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Reply #51: Bill Black: Fiat Justitia Ruat Caelum (Let Justice be Done, Though the Heavens Fall) [View All]

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Apr-23-11 10:20 AM
Response to Reply #50
51. Bill Black: Fiat Justitia Ruat Caelum (Let Justice be Done, Though the Heavens Fall)
http://www.nakedcapitalism.com/2011/04/bill-black-fiat-...

This post by Bill Black is important because it presents and dissects an ugly example of failure of morality and common sense within what passes for the elite in the US....

LENGTHY BUT WORTHY


This was not a fraud free financial crisis. It is a prosecution free financial crisis for the elites whose frauds caused the crisis. Historically, control frauds frauds run by the senior officers who control seemingly legitimate banks and use them as weapons to defraud creditors and shareholders drive serious financial crises. That was true of our two most recent financial scandals. The national commission investigating the causes of the S&L debacle found that at the typical large failure fraud was invariably present. The major Enron era frauds were all control frauds. This current crisis was driven by accounting control frauds. We have known, for well over a century, how to make home loans in a manner that limits fraud to negligible levels. We have known for centuries that if bankers do not underwrite the inevitable results are massive losses, endemic fraud, and failure. Honest mortgage lenders do not make liars loans. No one ever forced a banker to make liars loans. Only fraudulent mortgage lenders make material numbers of liars loans. My prior columns have explained that it was the lenders that overwhelmingly put the lies in liars loans.
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