The Government's Massive Cover Up of the Economic Crisis

Although I'm a regular visitor to George Washington's Blog, I inadvertently missed the helpful post that follows, "Senior S&L Regulator Says Government Engaging in Massive Cover-Up of Economic Crisis: 'The Entire Strategy Is to Keep People from Getting the Facts.'"

However, thanks to reddit, a social news site that bills itself as "a source for what's new and popular online" -- not to mention a frequent stopping point of mine -- I got a second chance to highlight ongoing and reprehensible efforts by those in charge to pull the wool over our eyes.

William K. Black was the senior regulator during the S&L crisis, and an Associate Professor of Economics and Law at the University of Missouri (bio).

Black says that massive fraud is what caused the economic crisis. As one example, he explains that everyone involved knew that the CDOs which packaged subprime loans were not AAA credit-worthy (which means that they are completely risk-free). He also said that the exotic instruments (CDOs, CDS, etc.) which spun the mortgages into more and more abstract investments were intentionally created to defraud investors.

Moreover, Black says that the government's entire strategy in dealing with the economic crisis is a massive cover-up:

[They] don't want to change the bankers, because if we do, if we put honest people in, who didn't cause the problem, their first job would be to find the scope of the problem. And that would destroy the cover up....

Comments

[Dave Wrixon:]

So if it is fraud, then why are there no civil law claims for damages?

When are we going to see some serious criminal charges brought?

Perhaps, we should settle for a good old fashioned lynching?

Apr 05 05:11 AM

[rdondamike:]

We shouldn't have to pay big corporations anyway and I think this may be the conventional thinking that we can't do so either. Nobody can or has a solution to solving these problems.

Apr 05 08:46 AM

[davidma11:]

Nice article. I have been in mortgage banking for over 17 years and yes I believe their has been fraud at the highest levels of banking.
The government does want the fraud to stop because they benefit.
Think about it the very same banks who have toxic assets want to compete in purchasing toxic assets! Example Chase can sell their toxic assets to Wells with government backing; then Wells can sell theirs to Chase. Win win for the big corporation.. I don't hear the public upset that the taxpayer keeps subsidizing the top 1% & corporations. Obama doesn't stand for the forgotten man but rather the govt union man & UAW man.

Apr 05 11:09 AM

[tomatden:]

Here's Moyer's interview with Black

www.pbs.org/moyers/jou...

Apr 05 11:48 AM

[constab:]

I have been in the banking business for over 25 years and I believe their has been fraud at the highest level of banking and government. I live and work in the Netherlands and I hope our parliament will have the guts to start an open inquiry. The voters are very upset and the political climate in my country is changing with the speed of light. The bad thing is that the "fascists" parties are growing like hell. The turbulence in society is increasing.

Apr 05 11:58 AM

[robert99:]

Thanks for highlighting this article. I visit reddit every day, but I missed this article.

Apr 05 01:12 PM

[BerkeleyBob:]

I continue to be shocked, shocked at the absence of criminal charges (fraud is a crime, isn't it?) against the rating agencies who aided and abetted the deceptive practices by rating toxic debt as AAA quality...

Apr 05 01:29 PM

[fireball:]

the criminals make the laws to protect the criminals. detective fox never could figure out who to arrest for the henhouse burglary nor could inspector wolf pinpoint the murderer of the sheep.

Apr 05 02:47 PM

[johnbee:]

The entire US/UK banking Establishment are up to their necks in this,
along with the big accounting forms and lawyers and their knowing friends in Government. They have been getting away with it so good that they even thought (and still do) they can snatch their fraudulent bonuses from new Government money injections without recourse.
Of course somone should prosecute them. But who has the power and the money at risk to do so? The Governemnt don't want it to happen as its too close to home for their pals and the judiciary will go along with the Government on the basis they are supporting the rule of law and order not to stir up trouble

Apr 06 11:41 AM