If you weren't watching PBS this past week, then you wouldn't know a leading economist leveled some of the most provocative and insightful views yet about the coziness of the bankers with our government and how it continues even in the face of angry Americans losing jobs and money from coast-to-coast.
William K. Black, a professor of economics at the University of Missouri, was also a thorn in the side of the Keating Five in the early 90s. Black told Bill Moyers the credit rating services colluded with banks to unleash high yield, but potential toxic loans to flourish with relatively little government oversight by the Bush Administration. The evidence that rating services like the once-venerable Moody's slapped dubious AAA ratings on so-called pooled "liars loans" where the borrowers information was never verified has been well-known. Black said it was in both the borrowers and mortgage broker interest to inflate their earnings and credit history.
[CLICK HERE TO VIEW WILLIAM BLACK'S INTERVIEW ON BILL MOYERS]
Black's allegations point directly to the problem many people had with Treasury Secretary Timothy Geithner's appointment last December. He is simply doing the bank's bidding within the Obama Administration. The Goldman Sachs cabal of Henry Paulson, Robert Rubin and Lawrence Summers were involved with the company with as much a stake in the proliferation of subprime mortgages than any other institution, yet Federal bailout money was funneled back to Goldman Sachs and Geithner's plan to purchase toxic loans at a premium was cheered by Wall Street. I wonder why?
At one point during the interview Moyers asked if the Treasury was engaging in a cover-up to which Black said, "Absolutely."
They are scared to death. All right? They're scared to death of a collapse. They're afraid that if they admit the truth, that many of the large banks are insolvent. They think Americans are a bunch of cowards, and that we'll run screaming to the exits. And we won't rely on deposit insurance. And, by the way, you can rely on deposit insurance. And it's foolishness. All right? Now, it may be worse than that. You can impute more cynical motives. But I think they are sincerely just panicked about, 'We just can't let the big banks fail.' That's wrong.Black also maintains if the banks are, indeed, not insolvent why do they need up to $2 trillion in bailout money?
To a banker the inclination to stem the amount of panic in the Market is clear. You don't make or maintain your wealth with a jittery Dow. To those who believe in transparency and justice for the bank's fraudulent behavior, the cover-up is beginning to be worse than the original crime since unemployment continues to rise at a clip of 650,000 jobs a month and the $700 billion allotted to jar open the credit markets have been essentially wasted.
In another interview this week Black sounded even more ominous about this crisis and the diagnosis made by the Treasury when he said it could paralyze the Obama presidency. "It will be the greatest looting of the American people in our history and it will destroy the Obama presidency if it continues." And we've seen the presidential hand-tying one bad policy can have on an Administration with Bush's war in Iraq.
The populist anger that continues to rise is partly a function of the inability to face the fact the same bankers who created this crisis in the name of sheer greed continue to flourish because they have gamed both sides for their financial benefit. At a time when the civic attitude of millions of Americans was at its highest in decades with the election of Barack Obama, no soon has the corruption of Washington totally squashed it.