whatever party's in power has held an auction and auctioned off to the highest bidder on Wall Street, the position of Treasury Secretary. And that for the last 20 years overwhelmingly the winner of that auction is Goldman Sachs. So Goldman Sachs, again, has been chosen to run Treasury.

Now the National Economic Council and Trump, in appointing Gary Cohn, said that he would be his principal economic advisor. So, not the Chair of the Council of Economic Advisors, who is someone who actually knows economics. As you said, like so many bad ideas, this one came from Bill Clinton -- the creation of the NEC -- but largely because he didn't much like getting advice from people who actually knew economics, and who were professors and such. So he wanted somebody who didn't particularly know much about economics, but had the right politics and that, of course, was Bob Rubin who had been President and CEO of Goldman Sachs, as well. And then Bush II got, as his head of the NEC, a Goldman Sachs guy. So this really keeps it in the family.

Now we know that when Trump said he was going to drain the swamp, it was so that he could make it easier so they could get all the creepy-crawly things and give them the most prominent position in his new administration. So as a white collar criminologist, I'll say that this is going to be the most criminogenic environment since the days of Harding. And white collar crime and scandal and corruption is just going to have a field day. But it's not going to be a day, it's going to be a minimum of four years.

SHARMINI PERIES: And you thought you were having fun with the last administration, I can't wait to see what you take up with this one. Now, you were speaking about family keeping it close and now we know that the person that brought Cohn to Trump is his son-in-law Jared Kushner -- and who, I must add, is a real estate magnate himself. And so, with all of these connections, one of the reasons that he was brought to Trump's attention was because of his public/private partnership proposal that he had written up. What's in that, what's so scary about it, Bill?

BILL BLACK: Oh, well, nothing scary if you're the private part. laughs It's guaranteed enormous amounts of money where the government fronts the money and you get the profits. It's completely outrageous. It's a really bad way to do stimulus. And, again, these people are picked, not because they know anything about economics. In fact, any C heads often don't know particularly about economics. Even Larry Summers, who was Obama's first NEC head was not picked because of his knowledge of economics, but because, of course, he was Rubin's protégé. So this is more, it'll be great for Goldman's customers. By the way, Gary Cohn, as a result of -- and you have to love the euphemism -- "beginning public service," will be able to sell his Goldman shares and have them tax-deferred, the gain. And the gain, if he sells right now, is going to be an estimated 209 million bucks. So everybody's gonna win -- except, of course, the public.

SHARMINI PERIES: And tell us a little bit more about Goldman Sachs and their role in economic catastrophes. What's their history and, I mean, not only in this Trump Administration, they advise heads of states of all over the world.

BILL BLACK: Oh, they do it all. First, people will probably want to know that Blankfein -- and he said this seriously -- was doing "God's work." laughs So they have a really close identification with anything that makes them wealth, they think is something that God wanted and that they're actually helping God by making themselves fabulously wealthy. Goldman Sachs is one of the remaining big three investment banks in the United States. It is one that, as you say, is infamous for advising governments to do all kinds of bad transactions that are really good for Goldman, really good for other private clients, and really, really, really bad for the public sector. They're the ones who helped Greece do the scam to understate dramatically its debt levels so that it could qualify for the euro. We've seen how that worked out. But it's also informally referred to as Government Sachs because it really encourages its senior executives to go in to really senior levels of the government -- the kind of things that create policy and can make Goldman Sachs and its clients immensely wealthy.

But you always have to worry with Goldman Sachs. Goldman Sachs is also one -- many of the entities did this -- but Goldman Sachs is the one that's most infamous for setting up a toxic waste fund, telling investors that it picked the bonds because they were good bonds, when actually Goldman Sachs and another Paulson -- not the Paulson that used to run Goldman Sachs and then became Treasury Secretary under Bush II -- but the other Paulson, the one that did the big short, the really big short. And they were, in fact, picking the fund so that it was filled with the most toxic crud and then Goldman and Paulson were betting for the sure thing, which is that this was going to lose money and encouraging other Goldman customers to come in saying, "We've created this portfolio of really good stuff that you want to be invested in." And when they were called on this in the Senate investigation, they said, "Oh, we don't see any problem with doing that. We're not here for our customers." laughs "We're here for Goldman Sachs. Everybody should know that we're rapacious." And, of course, Matt Taibbi has summed it up so colorfully and accurately in labeling Goldman Sachs "The Vampire Squid" that exists simply to thrust its feeding tube into any pile of rotting assets to extract the value and further rip off the public and enrich the Goldman partners. Which, all you can say is, "They done it again."

SHARMINI PERIES: All right, Bill, very scary times. I thank you so much for joining us and please come back real soon. I'm sure we'll have more news to unravel.

BILL BLACK: Oh, the Vampire Squid has many more acts.

SHARMINI PERIES: All right. Thank you for joining us on The Real News Network.

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END



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