Bill Black: A “Jihadist” Against the Banks?

Yves here. You cannot make this stuff up. This Real News Network segment features Bill Black discussing, based on his first-hand experience of having the Department of Justice attempting to quash Black’s expert witness testimony in a fraud case because Black is a “jihadist” against banks. Since when is calling out fraud tantamount to conducting a religious war? Only if you are a devout adherent of cult of elite finance.

I had lunch with a prominent journalist yesterday who told me how much more difficult it has become over time to do intrepid reporting about major financial firms. Led by the major PR firms, they fight tooth an nail over every point in a story, even inconsequential ones. This is similar to the “take no prisoners” strategy banks adopt in regulatory fights, where every issue is contested, so as to establish the baseline than any change that is even slightly unfavorable to their interest is deemed to be an offense. The intent is not just to wear down the other side, but to get the ones that are already captured or are co-optable to internalize that viewpoint. As this Real News Network story demonstrates, that approach appears to have succeeded in spades at the Department of Justice.

I hope readers will circulate this Real News Network segment on Bill Black widely.

HARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to the Real News Network. I’m Sharmini Peries coming to you from Baltimore.

Also welcome to the Bill Black report. As you know, Bill is an associate professor of economics and law at the University of Missouri Kansas City. He’s a white collar criminologist and former financial regulator, and author of The Best Way to Rob a Bank Is To Own One. Bill, thank you so much for joining us today.

BILL BLACK: Good to be back.

PERIES: So Bill, give us a sense of what you have in your bank vault today.

BLACK: Ah. Well, I have officially arrived. I flew, getting up at 3:00 AM, to Miami immediately after giving my last exam for the semester very late the night before, to do one of my pro bono acts of testifying as an expert witness in a criminal case in which the Justice Department is going after the fraud mice and gerbils instead of the elite criminals. And I say I’ve officially arrived because on the record, the assistant U.S. attorney handling the case said that the court shouldn’t listen to me because I was waging, quote, “jihad”, unquote, against the–.

PERIES: That must be because of your beard, Bill.

BLACK: Well, maybe it’s because I grew up in Dearborn, Michigan, which has one of the largest populations of Arab-Americans in America, and frequently appear on Al Jazeera. It was particularly nasty because it was in fact I think the day that morning where they’d confirmed the San Bernardino attack as a terrorist attack. So you know, it was designed to be prejudicial and to discredit the folks. But this is how far the Justice Department has fallen. Not only will they not prosecute the elite bank frauds that drove the crisis, but anyone that wants them to do their job they’re treating as a terrorist.

And this is now the third of these pro bono gigs that I’ve taken on. And I can now confirm that it is a consistent pattern. And it’s truly amazing. It isn’t simply that they’re not prosecuting the elite bankers whose frauds caused this crisis. They are actually acting as a collection agency, they being the Justice Department, for the absolute worst fraudulent institutions. And they are prosecuting people and putting hundreds of small-time folks in prison on the basis of thoroughly false theories of the case in which they, the Justice Department, go in as a matter of routine. They claim that the institutions which are the largest criminal enterprises in the world–so in the case I was just in in Miami, was JP Morgan and Countrywide. Two of the largest criminal enterprises in the world. And we know criminal enterprises, because the United States of America has said that what they were doing was fraudulent front to back. How does the Justice Department present their case? Well, they put on the absolute lowest people in the food chain. Underwriters. And they ask them, well, you know, if you were being–you knew you were being given false information, would you have approved a loan? Well, you know, what underwriter without a grant of immunity from prosecution is going to say anything other than, well, of course I would have said no.

But we know at JP Morgan, and we know at Countrywide, and we know because the United States of America has investigated and has filed formal pleadings that this underwriting was completely phony. The Justice Department also supports [liar’s] loans, says that it was perfectly okay and that they were made prudently by places like Countrywide and JP Morgan, even though we know that they had fraud incidents of up to 90 percent. And even though we know Countrywide, for example, did internal reviews that found massive fraud in their liar’s loans, and in response to that what did they do? They adopted a more extreme version of liar’s loans.

And so the Justice Department presents this case in which the bankers that the United States of America says are the worst frauds that completely lead this fraudulent pattern, and where we’ve actually banned liar’s loans because A, they’re inherently fraudulent, and B, they’re inherently anti-consumer, the Justice Department reverses all of that, says the bankers were great. They’re the poor, innocent victims of these clever, you know, hairdressers and such. Or small-time property developers. And proceeds to put hundreds of small-time folks in prison while completely ignoring, as we’ve seen, the elites.

It’s just a staggering abuse, especially for a group that calls itself a Justice Department.

PERIES: And just before Eric Holder left office last year, he actually bragged about having settled for $16 billion with the Bank of America. What kind of breakdown does that settlement has, or you would like to expose here?

BLACK: Well, I can tell you from having been on both sides of the negotiations, it’s easy to get when you’re negotiating with a large bank what sounds like a very large settlement.

Now, the Justice Department played games with the numbers as well. They took all kinds of transactions that the banks were going to do anyway to restructure loans, and they claimed that those things that the bank was actually doing to maximize profits or minimize losses were part of the settlement. So about $5 billion of that is phony money.

But put that aside. Every big bank goes into these negotiations knowing one thing for sure, and that is the Justice Department will never impose a fine significant enough to cause the slightest chance that the bank might get into economic trouble. Because that’s what the Justice Department is scared to death of. And therefore all of these settlements relative to the size of the bank are trivial. And the proof is in the pudding in virtually every case. And I say virtually just to protect myself. In every case that I’ve looked at, the stock price rose when the settlement was announced.

PERIES: Shame. Bill, I thank you so much for joining us today and giving us this brief report, which we hope you continue to do on the Real News Network and look forward to having you back.

BLACK: A network that apparently supports people waging jihad against corrupt bankers.

PERIES: Yeah. Thanks a lot, Bill.

BLACK: Anything I can do for the cause.

PERIES: And thank you for joining us on the Real News Networ

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  1. Skippy

    Correct me if I’m wrong, but, Bill has never had a problem with banks…. its just whom is running them and the way they go about it….

    Skippy… has neoliberalism digressed to the point that calling out corruption is tantamount to terrorism… e.g. screwing with atomatistic liberty and freedom – ?????

    1. James Levy

      I start to wonder if the ethnic, regional, and class background of the S&L crooks failed to immunize them against the prosecutions that too many in today’s financial sector so richly deserve. Black is today attacking an elite sacred cow, one from which on rare occasion a “bad apple” may be plucked but which overall must be addressed with respect and an overarching tone of respectful deference. Today, a postman’s son like Blankfein, if rich enough, can skate above the law. I’m not so sure if that was as true in 1989. Any thoughts, folks?

      1. John Zelnicker

        Interesting thought, James. When Bill talks or writes about his work during the S & L crisis, he frequently refers to Continental Illinois, banks in Orange County, California, and Texas S & L’s as being the worst of the bunch, but I don’t recall references to Wall St. firms.

        I think there are several reasons why he and his colleagues were able to successfully prosecute the S & L bandits which distinguish them from the Wall St. banksters. First, the S & L’s were traditionally local institutions and were heavily regulated. They did not have the ability to make the kinds of investments that eventually got them into trouble. They were also very limited in their geographical reach. Once they were deregulated, especially interest rates, that all changed. However, they didn’t have the opportunity to gain the size, power, and influence that Wall St. had in the New York-Washington nexus, although Charles Keating tried mightily to do so.

        In addition, S & L’s were not as deeply intertwined in the economy, other than locally, as the big banks. Thus, there was little concern that bringing them down would cause widespread economic dislocations.

        Another issue is that the spread of the neo-liberal paradigm was in its early stages in the ’80’s and the intense financialization of our economy was just beginning to gain speed. (Financialization started much earlier, but regulations kept it from spreading as fast as it has since then.)

        There are other reasons for the success of the S & L prosecutions, but I think these are the main ones (apart from the the banks being sacred cows).

      2. polecat

        the Banksters…the’re richer than you,…and me…and just about everyone else……rich with impunity!

  2. abynormal

    “The corporate system is interconnected and now share a common invested interest, the ability to control through business, the people. It is an inevitable path the parameters set will take the beast down following the easiest way to collective profits, to control the ones that provide them. It is also logical to protect your own, from ones that are shedding light through Art on the grey water they may have stepped into to reach their fullest profit potentials. It is the logical solution to what would be, just business. So the Matrix story albeit written to lift for all the ceiling of what is possible, has inevitably shined a light on the entire path that was chosen and the pre-chosen road ahead that collective corporations were on creating a separate state of politically connected elite and those seeking award through serving them. A natural progression of what was set in place from the beginning. The flaw was in the design of the collective corporate system, globally intertwined now, and immersed in politics, protecting its own, making the question real this time, how to balance the equation.”
    Tom Althouse, The Frowny Face Cow

  3. Jerry Hamrick

    Bill Black is a bright star in the dark world of banks and other similar institutions. His light never dims!

  4. Anders

    I don’t get this. The major financial firms fight those who don’t share their belief in their own perfection, every point tooth and nail. Isn’t that what jihadist do, not permitting any deviant opinions?

    1. TedWa

      You’re right Anders, the banksters are the financial terrorists and them calling Mr Black one, well that’s the pot calling the kettle black. There a pun in there, it should the pot calling the kettle “Mr” Black.

    2. willaim c wesley

      Jihadists kill innocent people to induce terror, this could not be any more inappropriate of a characterization and constitutes the crime of libel in my opinion

  5. JTMcPhee

    Might I offer that the myth of “Justice” has been mythical for a long, long time? As an enforcement attorney with the US EPA, I got to watch both the “Main Justice” and US Attorney’s offices weaken and cheapen and dissipate the effectiveness of criminal prosecutions and even plain old civil-penalty-seeking and (very rare) injunctive actions against corporations and their officers and (more often the “designated indictee” low level functionary) employees.

    We had two laydown cases early in the days when EPA management started to emphasize criminal enforcement (this is early ’80s). One was a fella dumping PCBs in a ditch tributary to the Illionois River in a forest preserve — he left a copy of his invoice with the 55-gallon leaking drums that he had picked up from a major corporation, whose officers should also have been prosecuted even under the “difficult” liabilities of then-existing law, and apparently had no qualms about acknowledging what he had done — small fry, without benefit of Huge Corporate Counsel.

    The other was a Huge Steel And Coke Company on the South Side of Chicago, whose managers both engaged in illegal (then, it was) filling of Lake Calumet to increase their property, dispose of their coke waste, and pump “pollutants and contaminants” supposedly regulated by the Federal Water Pollution Control Act into “waters of the United States.” (One sour joke after another, here.) The vice president who met the investigators tried to route us away from the area where the badness was happening, and the company even positioned and re-positioned strings of train cars to block the crossings of various rail spurs that lay between public access and the sites of the action. Patent violations, intentional, should have been max penalties. The Chicago US Attorney’s office staff declined to prosecute — they would not have even needed an indictment, just an ‘information’ that the assistant could have carried forward from the draft we presented with the criminal litigation referral. This was when the incumbent USA was a corporate silk-stocking attorney. (I should add that the EPA lead field investigator, a former Corps of Engineers employee, was “reluctant” to push on cross-country to get to the locus delicti, and offered to the VP that the violations were “No big deal” and he had seen a lot worse — a kick to the shins did not even shut him up.)

    We called the assistant every day for weeks asking and eventually demanding prosecution, and got our boss to be brave enough to ask for a meeting with the USA himself to ask why no prosecution, eventually got messages from EPA Washington to “tread softly” and from Justice HQ that they were not pursuing these kinds of cases under their current priority protocols. Finally after some press attention, the PCB case went to the courts and the guy went away for 3 years. The other case was “nol-prossed,” “not enough government resources to pursue this” flagrant violation.

    Far as I can tell, it’s always been all corruption, all the time, and the best that us mopes can hope for is that the level of corruption, of what I call “slack,” which is apparently inevitable and also in some senses mandatory to grease the gears of the idiot political-economic machine our species has built, is kept to a tolerable minimum. “We have given you a Republic, if you can keep it…”

    Extra-credit, fun reading: “The Sign And Seal Of Justice,” for anyone needing a morning dose of additional cynicism…

    1. charger01

      I would love the opportunity to sit down and buy you a drink. I worked with several EPA CIDs from 05-11, they said similar things about working on easy – win cases that could never be sold to DoJ…. not sexy enough to boost their careers.

  6. Roquentin

    “You can calculate the worth of a man by the number of his enemies, and the importance of a work of art by the harm that is spoken of it.” – Gustave Flaubert

  7. Vatch

    Along with human overpopulation, religious extremism is one of the greatest threats to the world’s civilizations. It’s sickening that someone would cheapen our language by deliberately misusing the word “jihad”. In the early decades of the Cold War, opportunists would falsely accuse others of being communists. Genuine jihad, like the communism of Stalin and Mao, is truly evil. Improper use of these words makes it harder for people to recognize the real occurrence of jihad and totalitarian communism.

    1. cyclist

      I am far from an expert on Islam, but the meaning of the term jihad has many interpretations. It is the duty of every Muslim to perform jihad, which can mean a spiritual or physical (not necessarily violent) struggle for the cause. So if you are concerned about how words are being used, be careful about ‘genuine jihad’ as being ‘truly evil’. And I say this as one who believes that mankind would be better off without excessive concern over our imaginary friends in the sky.

      1. Vatch

        The word “inquisition” has multiple shades of meaning, and some people think that it is not an evil concept or activity. I disagree with them. As for “jihad”, yes, there are non-violent meanings, and many of those meanings are about the struggle to maintain or spread an intolerant religion. When women have approximate equality with men in Muslim theocracies, and when atheists are no longer executed in those same countries, I might be more open to the possibility that jihad is not evil.

        1. participant-observer-observed

          You need to do some Muslim religion study vs arab culture. Women have had divorce rights in Islam since the beginning, millennia before western women!

          Millions of Muslim women in south, southeast, and north Asia enjoy and exercise plentiful rights.

          1. Vatch

            Under Islamic law, women inherit only half of what men inherit. Polygyny is permitted, but polyandry is not. That’s not what I would call gender equality.

            We’ve all seen reports of rape victims being afraid to report the rape, because they might be prosecuted for adultery. This happens in non-Arab countries such as Pakistan, Iran, and parts of Africa.

            And as I already pointed out, atheists and other heretics are in great danger in Muslim countries.

      2. participant-observer-observed

        Yes, promoting a corruption of an otherwise purely theogical term for spiritual struggle and transformation (in Moslem context) is the most offensive and bigoted albeit grossly ignorant behaviour for this DOJ/govt official/proxy consultant.

        A formal complaint should be registered here if not a defamation lawsuit. This language is stunning!

  8. Gabriel

    In re Yves above,

    I had lunch with a prominent journalist yesterday who told me how much more difficult it has become over time to do intrepid reporting about major financial firms. Led by the major PR firms, they fight tooth an nail over every point in a story, even inconsequential ones.

    see also Mark Ames piece on how privately-retained lawyers were able to defeat Seymour Hersh where state intelligence agencies had failed:

    For one thing, the article’s language was unusually cautious and dull for a Hersh scoop. As New York magazine quipped,

    ‘[T]he general reaction has been a big yawn.’

    “I expected a lot more explosive stuff,” commented a former G. & W. executive. The reason was pretty straightforward: unlike Hersh’s stories going after the CIA and the military, the Times was far more afraid, and careful, of the consequences of taking on a powerful private company (Gulf & Western) and getting sued out of existence. Unlike Hersh’s muckraking stories about illegal CIA spying and military massacres, the Times saddled Hersh with a team of editors and lawyers to vet his reporting, sucking the life out of the piece until it was almost unreadable. Among other things, the Times cut out all the colorful anonymous quotes that made his muckraking bombshells on the CIA (and more recently, on the Osama Bin Laden killing) such memorable reads.

    Why? Again, because legally, you can get away with saying much more about government, spy agency, and military abuses without worrying about the legal consequences than you can about private corporations. And the flipside: private corporations have much more legal leeway to go vicious and dirty at a journalist and a publication than the government, which is constrained by the Constitution. It’s one of the benefits of contracting government work out to private contractors and agencies — they can legally get away with doing some of the dirty work that the government is barred from doing.

    (Pretty sure this piece pre-Pando locks, but will unlock if this just doesn’t show up for me)

  9. washunate

    Since when is calling out fraud tantamount to conducting a religious war?

    That’s an interesting literal question in addition to its rhetorical nature. Clearly fraud is a dirty word today, something not to be mentioned in polite company, yet it wasn’t always like that. Somewhere there in the 1990s the post-Bretton Woods international arrangement collapsed, and US officials decided secrecy and criminality was a superior strategy to transparency and reform. By the early 2000s, fraud was openly tolerated – even encouraged – by the highest levels of government.

    And now here we are, more than a decade after even the conservative FBI called fraud an epidemic in open Congressional testimony, and most prosecutors, law enforcement agencies, regulators, academic economists, and other highly paid public figures who have a responsibility to the public good refuse to even utter the word. Which of course is why Black is such a dangerous zealot. He is a terrorist in the contemporary neoliberal definition of the word, somebody acting against the interests of the prevailing power structure.

    Which, for me at least, begs one particularly interesting question. Why aren’t there hordes of leftist intellectuals out there being accused of waging jihad against the banks? Fraudulent governance is the moral issue of our time, the common denominator of policy failure across a variety of substantive issues.

    1. different clue

      Because maybe the leftist intellectuals can be ignored in a way that Black can’t be ignored.

    2. perpetualWAR

      I was told by a prominent foreclosure defense attorney that the superior court judge forbid her using the word “fraud.” She said “Your Honor, how would you like me to describe this cause of action?”

  10. flora

    “I was waging, quote, jihad, unquote, against the–.”

    Interesting the U.S. attorney didn’t use the word ‘crusade’, as in ‘I was waging, quote, crusade, unquote, against the–.’
    Gosh, you don’t suppose the U.S. attorney was trying to prejudice the court’s opinion of Prof. Black?
    No that couldn’t be what was happening. /s

  11. Rory

    In case Bill Black or someone else knowledgeable is following this comment thread, I’d like to know how the judge ruled on the prosecutor’s request not to let Mr. Black testify. The interview doesn’t seem to say.

  12. Chauncey Gardiner

    If this wasn’t a serious matter, and that the trial transcript will presumably become part of the public record, a US attorney claiming that Bill Black is a “Jihadist”?!… would be very, very funny. But IMO this choice of language was coldly intentional and likely emanated from current or former senior officials at the DoJ, if not outside the department. I believe it reflects the level of co-option of our public employees and legislators by a small segment of the population. This particularly chilling episode reminded me of Stockholm syndrome.

    The tools the perps have used to achieve their ends are now well known. The question is what can be done about it to restore the rule of law?

    A fish rots from the head down, and only one presidential candidate has said: “Wall Street today has enormous economic and political power. Their business model is Greed and Fraud. And for the sake of our economy, the major banks must be broken up.” —Senator Bernie Sanders; November 15, 2015 Democratic debate

    1. different clue

      It may also be for putting Black on future no-fly, no-train, no-drive lists. After all, if he is a certified jihadist . . . because the DoJ says so . . . . then it could well be legal at some future point to guantanamize him. To counter the jihadi threat.

  13. steelhead23

    Perhaps we are looking at this from the wrong frame. First, let me say that the view that Dr. Black is a jihadist waging war on the banks is a deflection. Having read a fair bit of his work, his real target is this nation’s financial regulators and prosecutors. Hence, the DOJ was painting him as a warrior because he has in fact routinely and regularly attacked their fecklessness. My next thought is that perhaps Dr. Black is winning if we take as truth M. Gandhi’s famous quote: ““First they ignore you, then they ridicule you, then they fight you, and then you win.” It looks like he’s got their attention and they are clearly ridiculing him – perhaps we are edging closer to winning – getting the DOJ to switch sides. I encourage Dr. Black to keep it up – and if time allows, turn up the volume.

    1. participant-observer-observed

      Insofar as jihad means moral or ethical struggle, Black’s relentless pursuit of justice is one we need more of; traditionally Islamic theology also rejects usury.

  14. Deloss Brown

    This is so disheartening and disgraceful–even though I’m very grateful to Yves for publishing it and keeping us informed. I dropped everything I was doing to send letters to Lynch, my senators Schumer and Gillibrand, Warren, Sanders and Clinton, and the President. Perhaps if they all understand that we are not as uninformed as they’d like, they will perform their jobs. I hear cries of “Fat chance!” But these are the people who are supposed to listen to us, unlike the collection of candidates who appeared in the debate last night. I have an idea for a new reality show, “Inmates of a Psychiatric Ward Run for President.”

    1. participant-observer-observed


      Ralph Nader often explains how easy it is to get politicians and officials on the record at their public events when they are home in their districts.

  15. Paul Tioxon

    You’d think that guys with names like “Machine Gun Kelly”, Bonnie and Clyde, John Dillinger, “Baby Face” Nelson, “Pretty Boy” Floyd, all stone cold killers and notorious bank robbers, who were regularly listed as FBI Most Wanted, would be Bank “Jihadists”. Boy, times sure have changed. Bill needs a nom de guerre, something like Bombs Away Bill, Kapital Killer Black, something with a splash of notoriety and punch commensurate with an anti-Wall St Jihadists. Yield Spread Black, Synthetic Derivative Bill, Claw Backs Black. Where’s Don Draper when you need him? Well Bill, now you know how Eco-terrorists feel. Hippie, please unhug the tree and slowly take 3 steps back and drop the bark and kick it back.

  16. Carmen Basilovecchio

    As for those elected:
    “Once ‘our people’ get themselves
    into a position to make policy,
    they cease being ‘our people’.”
    — M. Stanton Evans
    (1934- ) American journalist, author, educator and political activist

    As for how this frauds are hidden:
    As Frederick Soddy said,
    ” So elaborately has the real nature of
    this ridiculous proceeding been surrounded with
    confusion by some of the cleverest and most
    skillful advocates the world has ever known, that
    it still is something of a mystery to ordinary
    people, who hold their heads and confess they
    are ” unable to understand finance “. It is not
    intended that they should.”(The Role Of Money)

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