Bill Black and Michael Hudson on Corruption in Finance

Bill Black and Michael Hudson discuss how banking, particularly cross border banking, has become a vehicle for corruption. It is important to understand that the level of international capital flows varies over time, and we have been in a comparatively protracted period of high international capital movements. Oh, and high levels of cross-border capital flows are strongly correlated with the frequency and severity of financial crises.

Note this is a transcript of a podcast, but I was unable to locate it and Michael Hudson didn’t provide a link. Hudson was keen to have me publish this talk for Saturday, so I will add the podcast details as soon as I get them

By Patrick S. Lovell, producer of The Adventure Core and The Con

Patrick Lovell

Hi, my name is Patrick Lovell, and I want to welcome you to our latest effort in this podcast that I find myself incredibly compelled to do considering the confusion that we’re all in the midst of. I’m a producer of a five part docuseries known as The Con that is currently available at www.thecon.tv. It’s going to be whitewashed from history here shortly because unfortunately, there’s no market for truth, which has led me to try to do everything I can given the massive confusion in this world about how things actually operate, considering everything that has come down. Now, the working title of this, and we’ll try to sort this out as we move forward, but I’m thinking to myself, this is either the mechanics of corruption or maybe it’s crisis of clarity. But if you’re like me, a regular person who believes in family and the integrity of law and that things should work under a free market and fair system where nobody is above the law based on the mechanics of democracy and those sorts of things, I think are going to be quite shocked to understand exactly how this world actually operates. And it’s not something that just happened overnight.

Lovell

Even though if you consider over the course of the last, I think, month, we’ve seen massive bank runs where the President of the United States literally leapt into action with the chairman of the Federal Reserve and the Secretary of the Treasury to make sure that the bank runs were covered far beyond the threshold of the FDIC $250,000 threshold in terms of guarantees of the full faith and credit of the United States. Then came on camera to say, Yeah, but these aren’t bailouts. But of course, those were actually bailouts. But there’s a methodology behind everything that took place, just like there’s a methodology behind everything that I’ve learned took place that created the work that we did in The Con, which is to literally reveal to you the largest criminal conspiracy and cover up in history that never ended. Because we’ve looked, in addition to the bank runs over the course of last month or so, we’ve also been inundated with revelations that all of media in one form or more or another is somebody we can’t depend on. Of course, who’s going to be surprised based on the $ 787 million settlement to make the Dominion Voting Booth scandal go away for Fox and Rupert Murdoch and everything that followed in its wake.

Lovell

But if that was just the end of it, that might be something we could get our heads around. But of course, things come at us fast and furious every day, everything from all things Donald Trump to whatever might be a revelation of something along the lines of what we’ve seen recently from Jamie Diamond, the CEO of the largest bank in the United States, being oddly engaged with something like as ridiculous as Epstein. Those are all things that are back story to a monumental revelation about how control and power works in the United States. What I say is corruption births and fuels fascism. The whole point of this broadcast is to try to bring you the details of how the system is working because nobody, from the government to media to quite frankly, what else could we put in there? The Judiciary? Has any clarity on? And, unfortunately, the people that I have access to, or I should say, fortunately, they exist that can tell us exactly how this system works. And today, our initial podcast, I am just incredibly grateful to bring in two gentlemen that are at the top of the craft that are going to bring us revelations that I promise you will be eyes wide open as opposed to eyes wide shut.

Lovell

One of our guests that will come in slightly later is Michael Hudson, who was the President of the Institute of the Study of Long Term Economic Trends, a Wall Street financial analyst, a distinguished research professor of economics at the University of Missouri, Kansas City. He is also the author of Super Imperialism, the Economic Strategy of American Empire, and Forgive Them Their Debts, J is for Junk Economics and, of course, Killing the Host, and The Bubble and Beyond. In addition to Trade Development and Foreign Debt and The Myth of Aid amongst many others. Now, to start off is a gentleman that I miraculously discovered one afternoon, I believe it was 2010, on a Sunday morning show on PBS that was a fantastic journalist and a broadcaster by the name of Bill Moyers. He suddenly introduced a gentleman by the name of William K. Black that suddenly at that time period made sense of everything to me that didn’t make sense. William K. Black is an American lawyer, an academic author, and a former bank regulator. William Black’s expertise is in white collar crime and public finance, as well as regulation, of course, and other topics in law and economics.

Lovell

He developed the concept of control fraud, in which a business or a national executive uses the entity he or she controls as a weapon to commit fraud. He has written, The Best Way to Rob a Bank is to Own One. And he was the guide of our work to produce The Con. So, without further ado, please allow me to bring in William K. Black. Well, welcome, Bill, and it’s a great pleasure to have you here. There’s a lot of confusion out there. And I guess the first question that I have, Bill, as we move forward in this effort, can you explain to us how finance is involved with corruption?

William K. Black

I’m going to answer a slightly different question. Why is finance the lead in corruption in most countries, including the United States. And of course, they’re the experts at moving money, and they’re the experts at hiding money, and they’re experts at hiding the movement of money. So all of those things are really good in terms of corruption. Public officials want something of value, and you can give something of value and have plausible deniability. So you fund an entity, and that entity, maybe the member of Congress, isn’t even a shareholder, but they hire him as a consultant. Type of thing.

Black

So, there’s always a way to get money. Why is finance the preeminent example of what’s called a money committee in Congress? So first, you need to know that there is such a thing, right? This concept of a money committee. What does it mean? It means if you get on it, you will get incredible amounts of political contributions. It’s so powerful a committee. And so finance, obviously, is the most generous. First, it’s the biggest, but it sees, hey, this is come change that I’m giving you. You think $50,000. So $50,000 political contribution will put you on a first name basis with any US Senator. From a corporate standpoint, $50,000 is nothing. So it’s incredibly disproportionate. Finance not only governs finance, finance governs most other industries. If I’m another industry, I got to get loans. I got to be able to take my company public and sell shares. Well, all of that is done through finance and banking. Most of the smartest folks in business allegedly go into the most rarefied parts of finance. So, it’s an aristocracy within a business as well. And even though it’s supposed to be a middleman and it’s supposed to be really lean and mean, finance is incredibly huge and loaded.

Black

At peak, it gets over 40 % of all the profits of all industries. Think of that, one industry gets more than 40 % of the total corporate profits. So if you want to get rich in Congress or as a President and such, there’s nobody like them. They’re by far the biggest bear in the woods, type of thing. And they’re really good at moving the money and they can help you and your allies in lots of different ways where there are very few fingerprints and such. And finance itself lives off of two things, basically, almost complete deregulation and de-supervision. They’re rules, but the rules aren’t enforced and the prospect of being bailed out if bad things happen. And we are living in the golden era for the largest banks. And you can see that they feel it. The folks who wanted to acquire Silicon Valley Bank and other such banks were largely the number 15, the number 16 largest banks. Because if you’re the number 16 and you buy number 12, together you’re maybe your number 9, and you’re on the A list, finally, that gives you, again, almost complete impunity to do whatever you want.

Black

And indeed, you don’t even have to force yourself. People are desperate. Politicians are desperate to get support from the big banks, so they’re always imploring you to give money.

Lovell

Well, the whole thing is counterintuitive Bill, and we’ll discuss this much more in-depth with our co guest this afternoon, Mr. Michael Hudson. But I guess what you just said, brings to mind, two questions that I’m curious how you might set this up as we move into the next part of this podcast, is the notion of, to a layman like myself, what you just described was counterintuitive because what I heard was that finance would operate outside of the safety and sound risk, which is again counterintuitive to what I think all of our system depends upon. But in a peculiar grift, if you will, to where politicians might be low level ROI, great ROI is the idea, but low level to buy for the what comes downstream, particularly as it relates to regulation and no regulation. But given our pathway to this whole thing, I’m constantly reminded of, especially since we came out of the debt ceiling conversation last week, and I don’t want to go deeply into that, but just the nature of bailouts. When you think of the central bank and no regulation or regulation and political calculations, don’t the politicians have the ability and almost the responsibility to make sure that what we’re in the midst of doesn’t happen?

Black

They have a responsibility to get reelected in their view. And if they’re not reelected, then they become lobbyists and their ties to the banks get even more lucrative, potentially, if they’re on good terms with other members. So it pays not to rock the boat. Let me mention another thing about finance. It’s really important that people forget. All kinds of firms are actually finance firms that you don’t think of as finance firms. So for example, General Electric in 2008, as the crisis is occurring, how do you think of it? Well, you think of it as an industrial firm, but 60 % of its claim profits came from finance. So, every CEO of a nonfinancial institution has, in essence, the option of becoming a financial institution. And the classic example of this is Japan. In a time period similar to the savings and loan debacle in the United States, Japanese commercial firms, not banks, started buying up huge amounts of Japanese stock and Japanese commercial real estate. These were the twin bubbles, as they were called in Japan. And you made fantastic book profits on that right up until the collapse of the twin bubbles, whereupon you were effectively dozens and dozens of industrial companies who were actually become finance companies who were actually insolvent on any market value basis.

Black

And that was the beginning of what became known as the lost decade for Japan. But it’s really now working on three lost decades. So don’t think just of classic finance, all kinds of firms that you may not think of it that way. The CEO always has the option to put them into finance. So that’s an additional reason that finance is more equal than all others.

Lovell

Well, on that note, that’s a great segue, given the idea and the notion of the transition from industrial capitalism to financial capitalism. To bring in our guest, Mr. Michael Hudson. Really, the place to begin the conversation is with William K. Black, who has spent decades unraveling and diving deep into the methodology of corruption that has literally spanned decades. And it’s really an incredible honor to bring the two of these gentlemen together to speak about their areas of expertise because I have yet to see them speak together. And it should be very interesting to see what information we can glean from the era that we live in. So, Professor Black, I’m wondering if we can begin really at a a clarifying statement as to what you are, shall we say, seeing, interpreting from this crazy world that seems to be everybody is concerned about corruption, and yet nobody seems to understand what corruption actually is.

Black

I’m not sure that they don’t understand what corruption is, but they’re certainly acting in ways that make the world more criminogenic. And that’s a direct steal in criminology, and I’m a white collar criminologist from the physical science where we talk about pathogenic environments. And it fits really well with economics because economics is largely about incentives. And when you have really perverse incentives, you end up with a whole lot of really bad elite pathologies. And corruption is both something that people do directly, but it’s also something that CEOs do indirectly. In other words, they’re running a fraud or predation scheme, and they want to get away with it with impunity. So my saying as a savings and loan regulator was always the highest return on assets was always a political contribution. You create networks and these networks, these predatory networks optimize your ability to predate on other people with, we used to say, near impunity. Nowadays, we would be closer to complete impunity.

Lovell

Well, what we learned from you in making our work the con, we understand the three Ds, which are deregulation, de-supervision and decriminalization. And this didn’t just happen overnight. So what we’re looking at in the balance of power, given what a regular person might not be able to discern, given the overwhelming noise of misinformation and disinformation, there’s a mechanics of corruption that we learned long ago is called control fraud. Can you introduce to us the concept of control fraud, where it began in terms of your understanding of it, and give us some clarity, given where we currently are, given a lot of what seems to be thrown at us daily from bank runs and just the nature of power?

Black

Right. There’s been a big overlap in the discussion of corruption among political scientists and among economists. Their traditional view was, ah, not only is it no big harm, it’s actually a benefit. Their metaphor for this was grease. Not the country, but grease in joints. Their belief system was anytime the government’s involved, it’s going to be bureaucratic and nothing’s going to get done. Samuel Huntington’s famous line, he was the War of Civilizations guy, was that the only thing worse than a corrupt society was an honest society in one of these, he would have thought of them as third world type nation, because then you couldn’t get anything done. But as long as you could bribe people, that was like grease, and suddenly things would get done. And therefore, it wasn’t optimal, but it was a very good thing. Net, it was an improvement to have corruption. Now, that brings up one of the most important things that we discuss, which is strategic behavior. So economists and political scientists were really terrible at looking at strategic behavior. Because even if you took your grease metaphor, what would you do to optimize your take? How much grease you receive?

Black

Well, you’d make the place more bureaucratic because then you’d be extorting more bribes. And lo and behold, they did research, God forbid. And in fact, wherever you have these grease payments, tends to become more bureaucratic over time, not less bureaucratic over time, because of the perverse incentives. And of course, once you bribed people, then they’re corrupt, not just in the individual deal, but more broadly. Plus, you can now extort them. So you now have something on them. That’s actually bad in game theory. This is like giving mutual hostages. People can create better alliances, again, predatory alliances. Michael Milkin used to do this. He had an annual shindig called the Predator’s Ball. One of the bungalows where the super rich folks were had prostitutes, and you’d be using prostitutes in front of each other. Well, that creates in game theory sense, really good mutual hostages. I got something on you, you got something on me, and we all know that Michael Milkin has something on all of us. Whatever Michael Milkin wants to get done, that’s exactly what’s going to happen. The point is, economists think they’re the only ones who think strategically. This absurd things and they think they’re the absolute tops of the world.

Black

They do view mechanism design, which is the jargon for creating optimal systems where strategic behavior is possible. Strategic behavior is possible and strategic behaviors possible wherever you have asymmetric information, which is to say, essentially everywhere. In everything that matters in the economy, particularly finance, you have massively asymmetrical information, which means people act strategically. Economists think that they’re morons. They don’t think CEOs can develop their own mechanism designs to make themselves very wealthy. CEOs think it’s very funny. In fact, CEOs are massively more sophisticated, but also it isn’t sophistication. So often what we find in criminology as regulators is its audacity. Think of Trump. Trump’s a moron, an absolute moron. But he has enormous audacity. He just goes and does it. When one lie is exposed, he spins 12 more lives. And then he hires these predatory networks that go right up as we record this, where you have the chair of House Judiciary Committee deliberately seeking to interfere with the prosecution of Donald Trump at this time. So these predatory networks can be enormously strong. And of course, it became obvious to us as regulators about them because Charles Keating, the leading predator of the savings and loan debacle, recruited five US Senators to hammer us, who became known as the Keating Five, plus the speaker of the house, plus a majority of the House of Representatives co sponsored a resolution saying, Stop all this deregulation stuff, including the entire leadership in the house of both the Democrats and the Republicans.

Black

The networks, these predatory networks that I’m talking about became glaringly obvious, except economists, conventional economists. It was obviously the light that we experienced. And so when we were doing our analytics, we always took that very seriously and thought, how can we combat them? And indeed, that’s why the strategy of prosecuting them and suing them and filing complaints in plain English and then having me spend thousand plus hours explaining to journalists so that you’d get these stories saying, Hey, sleazy congressman took all this money from Charles Keating and did the following terrible things. And once you did that, it was like a jiu-jitsu move where you use their own weight against them and momentum. And the members of Congress started to rush as soon as we filed suit to return the contributions or donate them to charity. But unless and until you do something like that, you get, as I say, a majority of the House of Representatives co sponsoring a resolution. No, that’s not just voting for it. Co sponsoring a resolution. That almost never happens. That’s how easily you can do this because a huge political contribution from a senator’s standpoint is jump change.

Black

From the perspective of the CEO. It’ll be even a pretty tiny thrill with $500 million in assets. Now, think of three trillion dollars in asset banks and what their equivalent ability is to get mobilized political intervention on their behalf.

Lovell

You touched upon something that is an incredible intersection between the two. I guess the first thing I want to touch upon for those who are not as familiar as I am with the SNL crisis, thanks to Bill Black, I encourage you to look into that era and we will be continuing talking about that era throughout these podcast. However, that was roughly 30 years ago. We’re in an era now as it relates to a lot of what Mr. Hudson speaks about from Citigroup, which you just inferred a three trillion dollar, what I would call theft, which we know what took place during the great financial crisis. But in continuation to the leverage, interestingly enough, you mentioned the Keating and sexual blackmail and that thing. We’re literally seeing at this moment, interestingly, Jamie Diamond, who just announced presidency of the… Well, I didn’t announce it, but there’s some inferences that went for the President of the United States. But of course, helming Chase bank, which of course, Mr. Hudson was working intimately with decades ago, where he discovered a lot of the financial fraud. But ultimately, we’re seeing now, curiously enough, I think it’s Saint Croix suing, in the Southern district of Manhattan, Chase’s involvement, potentially, with Epstein. I don’t want to go there in terms of a conversation, but just in terms of just this strange leverage and consortium of organized, I hate to say it this early, but crime, Mr. Hudson, can you pick up on your understanding of what Mr. Black is laying down about the organization here and as it relates to economists as well?

Michael Hudson

Well, there’s a difference in how lawyers look at this and how economists look at it. And Bill has explained the corruption and the falsification. I never saw any fraud at Chase Manhattan Bank. You remember when President Nixon said, When the President does it, it’s not a crime. Well, the real control fraud for me is the economic theory is a fraud. The law itself is a fraud. In 1967, when I was at Chase, I was handed a note from the State Department saying, We’re looking at a way to finance the Vietnam War, and we think we’ve got it. We want to make America the new Switzerland. We want to make America the haven for criminals and kleptocrats and crooked presidents throughout the world. If we become to the new Switzerland and get all of this criminal money, we’ll be able to balance the international payments and we won’t have to sell our gold when we go to war in Vietnam. So what they asked me was how much money goes into Switzerland from the criminal agents. I was their balance of payments economist. So my job was to see, first of all, I had to estimate how much drug trade fraud and crime there was according to the FBI reports on criminal income.

Hudson

What do dictators, where do they put their money? Well, they put it in London and they put it in the offshore banking centers. So they asked Chase and Citibank and other US banks to set up branches in the Cayman Islands and other banking centers so that they could use these centers to receive this criminal money. And as you remember, HSBC even redesigned where you make the deposits in the bank so they’d be big enough to take huge wraps of $100 bills. And my job was to see how much fraud money was there available and criminal money was there in the world to balance the international payments. Well, that wasn’t a crime. David Rockefeller always said that he wanted to do the right thing. When the treasury asked him to set up these banking centers, he agreed, just like the other banks did. In fact, if you look at the US Treasury bulletin, every three months they have a report of bank liabilities to foreigners, including bank liabilities to their foreign branches, and they list France and England. But every three months it’s the little countries, the Caribbean countries. And this whole idea of offshore banking centers where you put your money and you don’t have to pay taxes, you don’t have to declare it.

Hudson

I don’t think there’s going to be any solution to this, to defraudulize it, because it was started by the oil industry in the 1920s when they set up Liberia and Panama as a anti states with their own currency so that they could take their oil earnings from Saudi Arabia and Iran and other countries, put them in Liberia or Panama using the US dollars so that there’s no foreign exchange risk, and they had no income tax, and then they would then send the money to the United States. And not many people know that all of Standard oil’s income was made in Liberia and Panama. And that was explained to me by their financial manager when I was doing my study of the balance of payments of the oil industry. So there you have fraud built into the law. And if you’re going to be a crook, you want to build it into the law. And since Bill has mentioned Donald Trump, I think anybody in New York has met, I think, at least five people who’ve been personally cheated by Donald Trump. They’ve been suppliers. They could supply pianos, they could supply work, they could be architects.

Hudson

And Trump would, when the money came due to be paid, he’d say, Well, I really don’t like it. I’m only going to give you half, or sometimes even less than half. And they would have to go to sue him. And to sue Donald Trump costs at least $50,000. And if you owed even more money than that, it goes up. Well, not many people could afford to go into a multi year fighting with Donald Trump, and he stole it fair and square. So what do you call it when somebody steals it fair and square when they legalize tax avoidance, when you legalize all of this fraud, where’s the room for an expose? You expose the legal system itself. And I know Bill and I have spoken about this in Kansas City and Rumani, Italy. The problem is the system itself is built on fraud. To me, the ultimate control fraud is when the economists do just what Bill described. And when the economists create an economic theory that distorts how the world really works but justifies financial fraud and criminal fraud, that’s the real control fraud. You control how people think about fraud. You control how they think about financial tax avoidance and not paying people and quite apart from simple misreporting.

Lovell

Bill, you have had a career, though, of the inside investigations. Maybe you could pick up on what Mr. Hudson said, though, and tie it back to really the full spectrum.

Black

Exactly. Indeed, what Michael just described is the ultimate form of control fraud. So if you want the world’s best predator, it would be a head of state that has complete control over the law because then they will make their illegal actions legal and they will make anyone who tries to prevent their illegal actions a criminal. That’s the ideal form. What we’ve tried to get across is this whole economists think pure private sector, squalid public sector. That’s how they’re taught to think in laissez-faire terms. But my answer, white collar criminologist’s answer, has always been C, all of the above. You get these power centers working together. And that’s why the concept of winner take all or zero sum is very wrong. They make lots of people wealthy. The whole idea is to make lots of people wealthy so that they will be invested in and supportive of the system and not running to some other journalist like the other Michael Hudson and saying, Oh, look, this is a scandal. What’s going on? Bastiat, a proto economist of France, very conservative from a different perspective, but his thought really captures what Michael just said. I’ll come pretty close to quoting it.

Black

Bostiat said, When plunder becomes a way of life for men in society, they create a law that authorizes it and a moral code that praises it, valorizes it. and so there isn’t a different view in terms of the lawyers or the white collar criminologists from what Michael said. He’s just explained the ultimate predator. So for example, when the Justice Department… Credit Suisse, people may have noticed, finally failed officially, right? But in the great financial crisis, we, the United States Department of Justice, brought various criminal charges against Credit Suisse. And the Department of Justice said that their factual investigation found that Credit Suisse’s frauds, which involved many of the things Michael was talking about, why, after all, we were trying to learn from Switzerland, as he made the point, had persisted for over a century. Now, think of that. The US Department of Justice knew this place is a criminal enterprise. We talk about seeming legitimate entities and using it as camouflage and a weapon and shield. It’s much easier to go into the offices of the President or the Prime Minister if you’re the CEO of some allegedly respectful company. But you’re really operating as a criminal enterprise and most assuredly with the backing of the Swiss government because it was Switzerland’s claim to fame. After all, it was finance and finance. Why do you want to put your money in Switzerland? The real reason is not inflation or this or that, it was secrecy. We went over as white collar criminologists, delivered a paper in Geneva and said, Hey, we’ll go check in on some white collar criminologists here, and ask them about bank fraud in Switzerland.

Black

And so we did. We found the leading guy in Geneva, and we asked our question. And 12 minutes later, when he could stop rolling on the floor in laughter, he said, You morons. Don’t you understand bank secrecy? The only way we, the Swiss, learn anything about our banks is when you, the United States, prosecutes them in the United States and actually disclose documents. So it’s this opaqueness, and indeed, the Bible says it right, all those that doeth evil, hateth the light, and boy do these folks hate the light. They want to be not just in shadow, not penumbra. They want to be in the umbra portion where it is completely opaque so they can do their thing.

Lovell

Well, and that was ultimately what led me on our adventure after the great financial crisis was it didn’t make sense until we discovered you. And we walked down the pathway where it made complete sense, hit the end of the run. But there was a lot of information that I had to unpack as an American citizen that thought the integrity of law really mattered above all else. I didn’t understand the methodology, if you will, of secrecy. And transparency, of course, is the answer to that. I want to set you up, Mr. Hudson, to respond, but I just have a quick follow up to Bill, if I may. Bill, we discovered after the Great Depression, of course, the Pecora hearings led by Ferdinand Pecora. The more you understand about this time period, it was a miracle of what he was able to pull off. But as a shortcut, he was able to present the facts to the American people that led then to solving some of the problems of that time period that led, of course, to the Glass Steagall Act, as well as the Securities and Exchange Commission, and of course, the Securities and Exchange Act of 1934.

Lovell

Of course, this was lacking after the…

Black

And the FDIC.

Lovell

And the FDIC. This will be an incredible convergence between the two of you and what I’ve learned from Mr. Hudson throughout the years, quite frankly, as it relates to Sheila Barron and some other things. But just as if you may, can you try to… Because I know and many of us know what you did during the savings and loan crisis, but that seems to have been whitewashed from history in today’s dialog and particularly mainstream media. It’s a complicated roadmap, and there’s a lot involved. But can you simplify it for the viewer to give us an understanding of what really America has done in the past to contend with this problem versus where we are now and what happened in between?

Black

So the genius of Pecora, and by the way, there had been earlier investigations and they had failed. Pecora’s genius was that he wasn’t an expert in banking. He was an expert in investigating the mob. From what we’ve both been discussing, I think it’s obvious now why that’s the best possible expertise you can have to investigate banking. He treated it more like a mob case, and he treated it the way a good lawyer does, which is it needs to be understandable to people. So he made it understandable. He did things like ask, Oh, by the way, how much did you pay in taxes? And one of the richest people in America said, zero, type of thing. That’s the thing people understood. And Pecora went for what was understandable, and gradually FDR realized that Pecora was creating the political space in which you could have significant reform. And of course, you have to give FDR some credit. He has that famous speech when he’s announcing the second New Deal, which he says, Never in history have the banks had this organized hatred of a single individual, me, and I welcome their hatred. Now, President Obama got out of line once by this much and said he wasn’t elected to help the fat cat bankers. The industry went beserk. Where he had been the leading recipient of bank political contributions, they suddenly shifted it and they were more like two thirds to three fifths in favor of Republicans. And he never took them on again. I mean, if you consider it taking them on to say fat cats, I don’t. But that was his big moment of independence, and he decided it cost him way too much. There aren’t that many FDRs that come along in either party.

Lovell

Mr. Hudson, I have heard you frequently referred to the nature of financialized capitalism versus industrial capitalism in the modern world. But given what Bill just said and your previous statement about this offshoring and outsourcing, but at the same time laundering ill gotten gains to, I guess, prop up other aspects of the economy, can you pick up on really the great financial crisis, Obama, and how that fits into your paradigm?

Hudson

Well, you’ve asked two questions, but I want to start by commenting on what Bill said about Switzerland. Around 1975, I was working for the Hudson Institute and one of our corporate clients was Ciba-Geigy. They wanted me to come over to Switzerland to solve some of their problems. And the problem was that they had to keep moving their pharmaceutical firms and their chemical companies right across the border into Germany because there was so much criminal capital going into Switzerland that it was pushing up the value of the Swiss frank, and they couldn’t afford to hire Swiss labor. When they took me out to dinner, I noticed that a Coca Cola cost about $10, and the meal, the restaurants were incredibly expensive. So you had such a high degree of criminal capital coming into Switzerland for its bank secrecy that it was driving industry out of the country and deindustrializing the whole country. And they asked what to do about it. And that time, there was an economist, I forget his name, I’m sure Bill knows, who said the problem with criminals is they’re all fighting each other. But if you could only consolidate the criminals and have one criminal group in a single corporation running the country, then all of a sudden they wouldn’t have to cheat anymore.

Hudson

They’d say, How do we make money for the country by running it in a way that will make money instead of trying to the contrary? Well, we tried with Donald Trump, but as Bill said, unfortunately, he’s a moron and didn’t know how to do it. So the real problem is that this financialization is very often, if not a criminal process, at least a predatory process, a destructive process, a process of emptying out corporate wealth and channeling it into the financial managers as you’re seeing the wave of bankruptcies from the special private capital companies that have bought out a company, borrow money for the company, use the money to pay a special tax dividend, then leave the company bankrupt now that you’ve taken all the money out. That’s not criminal when the financial sector does it because the government is the financial sector now. That’s the problem. What do you do when the financial sector is the government and they don’t do what economists say a criminal should do, and that’s run the economy productively? It’s not being run productively. Financialization has turned into, to a large extent, based on predatory capital that the fraud involved is the gross national product and national income accounting that says all of this is productive.

Hudson

All of this is adding to GDP. When a credit card company charges late fees that increase your interest rate from 19 % to 29 % or 30 %, that’s counted as financial services in the national income account and adds to GDP. So if you were to get rid of fraud, our GDP would plunge below China. China would really overtake us. If you get rid of fraud, where are the GDP going to go?

Black

If you take one of the most beloved economists of the right, French economist, Leon Walras. Walras famously said along the lines Michael was just talking about, for other people, it matters whether the husband, when he goes to the chemist, is getting a drug to cure his children’s illness, or whether he’s getting a drug to secretly murder them. A drug that will mask that it was done this way. He says, for our purposes, it’s irrelevant which of those two. In fact, it may be more valuable in the murder scenario because you have a higher utility as the guy for doing this. This is how insane economics is. These are the heroes of modern day conventional economist. von Mises said that fascism had earned itself in history glory and that the motives of those who staged the coup and installed fascism in Italy were pure. This has a very long history. As Michael said, we actually had a national inquiry into organized crime and one of the people involved was an economist. He wrote, Organized crime is a great thing because it is a cartel. A cartel maximizes by limiting supply of the evil goods. Thank God we have cartels.

Lovell

I have to follow up, though, on something that’s very, I think, critical because I never in a million years in my position in life would have ever thought this possible. But I’ve spent the last 13 years learning the details of this based on what I’ve learned from you, Mr. Black. The notion of what Mr. Hudson just mentioned by way of predation, can you bridge that, please, to the GFC, particularly as it relates to minorities? And a compounded question, has that also gone global to a degree?

Black

Sure. So as Michael said, if you simply charge more for anything, the GDP goes up. So if you do it in a predatory fashion, and in the US great financial crisis, college educated Hispanic households lost 73 % of their wealth. Black households with college education has lost 60 % of their wealth. Well, there are many ways that happened. I mean, the biggest way is putting you through appraisal fraud in a home that’s only worth two thirds and then ignoring the fact that it’s the world’s largest bubble hyperinflated by this wave of fraudulent lending and that you’re guaranteeing people are going to lose massive amount of wealth. But this is the genius of finance. They don’t come at you one way, they come at you dozens of ways. So they also did the following, and this is my favorite. The Fed actually tried to do something right, and that’s really rare. And so they hired outside consultants because loan brokers were deliberately created by the lenders to have incredibly perverse incentives. And this is called a yield spread premium. If I convince the borrower to pay way above a market rate, I, the loan broker, get an additional fee that measures in the thousands of dollars.

Black

So I’m directly screwing my customer when I do that. And the inevitable national commission to Investigate the cause has found that this succeeded, in fact, exactly half the time in the large data set they had. So this isn’t some rare thing against some individual who is suffering from dementia. This is you could do it to most everybody. And the Fed folks who are testing this were trying to get across through disclosures to borrowers that the loan broker is your enemy, not your friend. The loan broker is out to screw you. And they tried different disclosure regimes, and none of them were, of course, any remotely as blunt as what I just said, which is, by the way, the truth. But some of them got there. And the people in the focus group refused to believe the disclosure, saying the government would never allow that. That’s the kind of faith. So is it broader? Yes. Americans know nothing, typically, I mean overwhelmingly, about the payment protection insurance scam in the UK. But that’s the direct model that Wells Fargo did a variant off of. We do not know because the regulators, and that needs to be in scare quotes, in the United Kingdom, didn’t bother to investigate, how long that scam existed.

Black

We know that it was a minimum of two decades. So competition never unwound it, contrary to economic theory. And a very conservative economist in their competition bureau in the UK said that the return, the profit on these sales, these are cross selling. Anytime you come in for a loan, we also sell you insurance. The profit on that was 500 %. Now think of that, 500 %. Everything else was a fake. It was potemkin. The only thing that was real was the insurance sales. That’s where all the profits of the branch network were. They sold over 60 million of these policies. Uk isn’t that big, 60 million. That’s everybody adult, basically, was taken in by this scam, and for at least 20 years. When they finally stopped it, it wasn’t stopped by the regulators. It was stopped by whistle blowing from the unions, upset at what they were being forced to do to the customers. So yes, to pick up Michael’s point, all of that increased reported GDP, and it did by tens of billions of pounds.

Hudson

Let’s compare what happened under Obama in 2008, 2009 on with the recent Silicon Valley collapse. Nobody said it’s the result of the fraud that there was under Obama, and yet what you had is a vast shortage of inability of bank assets to cover the liabilities, the deposits. The whole 14 years of zero interest rate policy was just to let the banks make back the money that they lost as a result of the fraud. The whole economy was distorted for 14 years with low interest just to reinflate prices for real estate that had plunged after the fraud, and in the process, the stock and bond market, a huge run up. Well, then finally, the Federal Reserve decided to get back to normal because they wanted to fight the labor unions. They said, workers are beginning to make more money, higher wages now that COVID is over. We’ve got to bring on a depression to prevent workers from making money, so the profits will go up and we’ll support the stock market and therefore, the bank reserves. That’s our job. The banks are our clients at the Federal Reserve, and we’re here to solve them.

Hudson

Well, as a result, when interest rates went up to 4 % and 5 %, the market price of their 30 year mortgages went down by about 30 %. The market price of their long term government securities went down. The regulators thought, well, the banks don’t have to report how much their assets are market value relative to liabilities.

Hudson

And the regulators thought, Well, if there’s no fraud, then there can’t be a problem without saying that there is such a thing as economic insolvency by the interest rates going up, reducing the bank assets and creating negative equity. Part of the whole fraud is thinking that if it’s not a fraud, then everything is okay and the economy is in balance, working towards equilibrium and there’s no problem. Well, then you had Silicon Valley collapse and Silvergate with the huge fraud of cryptocurrency going under. The whole economic regulatory theory is a product of this fraudulent fairytale about how economies are supposed to work in a way that as if they did work to make the economy richer instead of poor in a predatory way.

Black

Let me make some friendly amendments on what Michael has just said that captures a bunch, but not all. Obviously, we have time to go through a lot of them, maybe. First, he used the word regulators. There are no regulators. There haven’t been regulators for a very long time. There are consciously no regulators at the Fed, which was Silicon Valley Bank, because it’s now 15 years ago, they put an economist in charge of supervision. He’s been replaced with another economist. They’ve never had an actual supervisor since the great financial crisis, basically. Think of that. And the first economist they put in was Peter Parkinson, who was the guy who Greenspan used to testify that there couldn’t be any possible risk from credit default swaps, tell it to AIG, type of thing. So these are people who get promoted because they’re willing to lie. That’s the really sick part of the Fed. Okay, so who knows about interest rate risk and market value? Economists. So the guy in charge, he didn’t think everything was fine, he knew exactly what was happening. And I can tell you, we, as far less sophisticated folks, allegedly, in 1984, when I started as a regulator, had weekly reports. I’m sorry, monthly reports on interest rate risk.

Black

So they have them now. So they knew exactly how much underwater, as we say, these folks were. And the county rule’s absurd. And the federal government, the regulators, and the SEC have the power to change that at any time. The federal regulators, banking regulators have chosen not to do so. So what happens when you take a lot of interest rate risk in an environment where interest rates are almost certainly going to rise sharply? The bank is going to lose the bet, but the bank isn’t what matters. It’s the officers that have incentives. Banks aren’t human. They don’t have incentives. They can’t protect themselves. They have no goals. They have no motives. It’s a legal fiction. That’s what a bank is or any corporation, business. So, if even though I know interest rates are going to go up with a high probability, I buy a bunch of fixed rate government bonds, what will happen to reported earnings of the bank? It’s guaranteed to go up. What will happen to my bonus under modern executive compensation? It will go up. How could I make this completely insane? I know I could grow massively, which we haven’t talked about yet, but is one of the biggest things, particularly in Michael’s broader discussions we’ll get to in other talks about debt.

Black

When we deregulated interest rates, we not only allowed the creation of massive debt traps to destroy people, we allowed essentially unlimited growth of financial institutions that have deposit insurance. All I have to do is increase my deposit rate by 10 basis points, that’s one tenth of 1 % of interest. And the next day I will have whatever tens of billions of dollars I wish to grow instantly, which I will put in long term or medium term fixed rate bonds that are exposed to substantial interest rate risk but have a yield that’s higher than my portfolio’s existing weighted yield. Now, what could I really do as this thing is spinning out of control? Well, I could pretend with this incredibly weak regulatory group that I’m hedging. And the way you hedge interest rate risk in the modern era is interest rate swaps. It’s a type of financial derivative. Don’t worry about the detail, just this one really important thing. The whole idea of a hedge is to offset. So as your fixed rate bonds that Michael was talking about lose market value, but don’t recognize it for accounting purposes, my hedge instrument will go up. And after it’s gone up a lot, meaning I’ve got a lot of unrealized losses, they sold the hedge and booked the gain and then transferred the long term security Michael was talking about to an account where you essentially never until failure have to recognize the loss.

Black

And all of that supergoosed. If you think of it like end game strategy in chess, but you’d have to change the game where if you took two more pieces before you lost the big pay off, they were grabbing the pieces. So all of this is mathematically certain to produce a significant fake accounting gain, which will produce a very real bonus gain. No, it’s not fraud. It’s incredibly perverse incentives that allow the officers to predate on the bank. The saying in banking is every banker’s first option is on the firm. We’re talking about traders, people that have power to invest the firm’s assets.

Lovell

I’m reminded as, and we’re nearing what our planned scheduled time is, approximately an hour here. But I want to tee this up and let you guys go as long as you want to. I’m sure Mr. Hudson has plenty of response, so I apologize for interrupting you, Mr. Hudson. But I just have to ask you these two questions, Bill, in context. Then as I think it relates to what I’ve heard Mr. Hudson reveal a lot, I heard baked in there was the notion of control fraud, which we’ve been learning since we learned about you and we started to build all the building blocks to reveal what took place during the GFC. But at the end of that, we realized that the Fed back during the GFC was mandated by Congress under the Hawaii Statutes to be able to prevent what exactly took place. Now, what we all know is recently the Fed had said publicly about two weeks ago, they were responsible for not regulating, as you just demonstrated, what just took place in the most recent runs. I’m wondering if you two can discuss, and the easy way to get there is really Citigroup is one of the facilitators of all this, especially as we know, going back to the GFC, what we got by way of Richard Bowen, to reveal to the world that it was effectively an $80 billion scam given the underwriting that was taking place.

Lovell

That then Robert Rubin was chairman of, that, of course, all of this stuff dissipated, and I’ll bring it full circle, they walked with three trillion after the emergency apparatus of the Federal Reserve. So it seems like a lot of this begins and ends with the Fed with control fraud in the middle.

Black

Well, let me just pick up on Michael’s useful point about crypto, right? And I’m just going to tie it to the regulation. The Fed and the FDIC in their reports, the Fed in particular says we couldn’t hire an examiner in charge. Now, the Fed has unlimited funds and it’s not subject to normal pay caps in the federal government. These morons went for roughly a year with no one senior enough in their view to be qualified to examine an institution that was doing things that had about a 99 % probability of blowing the thing up. That’s the world we currently live in. This is insane, even on their own turn.

Hudson

Well, the only thing that can threaten stability is honesty and transparency. If you know what’s going on, then you’re appalled. Unfortunately, that’s not what’s taught. I never had to learn that when I got my PhD in economics. They didn’t deal with it. And by the way, back in the 1930s, the person who was in charge of the national income accounts, Roy Ovid Hall, wanted to put a crime in the GDP statistics because he said, This is very important economically. And if you want to get a picture of the economy, you want to know who’s getting the money and where it’s going. The Christians, moralists, and Congress said, We can’t report fraud because somehow if you say that it exists, that is if you recognize it, we’re justifying it and we’re recognizing that it’s there. We can’t do it. It would be unpatriotic. So they’ve left out all of this. And you have to go to the FBI reports annually to get some estimate of what the fraud is. But I think it’s much larger than the FBI said because it’s built into the system, not only fraud, but misrepresentation and the belief that the whole financial sector itself is an addition to the economy instead of overhead paid for at the economy’s expense.

Hudson

Somebody’s paying for all of this fraud and it’s the overall economy that’s being burdened just like Switzerland’s economy was being deindustrialized because so much of it was going for fraud.

Black

To pick up Michael’s point again about this idiosy of how we do accounts, finance under economics theory is a middleman. And the efficiency principle for a middleman is real clear, lean and mean. Both just before the Great Depression and just before the great financial crisis, finance was responsible for over 40 % of the total profits of all industries in the United States. And economists thought that was great. Missing Michael’s point, this is a dead weight cost of a massively bloated sector, which instead of efficiently allocating stuff, misallocates assets, produces bubbles, and is mostly given over to a cover up. Many coverups, actually. They have coverups of coverups of coverups in finance, type of thing. And this is all treated as if it were real when it’s a Kabuki play. And that’s why the one thing you cannot do at these senior ranks is tell the truth.

Lovell

But I want to pick up, and both of you, obviously, you’re at a level that’s far beyond my comprehension. I’ve been in this investigation for a very long time. But again, I’ve heard both of you talk specifically about you said misrepresentation. Okay, well, we know that Citi was involved with an $80 billion a year scam based on misrepresentation and warranties that a gentleman by the name of Dick Bowen had notified his boss and then his boss and then ultimately up the food chain under the laws of Sarbanes–Oxley to incoming chairman of the board, Robert Rubin, who was, of course, none other than the former CEO of Goldman Sachs turned secretary of treasury under President Clinton, which then, of course, because of that what it appears to be, given what we understand about the Federal Crisis Inquiry Commission and all that it elicits, particularly in light of the Federal Reserve’s position, again, with Allen Greenspan, which we know had information from Ned Gramlich about all the predation that was happening that would ultimately be somewhat understood by the Consumer Financial Protection Bureau, but never at the level, okay, I see you want to talk. I’ll be quiet.

Black

Last words from me on the subject. In economics and white collar criminology, we usually can’t do formal experiments. So we observe what we call natural experiments and learn from them. Richard Bowen and Michael Winston were completely correct. Had they been listened to, those two huge financial institutions, one of them Citi, would not have gotten into financial trouble and needed a bailout. So what we know, additional information, and that’s what economists focus on, markets are supposed to respond to this additional information, is these guys were not only great their entire career, in the greatest moment of their lives, their analytics were dead right. And even though they knew that they would be attacked, they told the truth and tried to save the banks. So that’s the additional information. So under economic theory, these guys should be the CEOs of two of the largest banks in the world today. Instead, they are unemployed and unemployable in every financial institution in America. That’s one hell of an experiment that we run as to how broad this pathology is of not wanting the truth.

Hudson

Well, Bill makes a very important distinction between the strategy of financial criminalization and other criminals. If you’re just a regular street criminal, you’re a robber or burglar, your idea is not to get caught. The financial criminals say, We have to plan it so we expect to get caught. And when we’re caught, nothing’s going to happen. That’s what they do.

Black

No, we get bailed out. We get bailed out. Something does happen.

Hudson

Yeah, exactly. But you don’t have to pay for it. So you have to figure out how you’re going to get away with it as part of the crime. Don’t try to think you won’t get away. You deal with the consequences. That’s control.

Lovell

Well, I think that unless you guys have any further statements, the idea for me, for the two of you, again, I’ve been so fortunate to listen to both of you and study both of you for many years to have you to collaborate. I hope we can open up this dialog even further and continue this because it seems like if there is one closing statement, I would like to just see if you guys might comment briefly that given what I said at the outset that there seems to be a crisis of clarity. Nobody understands the perverse and verse of what we think our economy is, given everything that you guys have revealed to us today, most notably being what appears to be presidential candidates. I don’t want to create a huge, long conversation, but is there anything we can bring to the public writ large that it seems media or government, and of course, presidential candidates will not or cannot under these circumstances, lay out to the American people in a transparent way?

Black

All those that doeth evil, hateth the light. Bring radical transparency to all financing of politics and to money flows that Michael was talking about. Because you would find out an immense portion of the money that goes to the wealthiest people is dirty as all hell.

Hudson

In other words, our economic accounts do not reflect the most significant path to riches and how people really gain wealth in America.

Black

And that path is a sure thing. Don’t think of this as risk. That’s their BS. We’re risk takers. They hate risk. They love a sure thing. They rig the system.

Hudson

That’s right. It’s always safer to live in a neighborhood that’s run by the mafioso. They keep everything, they keep the stores safe and the streets safe.

Lovell

Wow. Well, that was profound and very difficult to accept, but incredibly important for Americans to hear. I hope we can get this message out broad and wide. I will thank you again, gentlemen, for your time and your expertise. All the best. Thank you.

Black

Michael, it’s great to see you.

Hudson

Good to see you, Bill.

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16 comments

  1. GramSci

    «That’s right. It’s always safer to live in a neighborhood that’s run by the mafioso. They keep everything, they keep the stores safe and the streets safe.»

    When we were young, we lucked into well-paying jobs working in a job training program for the still-prosperous Polaroid Corporation. We bought our first house, a triple-decker in Eastie, right on Boston harbor :-) , right next door to Logan :-( .

    Eastie was run by the mob. We did wake up one morning to see a corpse washing up on the harbor rocks, but we don’t think we knew him; he had no head and no hands. Juana says she never felt so safe.

    Unfortunately, there was a bigger mob, and we learned that ‘safety’ is ephemeral. A few years later we lost our next house in the Carter-Volcker recession.

  2. rob

    one from the way-back machine, just to show how little changes and the song remains the same…
    and I wonder how Mr Black felt about Peter Brewton’s contribution to exposing and his take away’s of what was happening in domestic/international banking,at the time. Circa 1992… when his book was released about the savings and loan scandal of the 70’s /80’s, called .
    “The Mafia, the CIA, and George Bush”…(that is the elder HW,, for those kids out there who don’t remember this)

    https://youtube.com/watch?v=F1xFDgV-KAc&t=3457s

    1. bill

      Another giant wealth transfer to Texas. No wonder the Dems faded on Iran-Contra. I remember and learned that every five years we have a financial crisis that lasts for ten years.

  3. rob

    What is needed is there to be an open dialogue somewhere the entirety of the nation could view it, regularly, to study what Dr. Hudson and Mr. Black are saying about the predatory nature baked into the system, by removing the criminality in immoral actions by making anything reprehensible; LEGAL in the eyes of the law. What isn’t criminal, that should be.

    That is the biggest thing going on right now. It is where the action is. be it :
    the federal reserve act…. and how this nation creates money
    or the war machine… and the necessary propaganda to keep a population funding the never ending war mobilization.. to trump all else.
    the predatory health care system for profit… making everyone born a “mark”
    the agri-industrial complex making food un healthy for all, while destroying the environment
    and on and on it goes….
    It’s really a subversive idea.

  4. Mikel

    “This is like giving mutual hostages. People can create better alliances, again, predatory alliances. Michael Milkin (Epstein/Maxwell) used to do this. He had an annual shindig called the Predator’s Ball. One of the bungalows where the super rich folks were had prostitutes, and you’d be using prostitutes in front of each other. Well, that creates in game theory sense, really good mutual hostages. I got something on you, you got something on me, and we all know that Michael Milkin (Epstein/Maxwell) has something on all of us. Whatever Michael Milkin (Epstein/Maxwell) wants to get done, that’s exactly what’s going to happen. The point is, economists think they’re the only ones who think strategically…”

    I couldn’t resist adding the parenthetical. Choose your own with numerous individuals and/or the institutions they’ve formed.
    “Predators Ball” could be a new board game.

  5. JEHR

    I’ve heard these descriptions of the financial system many times and I think that the end of the climate change “experiment” may very well be the end of control fraud also. It will be a horrible mess out of which no one may survive.

  6. Rubicon

    Thank you, Yves, for sharing what was discussed here.

    In all the years of trying to understand Dr. Michael Hudson and Mr. Black’s observations, what really “hit the nail on the head” was in defining all this as a Huge Crime Family Operation.

    In alluding to Switzerland, it sounds as though we should also include all of the UK and EU financiers, bankers, marketeers, too.

  7. gdmofo

    “If you get rid of fraud, where are the GDP going to go?”

    So getting rid of fraud leads to economic terminal shock?

    1. some guy

      If you are able to grow all your own food,water,power, heat, cold, etc., maybe you don’t have to care so much if the moneyconomy has a moneyconomic terminal shock.

  8. Eclair

    It’s Sunday morning and I am still reading the interview, slowly, a bit each day, so as to be able to digest and process.

    But, an aside. Last night, we went out for dinner with my spouse’s cousin (well, a cousin of cousins, but in this small town, that means we’re related.) They are a retired, very working class couple, spend their time traveling, working on their 10 acres, complete with small apple orchard, volunteering on the town’s annual Apple Festival. His wife, mentioned to me during the evening, that she had just heard that the company that owned Corningware, Pyrex, Corelle, and Case Cutlery, had declared bankruptcy. She simply could not understand how a manufacturer of such basic kitchen-ware could be going out of business. (We are deep in pot-luck and ‘covered-dish’ territory here! The ‘covered dishes’ being mostly pyrex and Corningware.)

    I, off the top of my head, being a devoted reader of NC and Mr Hudson, suggested that a Private Equity firm (I characterized it as a bunch of rich people with piles of cash) had ‘bought’ the holding company, sucked out all its assets, enriching themselves in the process, then forced the company into bankruptcy. I could tell she had never heard of ‘private equity,’ or of what they do to make even more money.

    This morning I did a quick internet search: Instant Brands, the parent company, has been controlled by Cornell Capital, a private equity firm.

    1. tevhatch

      They even sold of the license to the lable pyrex, allowing it to be used even for items not safe to be heated.

  9. John Wright

    If the USA doesn’t have good regulators, why have accounting firms not stepped into the vacuum?

    The shareholders of SVP realized a huge economic loss due to poor regulation/oversight by both the Feds and the SVB accounting firm and internal accountants.

    The USA rot is very deep, an “on the take” political class, a compliant main stream media, a Federal Reserve that follows ZIRP for over a decade without regulatory oversight, creating an easy money environment for private equity to buy residential rental properties, medical practices/hospital groups and industrial firms.

    I have previously pointed to an old (2010) New Yorker interview featuring Paul Wooley (and others) titled “What good is Wall Street” .

    https://www.newyorker.com/magazine/2010/11/29/what-good-is-wall-street

    Wooley argues that the financial industry is 2 to 3 times it should be in the USA/UK.

    That represents a lot of people employed unproductively and very possibly, harmfully, to the USA.

    Wooley states in the New Yorker article:

    “Why on earth should finance be the biggest and most highly paid industry when it’s just a utility, like sewage or gas? … It is like a cancer that is growing to infinite size, until it takes over the entire body.”

    The article has a lot of earlier history and illustrates how little things have changed for the better in the ensuing 13 years.

    1. tevhatch

      “If the USA doesn’t have good regulators, why have accounting firms not stepped into the vacuum?”

      Is this a rhetorical question?

  10. bill wolfe

    I was one of the millions of crime victims of the Obama HUD home mortgage sale. My mortgage was HUD insured. Lost employment. Got behind in mortgage payments. Wells Fargo immediately bailed and HUD bought mortgage. Without my knowledge or consent, HUD bundled and sold mortgage for about 50 cents on the dollar to a Florida hedge fund. They even managed to steal my equity. How many billions were stolen in that fraud?

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