Wednesday, February 8, 2012

Bill Black: On Why White Collar Crime is on the Rise, How to "Hotspot" Elite Financial Crimes, and Why Republicans and Democrats are Not Interested

On why we have high and rising levels of white collar crime: Bush and Obama both cut prosecutions of white collar criminals. It has been a unilateral disarmament.

On why Republicans and Democrats are not pursuing elite white collar crime: It would hurt campaign contributions. Finance is the leading source of campaign contributions for both parties.

On how to "hotspot" white collar crime: Going after issuers of "liars' loans" would have been the obvious way to go. You always have insufficient resources so you always look for choke-points. There are only 3 credit rating agencies, for example. If you investigated even one of them for the frauds they were committing - giving AAA ratings to liars' loans - you would have shut down the entire secondary market and the fraudulent loans. There are also only 5 investment banks. If you had gone after one of them... Lehman Brothers, for example. Or Aurora - where they  fired the fraud guy because he made a criminal referral. With very few resources you could have prevented the entire crisis.

On how hotspotting would have stopped the fraud: Hotspotting puts a shot across the bow of the rest of the industry. You have to have the regulatory cops on the beat... and they took the cops off the beat.

No comments: