Lehman's Liar's Loans and Other Cons

[Crewleader]

Weekend Edition
April 23 - 25, 2010

By Mike Whitney

William Black Charges "Massive, Fraudulent Transactions"

Prof. William Black submitted a 24-page report on the Lehman bankruptcy to the House Committee on Financial Services on Tuesday. It is the best analysis of the underlying causes of the financial crisis to date. Black, who is a former government regulator and white-collar criminologist, shows that the crisis was not an unavoidable disaster, as Wall Street apologists suggest, but the result of large-scale fraud perpetrated by financial institutions like Lehman Brothers. The incidents of fraud were numerous, blatant, extreme and premeditated. In making his case against Lehman, Black exposes the omissions, failures and negligence of the primary regulators, particularly the Fed. Had the Fed not been derelict in its duties, the cyclical downturn would not have turned into a near-Depression.

"Lehman’s failure is a story in large part of fraud," Black said in his testimony before the House. "Lehman was the leading purveyor of liars’ loans in the world. For most of this decade, studies of liars’ loans show incidence of fraud of 90per cent. ... If you want to know why we have a global crisis, in large part it is before you."

As the Litigation Director of the Federal Home Loan Bank Board during the S&L crisis, Black knows what he's talking about. He was so dogged in his investigation that Charles Keating "directed his chief political fixer that his ‘Highest Priority’ was to ‘Get Black … Kill him Dead.’” But Black didn't buckle or give ground. He shrugged off the threats and continued to expose unsound practices and illegal activity. His team faced the same challenges that regulators face today, "elite frauds" by powerful institutions that wield tremendous political power.

Black's statement cuts through much of the ideological claptrap surrounding the crisis and shows that deregulation is really the decriminalization of fraud. The notion that the market can "regulate itself" has been jettisoned altogether and public support for reform is gaining momentum.

http://www.counterpunch.org/whitney04232010.html

[Angry Dragon]

1. We need justice

Everyone affected should bring a civil suit.