Y'all know there is no love loss between little 'ol AlexTangoFuego and the bankers and investment bankers and financiers of the world. I never did much like those guys when I encountered them whilst enjoying a single malt nightcap at the Caribou Club. I think back on that now and wonder whatever the fuck was I thinking to become a member of that "members only" bastion of conspicuous consumption and everything/one that is wrong with this world. I do remember why - thinking that it was good for business - to mingle and bullshit with potential clients. I did meet a few genuine and nice people there. A few. And far between.
The money pimps were mostly assholes. Par excellence. In a French accent. Driving through town in Lamborghini's and Ferrari's and Bentley's (apostrophes for visual effect) on Sunday morning to get donuts and coffee and the Sunday Times. Overcompensating and overconfident with regard to the bulge in their Prada jeans. That would be in the back pocket, in the "billfold" as they call it in west Texas. Too much money will make a man into an arrogant God-prick and a woman into a marquisetta whore to the highest bidder. It's sad, really, to see the people who sell their souls to the Almighty God-Dollar. Empty, sad souls set for life (in theory) in mega-big and not-so-big houses alike wondering where they took the wrong turn. Longing for love and life and music and dance and art and poetry. And love, one more time for good measure.
I like to think and believe that I was an undercover radical-leftist-hippie-socialist-commie-enviro-green-fundamentalist spy/recon guy collecting intel on how to bring it all down with a little C4 or a UHaul moving van full of fermented bullshit pumped down the red carpeted stairs under the caribou horn chandeliers. Or maybe I was collecting some sort of twisted CC experience for a screenplay, or a book, or a poem, or just a memory or two. Or maybe I was just trying to get laid. (grin)
Anyway, it's a small part of my life experience, that Aspen/Caribou Club experience is. Was. A very small part of me, but definitely nothing to do with who I have always been at my core. Thank God. Thank Gawd as Madeleine Murray O'Hair would say. I'm glad that time in my life is behind me - although I miss my true friends there - my tango friends. I miss them dearly.
I am happy to be getting back to my hippie roots these days, long hair and all. But that, my friends, is another story.
So, as usual, I digressed. Here's what I wanted to post, crossposted from The Huffington Post via NiemanWatchdog.org - written by Dan Froomkin.
If it wasn't already blindingly obvious that pervasive fraud was at the heart of the financial crisis and the ensuing foreclosure catastrophe, you would think that the latest news -- that banks have routinely been lying their heads off in the rush to kick homeowners off the properties they fraudulently induced them to buy in the first place -- would pretty much clinch it.
And yet the mainstream media still by and large hasn't connected the dots.
What we are seeing all around us are the continued effects of a vast criminal enterprise that has never been brought to account, employing a process that, as University of Texas economist James Galbraith explains, involved the equivalent of counterfeiting, laundering and fencing.
So the person with the right expertise to lead us here is a criminologist -- in particular William K. Black, one of the few effective regulators in recent history (during the savings and loan crisis of the late 1980s), a notorious knocker of heads and currently professor at the University of Missouri-Kansas City and author of the book, "The Best Way to Rob a Bank Is to Own One".
I first interviewed Black in April, and recently checked back in and asked him about this ongoing problem of the mainstream media's inability to properly cover this story. He responded with this breathless and breathtaking list of failings (slightly edited for publication):
The things I think are critical and badly under-reported are:
1. The astonishing amount of mortgage fraud (literally, millions of cases annually) and how it hyperinflated the bubble and led to the Great Recession.
2. The fact that these mortgage frauds were overwhelmingly due to consciously fraudulent lending practices in which the CEOs of seemingly legitimate entities used accounting tricks as their “weapon of choice" to report higher profits and get bigger bonuses. (George A. Akerlof and Paul R. Romer got it right in the title to their 1993 article: Looting: The Economic Underworld of Bankruptcy for Profit.)
3. The disgraceful lack of prosecutions which has resulted from regulators virtually ending the practice of making criminal referrals and the pathetic March 2007 "partnership" that the FBI entered into with the Mortgage Bankers Association (the trade association of the "perps") that led the FBI and the Department of Justice to (implicitly) define out of existence fraud by the lenders (and to conceive of them as the "victim" -- which they are, but only of their controlling officers). Bush administration attorney general Michael Mukasey in June 2008 notoriously refused to create a national task force against mortgage fraud based on his claim that mortgage fraud was analogous to "white collar street crime."
4. The "echo" epidemics of fraud set off by the primary epidemic of accounting “control fraud". The fraud designed by CEOs in turn kicked off an epidemic of fraud among loan brokers and appraisers. Reporters should explore the concept of the Gresham's-style dynamic in which bad ethics were a competitive advantage and drove good ethics out of the marketplace.
5. The massive foreclosure fraud we are seeing now as another "echo" epidemic. To optimize their accounting control fraud, lenders gutted underwriting. That led to "fraud in the inducement" (vis a vis borrowers), endemic documentation problems, and an extraordinary numbers of defaults. The process required tens of thousands of real estate financing personnel to commit fraud on a daily basis as their core function. Some of these people are unemployed, but many are in the industry and are presently engaged in loan servicing. Now that their job is to foreclose on properties, there is no reason to expect that they would suddenly become honest, and they haven't.
6. The ongoing massive cover up of losses on bad assets, particularly by the “too big to fail” institutions, which I call “systemically dangerous institutions” (SDIs). Those institutions, along with Federal Reserve Board Chairman Ben Bernanke and Congress (at the behest of the Chamber of Commerce and with no opposition from the Obama administration) in April 2009 forced the Financial Accounting Standards Board (FASB) to change the rules so that the banks do not have to recognize their losses unless and until they sell the bad assets. The implications of this cover up are large (and rarely reported). At the very least, it means that Treasury Secretary Timothy Geithner's propaganda campaign about TARP saving the world at virtually no cost (perhaps even a "profit") is nonsense -- despite its success in influencing the Washington Post and Los Angeles Times. Consider:
A) The repayment of TARP funds does not mean the banks are healthy. Their asset values are often grossly inflated, which means their net worth is grossly inflated. That means that the claims that we have increased net worth requirements (and that Basel III will further increase net worth requirements) are false. Net worth requirements have meaning only if the accounting is honest
B) The repayment of TARP funds does mean that the banks are freed from any meaningful restraint on senior officer compensation. Note that absent the accounting lies the banks would often be reporting losses (and failure to meet required capital requirements, or outright insolvency) and could not pay their senior officers bonuses and would be subject to mandatory closure under the Prompt Corrective Action (PCA) law.
C) No commercial entity would have ever signed the TARP deals on the terms that the U.S. drafted for itself. The U.S. provided not only fresh money but an unlimited de facto guarantee (along with permitting phony accounting). If the U.S. had negotiated competently it would have owned virtually all the shares of every TARP recipient (which, of course, was a political impossibility).
D) The accounting lies are stalling the recovery. Markets cannot clear promptly when one creates an incentive to hold massively overvalued assets for years.
E) The losses are still there, but the taxpayers are on the hook via Fannie and Freddie and the Fed (which has taken over a trillion dollars in toxic collateral at grossly inflated values).
7. The continued absence of effective regulation. It should be scandalous that President Obama left in charge, or even promoted, the anti-regulators who permitted the Great Recession. The (failed) anti-regulator of Fannie and Freddie, for example, remains FHFA's acting director. This is significantly insane as a matter of both economics and politics. (The administration doesn't even seem to realize the issue of integrity.)
8. The crises of state and local government and the lack of a rational basis for Republican and Blue Dog opposition to the proposed revenue sharing component of the stimulus bill. The compounding insanity of the administration failing to fight for its concept and failing to make explicit how badly its removal would harm the recovery, employment, and vital government services.
9. The insanity of accepting mass, long-term unemployment rather than having the government provide productive jobs for everyone willing to work (as the employer of last resort).
I have nothing to add.
Crossposted from NiemanWatchdog.org.
Dan Froomkin is senior Washington correspondent for the Huffington Post.
And here's to the good bankers and financial folks of the world. I know it's never good to over-generalize - they are not all bad. Most of the folks out there have noble intent and are doing the right thing - trying to help people in the financial maze/ artifice of the world. I thank you for all of the rest of us. You know who you are.