Posts tagged Banking
Too Big to Jail

More than two decades ago, during the savings and loan crisis, Bill Black exposed the Keating Five, senators who took big campaign contributions from the most infamous of the savings and loan executives and then tried to hide their crimes by stopping bank examiners from doing their job. 

The scandal ended the careers of three of those senators. One of them—John McCain—went on to run for president. Black also helped prosecutors convict more than 3,000 crooked bankers, a third of them high-level executives. He also trained bank examiners and FBI agents in what to look for and showed prosecutors how to frame charges and present complicated evidence to juries in a compelling manner. 

After that, Black, a lawyer, got a doctorate in criminology and developed a theory he calls “control fraud” to describe how corrupt bankers turn legitimate institutions into criminal enterprises. He devised techniques to help bank regulators quickly spot crooked banking practices, and rolled all this into a book,The Best Way to Rob a Bank Is to Own One. 

With a track record like that, you might think Black would have been the first person President Barack Obama called when he took office five years ago as the economy was being gutted because of reckless and rapacious banking practices that plundered profits through subprime mortgages and devilish derivatives. A second Great Depression was stalking America, as the stock market was tanking and businesses small and large were hemorrhaging jobs. 

BUT

Too Big to Jail

More than two decades ago, during the savings and loan crisis, Bill Black exposed the Keating Five, senators who took big campaign contributions from the most infamous of the savings and loan executives and then tried to hide their crimes by stopping bank examiners from doing their job.

The scandal ended the careers of three of those senators. One of them—John McCain—went on to run for president. Black also helped prosecutors convict more than 3,000 crooked bankers, a third of them high-level executives. He also trained bank examiners and FBI agents in what to look for and showed prosecutors how to frame charges and present complicated evidence to juries in a compelling manner.

After that, Black, a lawyer, got a doctorate in criminology and developed a theory he calls “control fraud” to describe how corrupt bankers turn legitimate institutions into criminal enterprises. He devised techniques to help bank regulators quickly spot crooked banking practices, and rolled all this into a book,The Best Way to Rob a Bank Is to Own One.

With a track record like that, you might think Black would have been the first person President Barack Obama called when he took office five years ago as the economy was being gutted because of reckless and rapacious banking practices that plundered profits through subprime mortgages and devilish derivatives. A second Great Depression was stalking America, as the stock market was tanking and businesses small and large were hemorrhaging jobs.

BUT

Bank of America apologised to a woman after one of its contractors allegedly trashed her house and took her parrot while wrongly repossessing her home.

Forty-six-year-old Angela Iannelli sued the bank on Monday.

She claims her mortgage was up-to-date when one of the banking giant’s contractors damaged furniture, took her pet parrot, Luke, and padlocked her door in October.

In a statement, the bank said it “sincerely apologises” and has tried for months to resolve the issue.

The bank said it has “zero tolerance for this kind of error” and said it will quickly review the lawsuit’s allegations and consider any hardship that resulted.

The woman, who lives in the Pittsburgh area, said she eventually got her bird back after repeated calls to the bank.
This part of the proposal may as well be called the Lloyd Blankfein Act of 2009, for it is clearly targeted at Goldman Sachs and its largely unrepentant CEO. As a senior administration official put it: “As we saw the ones that got special protections turn around and make significant profits on proprietary trading, it persuaded the president and the economic team that it is worth looking at it in some detail.” And while the stocks of all the big investment banks are down today, it will affect most directly the firms that derive maximum benefits from the cheap funding and have small presences in the lower-margin bricks-and-mortar banking businesses: Goldman and Morgan Stanley. This isn’t as big a deal for JPMorgan Chase, which in the most recent quarter derived less than one-fifth of its revenues from investment banking, or for Bank of America.