SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
Obama's Financial Regulation Plan Doomed to Fail
According to Law and Economics, Professor William K. Black, You Need a Criminal Mind to Take Down a Criminal Entrerprise
Jul 02, 2009
President
Obama's financial regulation proposal is doomed to fail.
Why?
Because
it was developed by people who don't believe in regulation.
That's
the take of William K. Black, a profess of law and economics at the University
of Missouri-Kansas City.
Black
believes that the only way to prevent future financial meltdowns is to have
in place a regulatory system and prosecutorial system developed by people with
a proven track record.
People
like Michael Patriarca. And William Black
First
thing Black would do?
Implant
at every financial regulator an office of the chief criminologist.
"If
you look at the largest single area of losses in banks - it has been control
fraud," Black told Corporate Crime Reporter last week. "But
of course, institutionally, none of these financial regulatory agencies are
set up well to even spot or stop these kinds of fraud. They don't have
the training, they don't have the background, they don't have institutional
structures that focus on the criminality."
"So,
you would institutionalize. You put in place someone who knows about fraud,
the literature about crime and criminology. They need to think, before they
deregulate, whether they are producing what we refer to as a criminogenic environment
- an environment that is going to produce widespread crime."
There
are currently nineteen banks that the government says are too big to fail. Black
would reduce that number to zero - by shrinking their size.
He
would also beef up financial enforcement units across the country - and
rehire the 500 FBI white collar agents who were shifted over to work national
security cases post-911.
And
he would send them undercover into troubled banks.
"Once
you get in, you are going to discover literally on day one that the underwriting
has been removed," Black said. "You are going to discover no later
than day two that the internal controls are gone and that indeed people get
in trouble for saying no to bad loans. By week one, you will have identified
several people who used to work at six other big places. That's how this
industry worked. And they will tell you the names - oh yeah, Fred is the
disastrous CFO over there."
Black
would also turn the executive compensation system on hits head.
"You
say - you can't get paid except on the basis of long term performance,"
Black said. "You can get your $200,000 a year. And then you show us you
produce the long term performance. And you show us that the long term performance
gains were due to your efforts, as opposed to everyone in the same industry
producing the same results."
[For
a complete transcript of the Interview with William K. Black, see 23 Corporate
Crime Reporter 26(13), June 29, 2009, print edition
only.]
An Unconstitutional Rampage
Trump and Musk are on an unconstitutional rampage, aiming for virtually every corner of the federal government. These two right-wing billionaires are targeting nurses, scientists, teachers, daycare providers, judges, veterans, air traffic controllers, and nuclear safety inspectors. No one is safe. The food stamps program, Social Security, Medicare, and Medicaid are next. It’s an unprecedented disaster and a five-alarm fire, but there will be a reckoning. The people did not vote for this. The American people do not want this dystopian hellscape that hides behind claims of “efficiency.” Still, in reality, it is all a giveaway to corporate interests and the libertarian dreams of far-right oligarchs like Musk. Common Dreams is playing a vital role by reporting day and night on this orgy of corruption and greed, as well as what everyday people can do to organize and fight back. As a people-powered nonprofit news outlet, we cover issues the corporate media never will, but we can only continue with our readers’ support. |
Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
Russell Mokhiber
Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter. He is also founder of singlepayeraction.org, and editor of the website Morgan County USA.
President
Obama's financial regulation proposal is doomed to fail.
Why?
Because
it was developed by people who don't believe in regulation.
That's
the take of William K. Black, a profess of law and economics at the University
of Missouri-Kansas City.
Black
believes that the only way to prevent future financial meltdowns is to have
in place a regulatory system and prosecutorial system developed by people with
a proven track record.
People
like Michael Patriarca. And William Black
First
thing Black would do?
Implant
at every financial regulator an office of the chief criminologist.
"If
you look at the largest single area of losses in banks - it has been control
fraud," Black told Corporate Crime Reporter last week. "But
of course, institutionally, none of these financial regulatory agencies are
set up well to even spot or stop these kinds of fraud. They don't have
the training, they don't have the background, they don't have institutional
structures that focus on the criminality."
"So,
you would institutionalize. You put in place someone who knows about fraud,
the literature about crime and criminology. They need to think, before they
deregulate, whether they are producing what we refer to as a criminogenic environment
- an environment that is going to produce widespread crime."
There
are currently nineteen banks that the government says are too big to fail. Black
would reduce that number to zero - by shrinking their size.
He
would also beef up financial enforcement units across the country - and
rehire the 500 FBI white collar agents who were shifted over to work national
security cases post-911.
And
he would send them undercover into troubled banks.
"Once
you get in, you are going to discover literally on day one that the underwriting
has been removed," Black said. "You are going to discover no later
than day two that the internal controls are gone and that indeed people get
in trouble for saying no to bad loans. By week one, you will have identified
several people who used to work at six other big places. That's how this
industry worked. And they will tell you the names - oh yeah, Fred is the
disastrous CFO over there."
Black
would also turn the executive compensation system on hits head.
"You
say - you can't get paid except on the basis of long term performance,"
Black said. "You can get your $200,000 a year. And then you show us you
produce the long term performance. And you show us that the long term performance
gains were due to your efforts, as opposed to everyone in the same industry
producing the same results."
[For
a complete transcript of the Interview with William K. Black, see 23 Corporate
Crime Reporter 26(13), June 29, 2009, print edition
only.]
Russell Mokhiber
Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter. He is also founder of singlepayeraction.org, and editor of the website Morgan County USA.
President
Obama's financial regulation proposal is doomed to fail.
Why?
Because
it was developed by people who don't believe in regulation.
That's
the take of William K. Black, a profess of law and economics at the University
of Missouri-Kansas City.
Black
believes that the only way to prevent future financial meltdowns is to have
in place a regulatory system and prosecutorial system developed by people with
a proven track record.
People
like Michael Patriarca. And William Black
First
thing Black would do?
Implant
at every financial regulator an office of the chief criminologist.
"If
you look at the largest single area of losses in banks - it has been control
fraud," Black told Corporate Crime Reporter last week. "But
of course, institutionally, none of these financial regulatory agencies are
set up well to even spot or stop these kinds of fraud. They don't have
the training, they don't have the background, they don't have institutional
structures that focus on the criminality."
"So,
you would institutionalize. You put in place someone who knows about fraud,
the literature about crime and criminology. They need to think, before they
deregulate, whether they are producing what we refer to as a criminogenic environment
- an environment that is going to produce widespread crime."
There
are currently nineteen banks that the government says are too big to fail. Black
would reduce that number to zero - by shrinking their size.
He
would also beef up financial enforcement units across the country - and
rehire the 500 FBI white collar agents who were shifted over to work national
security cases post-911.
And
he would send them undercover into troubled banks.
"Once
you get in, you are going to discover literally on day one that the underwriting
has been removed," Black said. "You are going to discover no later
than day two that the internal controls are gone and that indeed people get
in trouble for saying no to bad loans. By week one, you will have identified
several people who used to work at six other big places. That's how this
industry worked. And they will tell you the names - oh yeah, Fred is the
disastrous CFO over there."
Black
would also turn the executive compensation system on hits head.
"You
say - you can't get paid except on the basis of long term performance,"
Black said. "You can get your $200,000 a year. And then you show us you
produce the long term performance. And you show us that the long term performance
gains were due to your efforts, as opposed to everyone in the same industry
producing the same results."
[For
a complete transcript of the Interview with William K. Black, see 23 Corporate
Crime Reporter 26(13), June 29, 2009, print edition
only.]
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.