PBS program Bill Moyers Journal has been available by broadcast, podcast and online transcript. Moyers is proudly a long time bane to public injustice and America’s military industrial complex. Also, of course, to latter day tea baggers who dangle on the line between sanity and insanity.
In 2003, Bush appointee Kenneth Tomlinson, chair of the CPB, claimed liberal bias at PBS. In the name of balance, he wanted progressive voices replaced by business advocates from the Wall Street Journal and right wing toadies such as Tucker Carlson. He targeted Moyers for removal as the most striking example of left wing bias.
Tomlinson had his own problems and met his political end after a critical report by the Inspector General and accusations that he misused federal funds. Moyers returned to PBS. However, nearing age 76, this week he is taking retirement to pursue other interests. He assures loyal listeners that, this time, he is not being pushed out the door.
Personally, I’ll miss Moyers, although I admit to skipping most of his recent programs while he listened to Americans argue endlessly over healthcare changes. April 23, the next to last program, was an example of his fine journalism.
Despite evidence of history’s greatest frauds during recent years, almost no Wall Street criminals have been held to account. On the contrary, many used public funds to further enrich themselves. William K. Black is a former bank regulator. He was testifying to Congress last week about the failed financial firm, Lehman Brothers. He sat down with Moyers.
I urge readers to listen to the podcast or read through the transcript HERE. Excerpts follow:
WILLIAM K. BLACK: Fraud is deceit. And the essence of fraud is, “I create trust in you, and then I betray that trust, and get you to give me something of value.” And as a result, there’s no more effective acid against trust than fraud, especially fraud by top elites, and that’s what we have.
. . . Lehman’s failure is a story in large part of fraud. And it is fraud that begins at the absolute latest in 2001.
BILL MOYERS: Bill Black is with me now. One of the country’s leading experts on crimes in high places he teaches economics and law at the University of Missouri-Kansas City, and wrote this book, THE BEST WAY TO ROB A BANK IS TO OWN ONE.
BILL MOYERS: What did you think of the President’s speech late this week?
WILLIAM K. BLACK: It’s a good speech. He’s a very good spokesman for his causes. I don’t think substantively the measures are going to prevent a future crisis. And I was disappointed that he wasn’t willing to be blunt. He used a number of euphemisms, but he was unwilling to use the F word.
BILL MOYERS: The F word?
WILLIAM K. BLACK: The F word’s fraud in this. And it’s the word that explains why we have these recurrent, intensifying crisis.
BILL MOYERS: How is that? What do you mean when you say fraud is at the center of it?
WILLIAM K. BLACK: Well, first, when you deregulate or never regulate, mortgage bankers were never regulated, you effectively have decriminalized that industry, because only the regulators can serve as the sherpas, that the FBI and the prosecutors need to be able to understand and prosecute these kind of complex frauds. They can do one or two or maybe three on their own, but when an entire industry is beset by wide scale fraud, you have to have the regulators. And the regulators were the problem. They became a self-fulfilling prophecy of failure, because they, President Bush appointed people who hated regulation. I call them the anti-regulators. And that’s what they were.
. . .And you might especially think that, if you knew that [Edward] Gramlich, one of the Fed members, went personally to Alan Greenspan and said, there’s a housing bubble. And there’s a terrible crisis in non-prime. We need to send the examiners in. We need to use our regulatory authority. And Greenspan refused. Lehman was brought down primarily by selling liar’s loans. It was the biggest seller of liar’s loans in the world.
And when we look at these liar’s loans, we find 90 percent fraud. 90 percent. And we find that most of the frauds are not induced by the borrower, but they’re overwhelmingly done by the loan brokers.
BILL MOYERS: And liar’s loans are?
WILLIAM K. BLACK: A liar’s loan is we don’t get any verified information from you about your income, your employment, your job history or your assets.
BILL MOYERS: You give me a loan, no questions asked?
WILLIAM K. BLACK: No real questions asked. Certainly no answers checked. . . Who got in trouble at Lehman? You got in trouble if you told the truth. They fired the people who found the problems. They promoted the people that caused the problem, and they gave them massive bonuses.
BILL MOYERS: I watched the testimony where you were present the other day in the Lehman hearings. And there was a very moving moment with a former vice-president of Lehman Brothers who had gone and tried to blow the whistle, who tried to get people to pay attention to what was going on. Take a look.
MATTHEW LEE: I hand-delivered my letter to the four addressees and I’ll give a quick timeline of what happened, May 16th was a Friday, on the Monday I sat down with the chief risk officer and discussed the letter, on the Wednesday I sat down with the general counsel and the head of internal audit, discussed the letter. On the Thursday I was on a conference call to Brazil. Somebody came into my office, pulled me out, and fired me on the spot with out any notification. I stayed, sorry.
BILL MOYERS: Matthew Lee, vice-president of Lehman Brothers, fired because he tried to blow the whistle. What does that say to you?
WILLIAM K. BLACK: Well, it tells me that they were covering up the frauds, that they knew about the frauds and that they were desperate to prevent other people from learning.
BILL MOYERS: Matthew Lee told the accounting firm Ernst & Young what was going on. Isn’t the accounting firm supposed to report this, once they learn from somebody like him that there’s fraud going on?
WILLIAM K. BLACK: Yes, they’re supposed to be the most important gatekeeper. They’re supposed to be independent. They’re supposed to be ultra-professional. But they have an enormous problem, and it’s compensation. And that is, the way you rise to power within one of these big four accounting firms is by being a rainmaker, bringing in the big clients.
And so, every single one of these major frauds we call control frauds in the financial sphere has been– their weapon of choice has been accounting. And every single one, for many years, was able to get what we call clean opinions from one of the most prestigious audit firms in the world, while they were massively fraudulent and deeply insolvent.
BILL MOYERS: I read an essay last night where you describe what you call a criminogenic environment. What is a criminogenic environment?
WILLIAM K. BLACK: A criminogenic environment is a steal from pathology, a pathogenic environment, an environment that spreads disease. In this case, it’s an environment that spreads fraud. And there are two key elements. One we talked about. If you don’t regulate, you create a criminogenic environment because you can get away with the frauds. The second is compensation. And that has two elements. One is the executive compensation that people have talked about that creates the perverse incentives. But the second is for these professionals. And for the lower level employees, to give the bonuses. And it creates what we call a Gresham’s dynamic. And that just means cheaters prosper. And when cheaters prosper, markets become perverse and they drive honesty out of the market. . .
Read on at Bill Moyers Journal. It describes outrageous frauds, but where is the citizen outrage? Can British Columbians learn anything from this or will we allow our own commercial criminals to steal the legacies of our children?