Econintersect Analysis Blog
Tag Archives: fraud
by Tom Eldridge Large amounts of deleveraging have taken place in the private sector. There is a lot more yet to be done, as implied by the following graph. Click on graph for larger image.
By William K. Black, New Economic Perspectives The imminent passage of the fraud-friendly JOBS Act caused me to reflect on the fact that the worst anti-regulatory travesties in the financial sphere have had broad, bipartisan support. The Garn-St Germain Act … Continue reading
by Guest Author ECB Watch This is a companion to another article to be published Draghi Nomination Based on Deception. Here, we address the broader issue of the falsification of Greece’s public finance data. We will look into Eurostat audits (Walter … Continue reading
This is a debate between Scott R. Baker (Stanford Univ.), Nicholas Bloom (Stanford Univ.) and Steven J. Davis (Univ. of Chicago) PRO and William K. Black (Univ. of Missouri Kansas City) ANTI The first presentation in the debate (the PRO … Continue reading
by Guest Author Shah Gilani
Alabama’s Jefferson County filed for bankruptcy protection on Wednesday, making it the largest municipal bankruptcy in U.S. history.
But believe it or not, that’s not the biggest story here.
The big story is how J.P. Morgan Chase & Co. (NYSE:JPM) – specifically, J.P. Morgan’s Securities arm – has a filthy hand in the whole Jefferson County saga.
This isn’t breaking news. I’ve written about it before and so have others. You just may have missed it because the spin machine was so effective that the story got buried fairly quickly. Continue reading
by William K. Black
One of the most revealing things about this crisis is the unwillingness to investigate whether “accounting control fraud” was a major contributor to the crisis. The refusal to even consider a major role for fraud is facially bizarre. The banking expert James Pierce found that fraud by senior insiders was, historically, the leading cause of major bank failures in the United States. The national commission that investigated the cause of the S&L debacle found:
“The typical large failure [grew] at an extremely rapid rate, achieving high concentrations of assets in risky ventures…. [E]very accounting trick available was used…. Evidence of fraud was invariably present as was the ability of the operators to “milk” the organization” (NCFIRRE 1993)
Two of the nation’s top economists’ study of the S&L debacle led them to conclude that the S&L regulators were correct – financial deregulation could be dangerously criminogenic. Continue reading
By William K. Black
A reader has asked several important questions about liar’s loans that are critical to understanding the causes of the ongoing U.S. crisis. By 2006, half of all loans called “subprime” were also liar’s loans. Roughly one-third of all home loans made in 2006 were liar’s loans. The crisis was originally called a “subprime” crisis, but it was always a liar’s loan crisis. The reader is correct to inquire about causation and moral culpability… Yes, “liar’s” loans are what the industry called “stated income” and “alt-a” loans when they were talking among themselves. Income was the primary category that was “stated” – i.e., listed without any verification as to accuracy – in a liar’s loans. Some liar’s loans, however, also “stated” employment, assets, and liabilities. “Stated income” is a euphemism for a liar’s loans, but it is at least honest about its insanity. Readers get it right immediately – they understand that no honest mortgage lender would make loans on this basis. (I expand on this point below.) Continue reading