What will it take for real finance reform – next “big one” will be much worse

Story Transcript

PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. I’m Paul Jay in Washington, and joining us again from Amherst, Massachusetts, from the PERI institute, is Bill Black. William K. Black is a professor at the University of Missouri-Kansas City and author of the book The Best Way to Rob a Bank Is to Own One. Thanks for joining us again, Bill.

BLACK: Thank you.

JAY: So just to sum all this up, let me ask you this. In the very beginning you called this system parasitic; you said if you want to understand the relationship of Wall Street to Main Street, they are like leeches. Have we gotten to the point where the financial system is so parasitic and the political system, at least at levels of the leadership of the two main political parties, are so entwined in this parasitism that we really need something else? And what would that something else be? In other words, what would ordinary people watching this, what should it be spent thinking about?

BLACK: Well, they should be thinking this is crony capitalism. And so a solution can’t just look at finance; it has to look at the involvement of finance and government. And this is about to get much worse because of the Supreme Court decision that now says that corporations are going to be able to do unlimited political contributions because they’re really people.

JAY: Unlimited advertising.

BLACK: Limiting political contributions and advertising are going to be authorized under this same logic [sic]. And that is going to mean that—for example, the House Finance Committee now has 71 members, because both political parties, whenever they have a freshmen elected from a tough district, try to get them put on the Finance Committee, because they know that if they get there it’s a gold mine, guaranteed, of political contributions that will increase their chances of reelection. Well, that’s sick. So here’s a couple of modest proposals. If corporations are really just like people, then we should have a three-strikes law for corporations: three strikes and you’re out of business, in terms of felonies or violations of law. By the way, we’re not going to have many major corporations around more than about 15 years if we adopt that standard. How about this one? Minorities in Florida can’t vote ever again if they have a felony conviction. Their civil rights in a political sense are removed. So [if] you violate the laws of corporation, you can no longer make any ads, you can no longer make any political contributions. Think they’ll go for that?

JAY: That would end a lot of television channels’ revenue streams pretty quickly.

BLACK: Yeah, that would be terrible, wouldn’t it?

JAY: So at the level of the political parties, as people become more educated about these issues and the kind of candidates they might support in the primaries, what should they be looking for in terms of candidates that might actually be willing to take on this parasitism?

BLACK: This is the fundamental thing. We knew as soon as we saw [Lawrence] Summers and [Timothy] Geithner that the finance side of the administration would be a disaster, but we hoped that the political side would be preeminent and say, you know, (A) this is substantively wrong to continue to get into bed with finance, and (B) its terrible politics. The Democratic Party will be crushed if it does this. Well, the political side has failed to get involved. So, you know, this is one of those rare things where doing the right thing is really good politics. So support candidates that will actually do the right thing. And if the Obama administration continues this way, it’s going to have a record disaster in the midterm elections. There is going to be a massive loss of Democratic seats. My phrase always is: what would it take if the greatest economic catastrophe in 80 years, if an epidemic of fraud by your top elites, if the corruption of your most senior professionals in accounting, law, appraisal, rating agencies, isn’t enough to make you fundamentally reconsider and say we are headed along a disastrous path, what will it take? Because the next big one will be even worse.

JAY: Thanks again for joining us, Bill. And thank you for joining us on The Real News Network. And if you want to help The Real News’ financial situation, don’t forget you can text 85944, just put the word “news”, and you’ll be sending us five bucks. Thanks again.

William K. Black

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.