[Update April 5, 2009: I did a little clean up editing to make this post more readable. I also added more links.]
[Update April 6, 2009: I embedded the video of the interview.]
Bill Moyers has become a believer in conspiracy theories - and that's a good thing. Because there really is a conspiracy by the elite to destroy this country. The current financial crisis has exposed them. Just like draining a pond can expose hidden evidence in a crime. The lower the Dow sinks the more shipwrecks are exposed. Of course the Dow is now back up so everything must be fine - except that the unemployment rate is still at peak levels.
If you haven't watched it yet, I have embedded the video below. You can also go to Bill Moyers' website and watch the interview with Bill Black here, and read the full transcript here.
Mr. Black must have got his name from his dark sense of humor. He has an ironic smile on his face throughout the whole interview. Moyers plays the straight man tossing leading questions in Bill B's direction, while Bill B proceeds to answer by hitting one home run ball after another out of the park. Either he's an avid reader of Future News Today (FNT) or we are telekinetically connected, because almost every point he makes in the interview is contained in the pages of recent FNT articles.
BILL MOYERS: In your book, you make it clear that calculated dishonesty by people in charge is at the heart of most large corporate failures and scandals, including, of course, the S&L, but is that true? Is that what you're saying here, that it was in the boardrooms and the CEO offices where this fraud began?Have Bill M and Bill B been reading my blog entries with apropos titles such as "Goldman Sachs: Wall St. Gangstas" and "Wall Street's gigantic Ponzi scheme"? Just asking.
WILLIAM K. BLACK: Absolutely.
BILL MOYERS: How did they do it? What do you mean?
WILLIAM K. BLACK: Well, the way that you do it is to make really bad loans, because they pay better. Then you grow extremely rapidly, in other words, you're a Ponzi-like scheme. And the third thing you do is we call it leverage. That just means borrowing a lot of money, and the combination creates a situation where you have guaranteed record profits in the early years. That makes you rich, through the bonuses that modern executive compensation has produced. It also makes it inevitable that there's going to be a disaster down the road.
BILL MOYERS: So if your assumption is correct, your evidence is sound, the bank, the lending company, created a fraud. And the ratings agency that is supposed to test the value of these assets knowingly entered into the fraud. Both parties are committing fraud by intention.This is exactly what I described in my article titled "Welcome to the Wall St. jungle" where I said, "This makes Madoff's Ponzi scheme look like child's play." And described how "CDSs were the mechanism for turning junk into gold," because it was the CDS guarantee slapped on the toxic junk that convinced the ratings agencies to give them their AAA seal of approval.
WILLIAM K. BLACK: Right, and the investment banker that — we call it pooling — puts together these bad mortgages, these liars' loans, and creates the toxic waste of these derivatives. All of them do that. And then they sell it to the world and the world just thinks because it has a triple-A rating it must actually be safe. Well, instead, there are 60 and 80 percent losses on these things, because of course they, in reality, are toxic waste.
BILL MOYERS: You're describing what Bernie Madoff did to a limited number of people. But you're saying it's systemic, a systemic Ponzi scheme.
WILLIAM K. BLACK: Oh, Bernie was a piker. He doesn't even get into the front ranks of a Ponzi scheme...
But as I have also said this is much more than a financial crisis.
BILL MOYERS: Yeah, and this week in New York, at this conference, you described this as more than a financial crisis. You called it a moral crisis.This is similar to what I said, "not only is this a financial mess of biblical proportions, but underlying it all is a level of fraud which is unimaginable. It involves the government and the Wall St. banks. It is a level of corruption that is at first shocking and then nauseating."
WILLIAM K. BLACK: Yes.
And what about that government involvement which I allege - what does Bill M's guest have to say about that?
BILL MOYERS: Who's covering up?By this time you've got the idea that Bill Moyers is presenting a conspiracy theory on mainstream media during prime time, and he's taking it quite seriously. His guest, Bill Black, is saying that the banks conspired to defraud the American public, and that the federal goverment was a co-conspirator. And Bill Moyers is agreeing with him.
WILLIAM K. BLACK: Geithner is charging, is covering up. Just like Paulson did before him. Geithner is publicly saying that it's going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they're allowing all the banks to report that they're not only solvent, but fully capitalized. Both statements can't be true. It can't be that they need $2 trillion, because they have masses losses, and that they're fine.
These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed, not because...
BILL MOYERS: What do you mean?
WILLIAM K. BLACK: Well, Geithner has, was one of our nation's top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud. All this pig in the poke stuff happened under him. So, in his phrase about legacy assets. Well he's a failed legacy regulator.
BILL MOYERS: To hear you say this is unusual because you supported Barack Obama, during the campaign. But you're seeming disillusioned now.
WILLIAM K. BLACK: Well, certainly in the financial sphere, I am. I think, first, the policies are substantively bad. Second, I think they completely lack integrity. Third, they violate the rule of law. This is being done just like Secretary Paulson did it. In violation of the law. We adopted a law after the Savings and Loan crisis, called the Prompt Corrective Action Law. And it requires them to close these institutions. And they're refusing to obey the law.
BILL MOYERS: Yeah. Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?I want to pick up on that comment that Bill B threw in there where he says, "it may be worse than that. You can impute more cynical motives." Because I do think it is "worse than that" and I do think that there are "more cynical motives". And honestly I think that Black believes that there are more "cynical motives" at work, its just that he's not willing to talk about it on a TV broadcast. But I wonder what he would say about his true suspicions if you could have a private conversation with him.
WILLIAM K. BLACK: Absolutely.
BILL MOYERS: You are.
WILLIAM K. BLACK: Absolutely, because 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.
And just when I thought that they would never get around to talking specifically about Goldman Sachs, the interview suddenly took a turn in that direction.
WILLIAM K. BLACK: [...] AIG was being used secretly to bail out favored banks like UBS and like Goldman Sachs. Secretary Paulson's firm, that he had come from being CEO. It got the largest amount of money. $12.9 billion. And they didn't want us to know that. And it was only Congressional pressure, and not Congressional pressure, by the way, on Geithner, but Congressional pressure on AIG.Like I've said before, we need a Watergate style special prosecutor to hold a congressional investigation to "blast it out". Of course as I have reported there is the TARP Special Investigator General, Neil Barofsky, who seems to have the tools at his disposal to launch such an investigation. But so far I have not been impressed with his results. Maybe that willl change now that Rep. Cummings has lit a fire under his butt. Up until now it has been up to New York Attorney General Mario Cuomo, who has been leading the investigation.
Where Congress said, "We will not give you a single penny more unless we know who received the money." And, you know, when he was Treasury Secretary, Paulson created a recommendation group to tell Treasury what they ought to do with AIG. And he put Goldman Sachs on it.
BILL MOYERS: Even though Goldman Sachs had a big vested stake.
WILLIAM K. BLACK: Massive stake. And even though he had just been CEO of Goldman Sachs before becoming Treasury Secretary. Now, in most stages in American history, that would be a scandal of such proportions that he wouldn't be allowed in civilized society.
BILL MOYERS: Yeah, like a conflict of interest, it seems.
WILLIAM K. BLACK: Massive conflict of interests.
BILL MOYERS: So, how did he get away with it?
WILLIAM K. BLACK: I don't know whether we've lost our capability of outrage. Or whether the cover up has been so successful that people just don't have the facts to react to it.
BILL MOYERS: Who's going to get the facts?
WILLIAM K. BLACK: We need some chairmen or chairwomen--
BILL MOYERS: In Congress.
WILLIAM K. BLACK: --in Congress, to hold the necessary hearings. And we can blast this out. But if you leave the failed CEOs in place, it isn't just that they're terrible business people, though they are. It isn't just that they lack integrity, though they do. Because they were engaged in these frauds. But they're not going to disclose the truth about the assets.
Alas, there is a short intro to Bill Moyers Journal which is missing from the internet version. Here is my transcript from a DVR recording I made of the show.
BILL MOYERS: I'm Bill Moyers and on this edition of The Journal Bill Black, a tough cop in one financial crisis, is back on the beat for another. He thinks Wall St. big shots should be taking the perp walk - all the way to the "big house" - say Leavenworth."Perp", in case your not familiar with the local vernacular, is short for "the perpetrator of a crime". And the "big house" is a colloquialism for prison. And Leavenworth is a federal prison not known for its hospitable environment - in fact some of the most notorious criminals have done time there including Al Capone and Mafia bosses Vito Genovese and Sam Giancana.
Sadly, Bill Black never went as far as saying that"Wall St. big shots should be taking the perp walk" in this interview. But he did say that there needs to be an investigation and that fraud had been committed. So the next logical step is to punish those responsible with jail sentences. The only question I have is whether the criminals in this case are "too big to jail"? Would the government be able to successfully prosecute "Hank" Paulson and Tim Geithner as it has Bernie Madoff?
[A reminder that the "A New Way Forward" (ANWF) national protest for "real structural change of Wall Street" is Saturday, April 11. For more information and to sign up to participate visit their website at www.anewwayforward.org.]