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Tag Archives: regulation
Update: The Best Way to Rob a Bank is to Own One
by William K. Black, New Economic Perspectives Editor’s note: This is a summary of the writings of Prof. Black over the past several years encompassing the manifest destiny of the political and economic thinking that resulted in the Great Financial … Continue reading
Posted in Banking News, money
Tagged banking, banking fraud, prosecution of fraud, regulation, William K. Black
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The Great Debate©: Is More Financial Regulation Needed?
The debate is started by a Wall Street Journal column written by Wendy Long, Republican/Conservative Candidate for the U.S. Senate from New York. The reply is by William K. Black, a frequent contributor to Global Economic Intersection. A Smarter Approach … Continue reading
Size in Banking: Efficiency of Scale vs. Abuse of Power
by Guest Authors: Eric De Keuleneer, DeKeuleneer.com and Nastassia Leszczynska Editor’s Note: This is posted as a companion article to The Great Debate©: Will Dodd-Frank be Effective? Introduction: Economies of scale, optimal size and competition in banking It is worth … Continue reading
Posted in Banking News
Tagged banking, bonds, derivatives, efficiency, Eric De Keuleneer, investment banking, Nastassia Leszczynska, regulation, risk
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The Great Debate©: Will Dodd-Frank be Effective?
Written by Elliott Morss, Bradley G. Lewis and William K. Black Editor’s note: The question of whether the 2010 Dodd-Frank Act will be effective in reducing systemic risk in the financial sector was brought into new focus by a a … Continue reading
The Great Debate©: Does Government Create Uncertainty and Prolong the Recession?
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
Posted in Great Debate©
Tagged fraud, Nicholas Bloom, regulation, Scott R. Baker, Steven J. Davis, uncertainty, William K. Black
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The Virgin Crisis: Systematically Ignoring Fraud as a Systemic Risk
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
Posted in Government
Tagged banking, financial crisis, fraud, regulation, William K. Black
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Banks: Flawed Regulation
Reversing the robotic gigantism of banking ought to be the top priority for reform. Bankers were once supposed to know every borrower, and to make case-by-case lending decisions. Now, however, banks use models conjured up by faraway financial wizards to mass-produce credit and a range of derivative products. Mass-production favors the growth of mega-banks, so, unlike the misjudgments of lending officers, these behemoths’ defective models have had disastrous consequences. Continue reading
Making Selective Regulation Work
This essay addresses options available when regulation is needed but is excessively expensive and/or cumbersome. How is desired behavior incentivized? Continue reading
