Black: “Our financial institutions are being run by sociopaths”

January 24th, 2011

As I’ve said before, William K Black, professor of economics and law at the University of Missouri, and the senior regulator during the US Savings and Loan crisis is, one of the sharpest commentators on the causes of the global financial crisis. In this interview with The Real News Network, Black says that:

“We have negative accountability. If you were an important contributor to this crisis you were promoted, and reappointed and given massive bonuses. There’s not been a single arrest, a single indictment, a single conviction, of one of the senior insiders at these major non-prime lenders. None….

It’s as if you took your kids, when they were teenagers, and when they did something outrageous that hurt other people, you tripled their allowance, instead of punishing them. You turn out psychopaths and sociopaths.

And we now have sociopaths in control of our major financial institutions and important levers of government as well.”

Here’s part two of the Real News interview:-

In an excellent article published on Benzinga today Black said the current approach to regulating financial institutions is inherently unsound. This is not only because it is being put together by the architects of the crisis — bankers and economists — but also because it gives much too much credence to capital ratios. Black said it is “impossible to build a sound system of banking regulation based on capital regulation as it is conceived in the Basel process”. He added that the Basel process is undermined by the three flawed assumptions that underpin it. These are:-

  1. Capital requirements are the ideal form of banking regulation.
  2. Capital requirements can be set without establishing sound accounting.
  3. Accounting control fraud is not a serious concern.

I particularly like this sentence:-

“The Basel process relies primarily on capital regulation, but ignores the accounting games that allow banks to create their reported capital.”

The key underlying problem is that, even though it’s been wholly discredited by the crisis (see this article by Professor Richard A. Werner), neo-classical economics still underpins the political, economic, regulatory and Basel committee response.

Here’s a more recent interview Black gave to Real News in December 2010. As usual, Black is as clear as a bell on government lies, deceit and propaganda, banking lies and subterfuge, ways in which banks hide their losses, and continued clandestine bailouts.

More at The Real News

Short URL: https://www.ianfraser.org/?p=3349

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2 Comments for “Black: “Our financial institutions are being run by sociopaths””

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