Interview with William Black

Written By: - Date published: 7:15 am, May 15th, 2016 - 30 comments
Categories: Economy - Tags:

Long time, regular commenter at The Standard, Travellerev, recently interviewed William Black. Travellev reports . . .
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“When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.” Frédéric Bastiat

 

About three weeks ago I was in the position to take part in an interview with one of my absolute global heroes. William Black, a renowned and successful financial fraud investigator in the USA and currently on the team of Bernie Sanders as his adviser in matters concerning Wall street and the international financial system, has been speaking out around the world against the current systemic fraud in our banking system and the lack of oversight and persecution of fraud!

William Black consented to a rare interview with a young local radio host after I put him on to William black and the host was generous enough to let me partake in the second half.

William Black has a long illustrious career as a financial investigator and as a banker hunter he has been incredibly successful with some 1000 convictions leading to jail time for bankers involved in financial fraud.

He also wrote a book which deserves the attention of everybody interested in the financial system. It is called: The Best Way to Rob a Bank Is To Own One

William Black and his investigative team developed a concept which is used to describe what happens when people in positions of power use the tools handed to them to corrupt the system they have control over. They termed it Control Fraud and this is what it means:

Control fraud occurs when a trusted person in a high position of responsibility in a company, corporation, or state subverts the organization and engages in extensive fraud for personal gain. The term Control fraud was coined by William K. Black to refer both to the acts of fraud and to the individuals who commit them. Wikipedia

William Black in several articles also wrote in detail how banks, most notably Merrill Lynch, used a beautiful model of fraud, starting as early 1990 (Before John Key started to work for them in ’95) all the way into the noughties when the bank in 2008 spectacularly collapsed under the weight of the derivatives it had on its books.

He describes the system as follows:

If you’re a lender there’s an easy recipe for maximizing fake accounting income. And it goes like this. You need four ingredients:

  1. grow like crazy

  2. by making really, really crappy loans but at a premium yield (yield just means ‘interest rate’)

  3. while employing extreme leverage, and

  4. while setting aside only the most trivial reserves or allowances for the inevitable losses this kind of behavior produces.

The trick is to do it quick and fast and get out before it collapses and it is only the top executives who get incredibly rich while the rest of the bank collapses.

So without further ado here is the interview. It starts at the second half of the two hour program but the first half is also available if you have the time. It is well worth listening to.

 

 

 

30 comments on “Interview with William Black ”

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  1. save nz 1
    15 May 2016 at 7:51 am

    Great post. If American wants to ‘great great’ again they need to elect Bernie and get his fraud advisers in to root out corruption in their system. American corporations like banks and wall st and Kleptocrats are stealing from their own people and their own future.

    The West won the cold war because unlike USSR and others they put more effort into corruption controls and having a free media so ordinary people felt safe within the system. Unfortunately a fair and balanced system under extreme neoliberalism has ended.

  2. Nic the NZer 2
    15 May 2016 at 8:42 am

    Bill Black is well worth listening to.

    The similarities with Dick Smith collapse are relevant and striking (though its not clear fraud was involved there or not). Prior to listing DSE ran a strategy of selling down the inventory and not replacing it. This caused the company to report significant profits before listing on the share market. Sharemarket investors who brought in overpaid for shares and needed to recapitalise the inventory for the business to continue operating. If there was any fraud it was in the accounts put with the listing which didnt make it clear that the business carried little stock. At this time the listing company sold out before the problems became evident and locking in their profits before the share price collapsed. This kind of thing drives investors out of the Sharemarket no doubt.

  3. travellerev 3
    15 May 2016 at 8:47 am

    Nic the NZer, the same thing happened in Holland with the V&D chain and in England with the BHS chain. Both some 11.000 people lost their jobs.

    • dukeofurl 3.1
      15 May 2016 at 8:55 am

      Its going to be repeated here with the ‘media merger’, create a big candy floss which is sold to the public and collapses soon after.

      That was supposed to be Weldons job for Mediaworks too, but they put the cart ( someone who could do a stock exchange float) before the horse(growing the audience with successful programs).

      • dukeofurl 3.1.1
        15 May 2016 at 9:31 am

        Just thinking about TV companies like Mediaworks, they buy programs/series etc and they treated as ‘assets’ and normally once they are screened, they lose value very quickly, maybe a rerun a year later etc.

        But the books can be cooked , by not writing off programs that have been screened or more often than you would think programs bought but not screened.
        News shows are the worst sort of program, high cost and zero value the next day.
        But of course crap reality shows can be kept on the books for longer, until it comes share float time and the company can be ‘valued’ by its assets.

        You can see how the ‘accounting value’ can be a complete fake

        • Gristle 3.1.1.1
          15 May 2016 at 11:25 am

          From memory, most programmes were written down to 0 or at most 10% after the first play: even on a 3 play deal.

          The issue can be over output deals so you build up a library of material that you do not have either the intention of screening or physically don’t have airtime to put on before the license expires. And of course this material may represent 20% of an output deal. So you would be courting trouble if you put 20% value on this junk.

      • RedBaronCV 3.1.2
        15 May 2016 at 10:20 am

        Is there a strategy to stop this?
        Wouldn’t it be great to have a shareholder AGM that voted for a wage policy with strict upper level limits enabling the employment of more people at a reasonable wage, invite the staff to put up and vote for a couple of the board of directors – it would be great to invest in an ethical organization with a small steady return.

        • Colonial Viper 3.1.2.1
          15 May 2016 at 1:04 pm

          Yes, we’re going to find a corporate shareholder meeting where the 1% minor shareholders alongside the 0.01% billion dollar hedge fund managers are going to suddenly start advocating to give away the value of their investment to the little people slaving away for them.

        • Nic the NZer 3.1.2.2
          16 May 2016 at 8:19 am

          In some places it used to be that the top execs and directors in certain industries based on trust (banking, accounting and legal) would have unlimited liability for their firms. This seemed to discourage a lot of this as the execs would keep an eye on how each was doing business.

          I think that should be brought back as a concept.

  4. Colonial Viper 4
    15 May 2016 at 10:15 am

    Awesome work Travellerev.

    Bill Black, an investigative veteran of the 1980s Savings and Loans scandal, makes it very clear how the subprime crisis was brought about and how the roots of the GFC were sown. And especially how the authorities have simply walked away from the problem.

    In the US Black makes a simple point: the financial system is regulated by authorities and law enforcement who do not believe in regulation or enforcement.

    Thanks again fo contributing this.

  5. Pat 5
    15 May 2016 at 10:27 am

    Well……

  6. stunnedmullet 6
    15 May 2016 at 12:24 pm

    Looking forward to more of your posts here Travellereve.

  7. adam 7
    15 May 2016 at 1:36 pm

    Nice, interview and good job.

    What a nice guy.

  8. whateva next? 8
    15 May 2016 at 2:15 pm

    Many thanks Travellerev, so good to hear someone with knowledge AND integrity explaining this stuff

  9. Penny Bright 9
    15 May 2016 at 2:23 pm

    Well done The Standard, Ev, Vinny and Bill Black!

    Vinny Eastwood is getting some internationally significant guests on his show, and they’re being given more than a short ‘sound bite’.

    I’d like to give Ev full credit for her years of research on our ex-Wall Street banker Prime Minister John Key, and look forward to a LOT more people paying attention to what she is saying.

    And I’d also like to give full credit to Vinny Eastwood to providing an ongoing opportunity for those active on the issues to have a chance to explain WHY we are doing what we are doing.

    That’s what ‘freedom of expression’ is all about – the opportunity to put forward a view that some may agree to disagree with.

    But where we don’t choose to agree – let’s keep it civilised.

    Debate the ISSUES – or agree to disagree?

    Hope you are given more opportunities to post here Ev!

    Cheers!

    Penny Bright
    2016 Auckland Mayoral candidate.

  10. UglyTruth 10
    15 May 2016 at 4:55 pm

    Great interview, Travellerev. It’s not hard to make the connection from Libor to the City of London to the Crown. Key’s history in the banking industry shows him to be ideologically aligned with these financial predators.

    Interesting that Labour UK has recently has recently been conducting a witch-hunt over anti-semitism, with Londoner Ken Livingston very much in the limelight. Big money families like the Rothschilds having a fairly significant interest (if you’ll pardon the pun) in the operations of the City of London and in the use of the language of anti-semitism as a reaction to criticism of Zionism.

  11. fender 11
    15 May 2016 at 7:27 pm

    Thank-you Travellerev for posting this. I found that highly educational and wish every voter in the country were made aware of how our PM fits into the puzzle.

    I’ve zero interest in reading the PM’s book, but it does seem odd that there’s no mention of derivatives in it. Surely he’s proud of his of his earlier “work”.

    • travellerev 11.1
      16 May 2016 at 7:28 am

      Fender,

      What is interesting is that the NZ Herald took 5 pages of the online version of an article which appeared in July 2008 of their website. That was the part of the “Unauthorized” biography article written among others by Eugene Bingham.
      The pages they took off were the pages in which they detailed his banking career.

      Maybe in a next post I can bring those pages back up because when I found the pages missing I went to the library and made a hard copy for future reference.

      It may be coincidence but they did so after I send them this article. An open letter to Eugene Bingham or would you have voted for John Key if you had known.

  12. Philj 12
    16 May 2016 at 12:37 pm

    Well done and thankyou Travelrev. We have to tell the whole story to the public , somehow. Sigh. Keep up the good work.

      • Nic the NZer 12.1.1
        18 May 2016 at 9:09 pm

        Think you should read through Bill Blacks article about 10 myths of neoclassical economics. It explains his position on deficits (and therefore govt debt) which was a question he didnt find time to answer during your interview properly.

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