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Apr 11 / Loren

The audacity of bankers

Bill Moyers Journal often has terrific guests who say things one doesn’t hear on mainstream media, but William K. Black was all this and more.

Well, the way that you do it is to make really bad loans, because they pay better. Then you grow extremely rapidly, in other words, you’re a Ponzi-like scheme. … It also makes it inevitable that there’s going to be a disaster down the road.

All of those checks and balances report to the CEO, so if the CEO goes bad, all of the checks and balances are easily overcome. And the art form is not simply to defeat those internal controls, but to suborn them, to turn them into your greatest allies. And the bonus programs are exactly how you do that.

Geithner is publicly saying that it’s going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they’re allowing all the banks to report that they’re not only solvent, but fully capitalized. Both statements can’t be true. It can’t be that they need $2 trillion, because they have masses losses, and that they’re fine.

The April 6 interview is a good read and makes a very compelling case that isn’t very complicated at all. Yet the media loves to portray the financial situation as highly complex and technical, supporting the view that the people who made the mess are the only ones who can possibly comprehend it … very convenient for them, isn’t it?

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