Bill Black: Despite a government accountability office investigation uncovering new evidence of illegal robo-signing, authorities still striking deals instead of locking up wrongdoers
SHARMINI PERIES, TRNN PRODUCER: Welcome to The Real News Network. I’m Sharmini Peries in Baltimore.
This is our segment with Bill Black. Bill Black 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. He’s the author of The Best Way to Rob a Bank Is to Own One. And he’s a regular contributor at The Real News Network.
Thanks for joining us, Bill.
BILL BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: Thank you.
PERIES: Bill, I understand you have two strategies to report on today, one that throws the homeowners under the bus, and another one: how the federal government plans on protecting bankers once again.
BLACK: So the one about the homeowners has to do with a GAO study that just came out. And the GAO looked at one of these programs in which the banks agreed with the Federal Reserve and the Office of the Comptroller of the Currency, which is supposed to regulate the largest national banks, to review their loan files and find out where they had screwed up in foreclosures or failing to give relief and to provide substantial payments to homeowners who were the victims of this practice, except that it all went disastrously wrong. So they started this review of the banks’ records, and it turned out that the records were in such terrible shape that the people doing the review, who were consultants chosen by the banks, concluded that they couldn’t complete the review unless they spent many years and billions of dollars doing it, because the loan files were in such bad shape.
Now, that should have caused everyone to reexamine how often they were engaged in fraud, the so-called robo-signing in which they lied in their affidavits that they had established a basis to foreclose on people’s homes. But, of course, it didn’t lead to that. Instead, it led to a deal in which the OCC and the Fed released the banks from the requirement to do the file reviews. And the GAO says, because of this, homeowners will get a billion and a half fewer dollars. And, of course, there was no completed review to find the facts and to determine who actually was the victims of all of that. So that’s the first atrocity.
The second was rolled out by the Justice Department through an aggressive campaign of press leaks to The New York Times and The Wall Street Journal in particular, which led to favorable stories in both papers a few days ago, and the message was: this is the new Justice Department; we’re going to prosecute banks, finally. And the two banks, according to the press leaks, are both foreign banks, of course.One is Credit Suisse, and that’s for aiding tax fraud by many of the wealthiest Americans, where Credit Suisse not only did this for years and years and years, but then obstructed the resolution of it as well and lied to the Justice Department and such. And the other one involving a bank called Paribas. These are both very large foreign banks. That bank is alleged to have helped bust the sanctions on regimes in Sudan and in Iran, so allegedly involved national security as well.
Now, of course, we’ll see whether these really lead to prosecutions, but the great press leak effort blew up in the face of the Department of Justice when the people at the Justice Department, the senior folks being interviewed, said, admitted that this was a new strategy. In other words, the old strategy was not to prosecute the banks, even when they were caught red-handed committing frauds. And one of the principle U.S. attorneys, Bharara, who’s been doing the insider fraud cases, admitted that the old strategy had created a massive loophole that was being exploited for rampant fraud by many elite bankers and noticed that none of this involves a prosecution of any of the Wall Street elites whose frauds actually drove the crisis.
And then, since Real News is run in part by a grand poobah who’s Canadian, Paul Jay, I have a shout-out for hockey, and that is our neighbor across the street, Mr. Spurgeon, scored the critical goal with about two minutes left in the game to send the Minnesota Wild into overtime, and the Wild then won and are into the second round of the Stanley Cup playoffs. So yay, neighbours.
PERIES: Thanks for joining us, Bill.
BLACK: Thank you.
PERIES: And thank you for joining us on The Real News Network.
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