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Bill Black: Obama administration quietly gave a $57 million award to a whistleblower regarding the Countrywide and Bank of America mortgage scandal

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JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I’m Jessica Desvarieux in Baltimore. And welcome to the Black finance and fraud report.

Now joining us is the man behind the report, Bill Black. Bill is an associate professor of economics and law at the University of Missouri-Kansas City. He is the author of the book The Best Way to Rob a Bank Is to Own One. And, of course, he’s a regular contributor to The Real News.

Thanks for being with us, Bill.


DESVARIEUX: So, Bill, what’s going on in the world of finance and fraud this week?

BLACK: So this is the dog that didn’t bark. In an agreement with a whistleblower that made possible much of the case against Bank of America that led to–it’s disputed how much is real, but at least and $8 billion recovery from Bank of America, the whistleblower, Mr. O’Donnell, got $57 million. Alright?

Now, you might have thought that that would lead to a big press conference in which people thanked him for his work, first in trying to block the frauds at Countrywide and Bank of America, and then, when that didn’t succeed, telling the government about the frauds and aiding them in the cases and achieving the only really litigation success they’ve had against a senior Bank of America official. But, of course, you’d be wrong.

So when this $57 million payment to the whistleblower was made, the Justice Department made no statements, offered no words of praise, no words of thanks, gave him no awards, and didn’t use the opportunity to call on other whistleblowers to come forward, and to promise that this time the Justice Department would actually follow up in the prosecutions.

And, of course, all this is happening just after the terrible embarrassment of President Obama supporting the passage of the omnibus bill with the bailout giveaway to Citi that was drafted by Citi and was lobbied for both by city and JPMorgan, Jamie Dimon personally. So it was the perfect opportunity, as a PR matter, to put the administration on the side of the angels and against the frauds. But we have the consistent pattern–not only are there zero prosecutions–even today the Obama administration never misses an opportunity to miss an opportunity to hold the banksters accountable.

DESVARIEUX: Bill, you mentioned the media not really paying attention to this bigger award to O’Donnell. But haven’t they gone even further to try to bring his credibility down?

BLACK: Well, they did originally. The media actually did cover the award, and the media actually asked the Justice Department for comment, and they said, ah, no comment, in all of this. They couldn’t even muster during these holidays a thank you for the person who suffered so much by bringing the truth in. So, yes, The New York Times previously, two years ago, when Mr. O’Donnell’s identity first became known.

So, again, what The New York Times knew at that point is that O’Donnell, when he was an executive with Countrywide, had tried to prevent these frauds, warned against them, tried to get the Bank of America, which acquired Countrywide, to stop the frauds. All of this failed, and then he’d gone to the Justice Department. So he is obviously the hero in the piece.

But the article had only snide words, basically a smear–this is The New York Times two years ago–of O’Donnell. This time around, at least they didn’t smear him, but they didn’t have any particularly good words of their own either. And as I said, the real story is the administration, and that includes the president, the Department of Justice, and the top regulator, Mr. Curry of the Office of the Comptroller of the Currency. None of these people could be bothered to thank the whistleblower. None of them could be bothered to take the opportunity, with all this publicity potential, to ask other whistleblowers to come forward. And, of course, none of them made the promise that they would actually change and prosecute people.

DESVARIEUX: Alright. Bill Black, always a pleasure having you on.

BLACK: Thank you.

DESVARIEUX: And 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.

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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.