Friday, January 01, 2010

Worthy of Your Trust?

With good reason, our trust is in short supply today. We have lost so much so quickly to the global "free" capital markets. However, as much as we have collectively lost, too many of us are still blinded to the fact that the only intervention into the markets was/ is on behalf of the the elites, thus they go on believing the propaganda that blames "socialism" and the poor for the collapse of our economy. Even those who suffer from a lack of healthcare, lack of employment, lack of retirement, etc. swallow this hogwash and continue to support the idea that universal healthcare will somehow destroy this great nation.

The F.B.I. estimated that lending institutions and banks are 80% responsible for the financial crisis that we, the people are still reeling from. Mortgage fraud and predatory lending triggered the financial crisis and these institutions were able to get away with it because of the drastic reduction in regulation and oversight. This accompanied by the failure of what was left of the ravaged regulatory system to implement the vital checks and balances needed to deter what William K. Black calls, “control fraud” drained much of our trust from what used to be an overly trustworthy nation of hyper-consumers. So, it's imperative that we direct the little trust left to the worthy and not toward the same people who robbed us blind.

Control frauds are crimes led by the head of state or CEO that use the nation or company as a fraud vehicle.Waves of “control fraud” can cause economic collapses, damage and discredit key institutions vital to good political governance, and erode trust. The defining element of fraud is deceit – the criminal creates and then betrays trust. Fraud, therefore, is the strongest acid to eat away at trust. Endemic control fraud causes institutions and trust to become friable – to crumble – and produce economic stagnation. -- William K. Black, "When Fragile becomes Friable: Endemic Control Fraud as a Cause of Economic Stagnation and Collapse"
The Prompt Corrective Action Law (PCA), was "adopted largely in response to the enormous cost to the taxpayers of our predecessor’s failed strategy of not closing insolvent S&Ls". However, this law was completely ignored by the powers that be.
BILL MOYERS: In other words, they could have closed these banks without nationalizing them?

WILLIAM K. BLACK: Well, you do a receivership. No one -- Ronald Reagan did receiverships. Nobody called it nationalization.

BILL MOYERS: And that's a law?

WILLIAM K. BLACK: That's the law.

BILL MOYERS: So, Paulson could have done this? Geithner could do this?

WILLIAM K. BLACK: Not could. Was mandated-

BILL MOYERS: By the law.

WILLIAM K. BLACK: By the law.
"...the real scandal of 2009 was the failure to even have an indictment, much less a conviction, of any of the major senior insiders at the nonprime lending specialists. And the second biggest scandal... would be the regulators that didn't bark. You can't get effective criminal prosecutions on any large scale against sophisticated frauds of this nature without very effective regulators." -- William K. Black, a white-collar criminologist and Associate Professor of Economics and Law at the University of Missouri-Kansas
Congress should pass additional legislation early in 2010 to overhaul the financial regulatory system and give the SEC and other watchdog agencies more resources and authority to police shadowy corners of the financial markets. But if this legislation goes through, will it be enough? How much longer will the band-aid approach give us? Isn't it about time we address the corruption at its core, and redirect our trust to those of us who are worthy?

The problem is, in order to find out who is worthy, it's essential that we remove the money from our political system, which will, at the very least, remove the inmates in charge of the political asylum. Then, and only then, can we can put our trust in those we elect to serve us.

Why Is Geithner Continuing Paulson's Policy of Violating the Law?


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