NO ADVERTISING, GOVERNMENT OR CORPORATE FUNDING

  • Latest News
  • Pitch a Story
  • Work with a Journalist
  • Join the Blog Squad
  • Afghanistan
  • Africa
  • Asia
  • Baltimore
  • Canada
  • Egypt
  • Europe
  • Latin America
  • Middle East
  • Russia
  • Economy
  • Environment
  • Health Care
  • Military
  • Occupy
  • Organize This
  • Reality Asserts Itself
  • US Politics
  • Bank of America Escapes Criminal Charges for Securities Fraud


    Bill Black: Bank of America facing civil charges but BOA and other major financial fraudsters off the hook from criminal charges -   August 9, 13
    Members don't see ads. If you are a member, and you're seeing this appeal, click here


    Share to Facebook Share to Twitter


    I support The Real News Network because it is not entertainment...it is real news. - David Pear
    Log in and tell us why you support TRNN

    Bio

    William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics. Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. Black developed the concept of "control fraud" frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management.

    Transcript

    Bank of America Escapes Criminal Charges for Securities FraudJAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I'm Jaisal Noor in Baltimore. And welcome to this latest edition of The Black Financial and Fraud Report.

    On Tuesday, the Department of Justice announced that it's suing Bank of America for mortgage-backed securities fraud conducted in 2008. In a public statement, U.S. attorney Anne M. Thompson said, "Bank of America's reckless and fraudulent origination and securitization practices in the lead-up to the financial crisis caused significant losses to investors."

    Now joining us to talk more about this is Bill Black. He's associate professor of economics and law at the University of Missouri-Kansas City. He's a white-collar criminologist and a former financial regulator, author of The Best Way to Rob a Bank Is to Own One. And he's a regular contributor to The Real News.

    Thank you so much for joining us, Bill.

    BILL BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: Thank you.

    NOOR: So, Bill, can you summarize this latest news and give us your reaction to it?

    BLACK: Yes. So this, first, is a civil suit, not a criminal prosecution. And even in a civil suit, the Department of Justice has refused to sue any of the senior officers who, according to this complaint, became wealthy through leading this massive fraud by Bank of America.

    The fraud allegation are that Bank of America, very late in the game, as you are emphasizing--so these were put together, these mortgage-backed securities, very late in 2007--now, that's a year after the housing bubble has already begun to collapse--and actually being sold, these securities, in 2008 to two particular entities. And those are Wachovia, a very large bank that also failed and had to be acquired, and the Federal Home Loan Bank of San Francisco, which is a quasi-governmental entity. And in terms of full disclosure, I used to be the senior vice president and general counsel of the Federal Home Loan Bank of San Francisco, but a long time ago, so none of this, you know, involves me even remotely directly.

    The allegation of the nature of the fraud is that Bank of America knew that it was selling product that was often fraudulent and was--mortgage product that was often fraudulent and was, in any event, of very poor quality, and that it lied in its representations to Wachovia and the Federal Home Loan Bank of San Francisco in order to induce them and others to purchase the alleged best portion of this mortgage-backed security. These portions are something that in the trade we call tranches. And this was the AAA tranche, in other words, the highest credit rating you can get that is supposedly reserved for the absolute bestest stuff with very low risk and such. And instead, the loans blew up at a rate where they caused very substantial losses and suffered a huge rating downgrade.

    And there are some more interesting allegations along the way, interesting because I think the Department of Justice doesn't explain how--understand how embarrassing they are to the Department of Justice. So one of the allegations, for example, says that Bank of America, after it realized that one of its loan officers was working with a borrower to commit a fraud, fired the loan officer, made a criminal referral to the Department of Justice. That loan officer, former loan officer, is under indictment (in other words, he's going to be criminally prosecuted), and that they still--they being Bank of America--still sold that loan under representations and warranties that it was a great loan, even though they knew it was in fact a product of multiple frauds. And, of course, the loan blew up and caused substantial losses.

    Now, of course, the question that everyone in the world except the Justice Department would ask is the complaint goes on to say that Bank of America employees came under intense pressure from senior officials at the Bank of America to deliberately make bad loans and to approve bad loans made by loan brokers, that they were specifically instructed that their job was not to find fraud, that their bonus packages depended on approving really crappy loans. And they got extra big bonuses if they exceeded their quotas. And the only way to do that was to approve all kinds of terrible loans.

    So how come the Department of Justice is prosecuting the littlest people in the involved, the minnows, the loan officers who are making maybe $45,000 a year, for fraudulent loans where the Justice Department is stressing that the loans only occur because senior management was pressuring the employees to make those loans. And then turns around and it makes criminal referrals on them when they approve them. And they still--the senior officials the Department of Justice still get complete immunity from the criminal laws and, as I said, don't even get sued civilly by the Department of Justice to recover the bonuses that they got for forcing the little folks to make the bad loans and in some cases actually prosecuting the little folks for doing exactly what Bank of America wanted them to do.

    NOOR: So, Bill, also on Tuesday, four former directors of failed Premier Bank were arraigned on criminal charges of defrauding the government of $70 million while participating in the TARP bank bailout. Following last week's jury conviction of Fabrice Tourreii, a young mid-level Goldman Sachs trader, Dennis Kelleher of Better Markets was quoted in The New Republic as saying the SEC must stop chasing minnows while letting the big whales of Wall Street go free. Your response.

    BLACK: Yeah. They're probably actually mostly chasing the bacteria that live in the minnows. So Fab wasn't even really mid-level in any serious sense within Goldman Sachs. And note that he was specifically charged with aiding and abetting Goldman Sachs fraud. So why isn't Goldman Sachs being sued--I'm sorry, prosecuted criminally for its fraud, just like the current complaint, which, by the way, is the second civil complaint filed by the Justice Department alleging that the Bank of America's senior officials committed fraud? So these are multiple-time losers, and that both complaints show that they committed these frauds over a very long time period. And apparently they are too big to prosecute. The fact that that other prosecution occurred because of alleged crime against TARP is also significant, 'cause that is the only folks allegedly even remotely involved in the crisis--and as you say, they're pretty small-time--who are being prosecuted. There was also an earlier case against Taylor, Bean, a mortgage bank, and that occurred only because the special inspector general of TARP, Neil Barofsky, forced, virtually, the Justice Department to prosecute.

    In other words, the criminal referrals that get action have come from this tiny little entity called SIGTARP, special inspector general for the TARP program, because criminal referrals have ceased virtually entirely from the Federal Banking Agency. And the administration--and this means both administrations, Obama and Bush--have refused to do even the most basic thing if you are serious about prosecuting, which is to require the banking regulatory agencies to renew their former practice of making criminal referrals against these elite frauds. Again, our agency made over 30,000 criminal referrals in the savings and loan crisis. In the current era, the largest banking regulatory agencies made zero criminal referrals. It is a scandal of epic proportions.

    NOOR: And finally, Bill, all this news comes on the heels of Michael Bresnick's resignation as head of President Obama's financial fraud task force. He'll be joining a private boutique lobbying firm. Now, do you interpret his departure as a signal of mission accomplished by the Obama administration, or a civil servant frustrated by the lack of prosecution at the Department of Justice? What do you make of this?

    BLACK: It's the mission accomplished in the same sense as when President Bush appeared on the aircraft carrier and declared victory before, you know, Iraq further went into the hellhole.

    Of course, this task force was announced with big publicity just before the election season, because the Obama administration had received, rightfully, so much criticism for its refusal to prosecute any of the major players. And now, a year later, it has prosecuted zero of the--in fact, it's prosecuted no one. So it's been a complete failure. It has only brought civil actions and only brought civil actions against companies for--in essence to try to get fines. It refuses to hold any of the senior bankers who grew wealthy through these frauds and drove this economic crisis accountable criminally for their actions. Indeed, it refuses to even hold them individually responsible civilly. So they're allowed to keep the wealth they got for destroying the global economy. Again, if you wrote it up in a novel, people would say, you know, that's not realistic. Surely the government would prosecute some of them. Well, no, the answer is, at this date, zero.

    NOOR: Bill black, thank you so much for joining us.

    BLACK: Thank you.

    NOOR: Thank you for joining us on The Real News Network.

    End

    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


    Comments

    Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at contact@therealnews.com

    Comments


    Latest Stories


    The Resegregation of American Schools
    The Modern History of Venezuela, Why Still So Much Crime? - Edgardo Lander on Reality Asserts Itself (7/9)
    What Role Has Russia Played in Eastern Ukraine?
    Can Johns Hopkins Afford to Pay A Living Wage? (2/2)
    University Sit-In Targets World's Largest Private Coal Company
    The Modern History of Venezuela and the Need for a Post-Oil Economy - Edgardo Lander on RAI (6/9)
    Can Johns Hopkins Afford to Pay A Living Wage? (1/2)
    One Percent of Environmentalists Killings Lead to Convictions
    Investigation Finds Former Ukraine President Not Responsible For Sniper Attack on Protestors
    The Modern History of Venezuela from 1973 to the Caracazo Massacre - Edgardo Lander on Reality Asserts Itself (3/9)
    Ukraine Transitional Gov't Moves Militarily To Reclaim Seized Buildings
    IPCC Report Flawed By Narrow Focus on Carbon Emissions
    The Modern History of Venezuela: The Bolivarian Revolution - Edgardo Lander on Reality Asserts Itself (5/9)
    Obama Signs Directives to Reduce the Gender Wage Gap
    Eastern Ukraine Lacks Political Representation in Kiev
    Demystifying the Role of Mitigation in the Most Recent IPCC Report
    Hypersurveillance State Won't Prevent Another Boston Marathon Bombing
    The Modern History of Venezuela from 1973 to the Caracazo Massacre - Edgardo Lander on Reality Asserts Itself (3/9)
    Univ. of Maine Faculty Reinstated After Students Protest Against Cuts
    The Modern History of Venezuela from 1908 to 1973 - Edgardo Lander on Reality Asserts Itself (2/9)
    IMF Will Address Global Inequality, Says Managing Director Christine Lagarde
    Raising Big Banks' Leverage Ratio Good, But Not Nearly Enough
    TRNN Replay: Austerity Road to 19th Century
    Has Palestinian Maneuvering Revived Peace Talks?
    Late Jackson Mayor Lumumba's Son Wins Primary to Replace His Father, Runoff Election Ahead
    Quebecers Reject PQ and Elect a Liberal Government Representing Big Business
    TRNN Debate: Decriminalization vs. Legalization
    The Beginning of the Chavez Era - Edgardo Lander on Reality Asserts Itself (4/9)
    "Off With His Head": Court Upholds Obama's Power to Kill
    Workers at Nation's Top Hospital Strike For Fair Wages
    From Exile to Radicalization in Venezuela - Edgardo Lander on Reality Asserts Itself (1/9)
    Rwanda 20 Years Later: Genocide, Western Plunder of Congo, and President Kagame
    Ukrainian Protesters in the East Demand More Autonomy From Kiev Government
    Hunger Strikers Demand President Obama Halt His Record 2 Million Deportations
    Indian Parliamentary Elections - A Primer With Vijay Prashad
    West Looks to Carve Up Ukraine & Privatize Industries Held by Kleptocrats
    Where Are Israeli-Palestinian Peace Negotiations Headed?
    The Multiple Kingdoms of Saudi Arabia (5/5)
    Do the Afghan Presidential Elections Signify Progress?
    Republican Presidential Hopefuls Pay Homage to Billionaire Casino Tycoon Sheldon Adelson
    Will Extremist Lieberman Become Israel's Next Prime Minister?
    Why do the Saudis Want the US to Attack Iran? (4/5)
    Immigrant Advocates and Families Tell President Obama 'Not One More'
    Elections, Pipelines, and Protests - The Canada Panel
    Chris Hedges on "Israel's War on American Universities"
    Baltimore Residents Decry Lack of Affordable Housing
    Yellen Talks the Talk But Will She Walk the Walk?
    Hopkins Hospital Workers Speak Out against "Poverty Wages"
    Will Venezuela's New Floating Exchange Rate Curb Inflation?
    The European Central Bank's War on Wages is Pushing Europe's Economy to the Brink
    Supreme Court Decision Opens Floodgates for More Campaign Cash
    Charles Keating, the Financier Behind the Savings and Loan Scandal, Dies at 90
    Saudi Arabia and the al-Qaeda Monster (3/5)
    Maryland Residents Voice Opposition to Natural Gas Fracking Export Facility
    Supreme Court Ruling Gives Wealthy Individuals More Influence Over Elections
    What are the Saudis Afraid Of? - Madawi Al-Rasheed (2/5)
    Baltimore's MICA Adjunct Professors Set to Vote on Unionization
    Boycott of Israel Moving to Next Level?
    Hypocrisy Dressed Up as "Realism" Justifies American Alliance with Saudi Dictatorship
    Immigration Reform in the Shadows of Cesar Chavez's Legacy
    Leaked Senate Report Shows Use of Torture As "Ineffective"
    UN Report Says Climate Change Will Threaten Food Production Worldwide
    The Hypocrisy of US Calling for Enforcement of International Law
    How the Ecuadorian Economy Grew in a Global Recession
    'Shadows of Liberty' Trailer
    Kristina Borjesson on Why CBS Shut Down Her investigation into Flight 800 (2/8)
    Glen Ford on Racism in the American Media (3/8)
    Paul Jay on What Drives Corporate Media and What Drive The Real News (4/8)
    Creating a New Media Paradigm After Citizens United (5/8)
    Should The Left Engage with the Mainstream Media? (6/8)
    What Is the Financial Backing For The Real News? (7/8)
    Standing up to Character Assassination (8/8)
    Oligarchs, Fascists and the People's Protest in Ukraine
    TRNN Debate: Is Obamacare In the Interest of Workers?
    Too-Big-To-Fail Advantage Remains Intact For Big Banks
    Obama and the Saudi Agenda
    TRNN Replay: Investigating the Saudi Government's 9/11 Connection and the Path to Disilliusionment - Sen. Graham on Reality Asserts Itself pt 1
    The Iraq War's Real Legacy
    Petitions with 100,000+ Signatures Call for Snowden's Passport to be Reinstated
    We Need to Harness People Power - Andy Shallal on Reality Asserts Itself (4/4)
    BC Pipeline Fight and Quebec Elections - The Canada Panel
    Jonathan Schell - 1943-2014: Board Member of TRNN on Why We Need The Real News
    Teachers on Strike from the UK to Argentina
    Connecticut Poised to Become First State with $10.10 Minimum Wage
    Oil Spill Threatens Wildlife and Local Economy
    DC School Test Scores Up, But Poor Black Kids Are Doing Worse - Andy Shallal on RAI (3/4)
    Obama's Proposal To End NSA Bulk Data Collection Won't Protect Privacy
    How Google, Apple & The Biggest Tech Companies Colluded to Fix Workers' Wages
    An American Should be One that Questions Their Government - Andy Shallal on RAI (2/4)
    What's Driving Putin & Obama's Posturing on Ukraine?
    Hundreds of Students & Faculty Occupy College Campus to Fight Cuts to Public Higher Ed
    Due Process 'Impossible' In Harsh Death Sentencing Of Over 500 Muslim Brotherhood Members
    Has Anglo-American Capitalism Run Out of Steam?
    Being the "Other" in America - Andy Shallal on Reality Asserts Itself (1/4)
    TRNN Debate: Should Baltimore 'Ban The Box'?
    How Fallujah Became the Iraqi Government's New Battleground
    Why I Decided to Blow the Whistle on the NSA
    NASA Climate Predictions Show Serious Threat To Humanity
    Professor Who Teaches Israel-Palestine Conflict Accuses College of Violating His Academic Freedom
    CIA and NSA Wrongdoing Requires Independent Investigation, Says Former Church Committee Staff
    Are Tuition Breaks Enough To Combat High Student Debt And Low Graduation Rates?
    Industries Across the U.S. Are Stealing Wages From Their Lowest Paid Workers
    Who In Ukraine Will Benefit From An IMF Bailout?
    NSA Recording All International Calls From U.S.
    Israel "Making Lives Miserable" for Africans, Hoping They 'Self-Deport' (2/2)
    BP Gets Green Light to Drill in Gulf, But Has Safety Improved?
    Residents Still Not Drinking Tap Water Two Months After West Virginia Spill (1/2)
    Libya's Descent Into Turmoil Three Years After NATO Intervention
    From Pipelines to Peladeau - Canadian Report
    Israel "Making Lives Miserable" for Africans, Hoping They 'Self-Deport' (1/2)
    Congressional Progressive Caucus Budget Strikes Back Against Austerity
    Libya Three Years Later - Chaos and Partition
    Why Was Gaddafi Overthrown?
    Should Ukraine and West Accept De Facto Crimea Joining Russia? (2/2)
    Tony Benn Saw Socialism as the Culmination of Democratization
    Why Didn't Bush/Cheney Attack Iran and Can Obama Make and Sell a Deal? - Gareth Porter on Reality Asserts Itself (3/3)
    After Late Mayor Lumumba is Laid to Rest, What's Next for Jackson, Mississippi? (2/2)
    Crimea Referendum: Self Determination or Big Power Manipulation? (1/2)
    Sen. Graham: President Must Side with Openness About CIA and 9/11
    Manufacturing a Narrative for War - Gareth Porter on Reality Asserts Itself (2/3)
    Protesters Hit the Streets of Brooklyn to Demand $15 Minimum Wage
    Hammer: 'Moral Bankruptcy' Behind Massive GM Recall
    White House Withholds Thousands of Documents from Senate CIA Probe
    I Grew Up Believing in Time Magazine's Version of America - Gareth Porter on RAI (1/3)
    Western European Banks Vulnerable to Ukrainian Sovereign Debt Crisis
    TRNN Debate: What's Driving Inflation in Venezuela? (2/2)
    CIA vs. Senate: Who Is Obama Protecting?
    Will Tipped Workers Get Excluded Again From Minimum Wage Hike?
    TRNN Debate: What's Driving Inflation in Venezuela? (1/2)
    After Late Mayor Lumumba is Laid to Rest, What's Next for Jackson, Mississippi?(1/2)
    TRNN Replay: A Look at Who's Poised to Become No.2 at the Fed
    How Right-Wing Nationalism Rose to Influence in Ukraine (2/2)
    Netanyahu Attacks Boycott As Campaign Enters New Phase
    Moving Towards a Police State - Michael Ratner on Reality Asserts Itself (7/7)
    Fighting Reagan's Secret, Illegal Wars - Michael Ratner on Reality Asserts Itself (6/7)
    Puerto Rican Independence Movement and Cuba Further Radicalized Me - Michael Ratner on RAI (5/7)
    The Butcher of Attica - Michael Ratner on Reality Asserts Itself (4/7)
    MLK and a Radicalizing Moment in American History - Michael Ratner on Reality Asserts Itself (3/7)

    RealNewsNetwork.com, Real News Network, Real News, Real News For Real People, IWT are trademarks and service marks of IWT.TV inc. "The Real News" is the flagship show of IWT and Real News Network.

    All original content on this site is copyright of The Real News Network.  Click here for more

    Problems with this site? Please let us know

    Linux VPS Hosting by Star Dot Hosting