Econintersect: Chris Martenson interviewed Bill Black on Saturday 13 July 2013. The topic was fraud in financial markets. The 47 minute interview is available after the Read more >> jump.
Here is one excerpt from Black’s comments when the discussion turned to the Obama administration decision not to prosecute the largest banks for fraud:
If you can steal with impunity, as soon as you devastate regulation, you devastate the ability to prosecute. And as soon as that happens, in our jargon, in criminology, you make it a criminogenic environment. It just means an environment where the incentives are so perverse that they are going to produce widespread crime. In this context, it is going to be widespread accounting control fraud. And we see how few ethical restraints remain in the most elite banks.
You are looking at an underlying economic dynamic where fraud is a sure thing that will make people fabulously wealthy and where you select by your hiring, by your promotion, and by your firing for the ethically worst people at these firms that are committing the frauds. And so you have one of the largest banks in the world, HSBC, being the key ally to the most violent Mexican drug cartel, where they actually did so much business together that the drug cartel designed special boxes to put the cash in that they were laundering that fit exactly into the teller windows so that there would be no delay. This is the efficiency principle of drug laundering.
So these banks figuratively have the blood of over a thousand people on their hands. They are willing to fund people that murder and torture and behead folks. And they are willing to do that year after year, despite warnings from the regulators that they are doing this. And the regulators are not willing to actually take serious action until there has been “true devastation.”
Note: Bill Black (William K. Black) is Associate Professor of Economics and Law, University of Missouri Kansas City and a Global Economic Intersection contributor.
Sources:
- Bill Black: The Banks Have Blood on Their Hands (YouTube, 14 July 2013)
- Bill Black: The Banks Have Blood on Their Hands (PeakProsperity, 13 July 2013)
