“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:
grow like crazy
by making really, really crappy loans but at a premium yield (yield just means ‘interest rate’)
while employing extreme leverage, and
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.