Monday, April 06, 2009

The Dubious Parallels, Continued

We've already discussed the dubiousness of Atlas Shrugged's relevance to the current economic crisis, which seems to be largely due to a confusion between cause and effect. Now the great William K Black, investigator and author of the '80s S&L expose "The Best Way To Rob A Bank Is To Own One", accuses CEOs and management of a calculated dishonesty that lies at the heart of the problem.

WILLIAM K. BLACK: The FBI publicly warned, in September 2004 that there was an epidemic of mortgage fraud, that if it was allowed to continue it would produce a crisis at least as large as the Savings and Loan debacle. And that they were going to make sure that they didn't let that happen. So what goes wrong? After 9/11, the attacks, the Justice Department transfers 500 white-collar specialists in the FBI to national terrorism. Well, we can all understand that. But then, the Bush administration refused to replace the missing 500 agents. So even today, again, as you say, this crisis is 1000 times worse, perhaps, certainly 100 times worse, than the Savings and Loan crisis. There are one-fifth as many FBI agents as worked the Savings and Loan crisis.

BILL MOYERS: You talk about the Bush administration. Of course, there's that famous photograph of some of the regulators in 2003, who come to a press conference with a chainsaw suggesting that they're going to slash, cut business loose from regulation, right?

WILLIAM K. BLACK: Well, they succeeded. And in that picture, by the way, the other — three of the other guys with pruning shears are the...

BILL MOYERS: That's right.

WILLIAM K. BLACK: They're the trade representatives. They're the lobbyists for the bankers. And everybody's grinning. The government's working together with the industry to destroy regulation. Well, we now know what happens when you destroy regulation. You get the biggest financial calamity of anybody under the age of 80.

(Italics my emphasis).

Hat tip to Calculated Risk.

1 comment:

JayCross said...

Might be somewhat off-topic, but there seemed to be a Randian undercurrent to this story. (And a hint of relevance to current times.)