Monday, April 30, 2012

Prof. Bill Black: Our System is So Flawed That Fraud is Mathematically Guaranteed! (Part 1)

Professor William Black, who was a former bank regulator and prosecutor during the Savings and Loan crisis in the early 1990s, told Chris Martenson in an podcast that losses from today's control frauds in the financial system "exceed the financial losses from all other forms of property crime combined!" When Professor Black was asked what he thought about hedge fund Paulson & Co.'s role in picking subprime mortgage-backed securities that were referenced in the Abacus synthetic CDO that Paulson sold short via Goldman Sachs (who then sold long exposure to IKB and RBS/ABN AMRO), he went WAY back and explained how the whole mortgage fraud epidemic started in the 1990s after the S&L crisis, which became systemic when Washington Mutual and Citicorp bought the wholesale lender/largest subprime lender Ameriquest. He then mentioned how the FBI said there was a huge mortgage fraud epidemic in 2004, but bank regulators didn't even contact them. And in 2006 when one in every three loans were liars loans (fraud). Chris Martenson and Bill Black also discussed how asymmetric information in the financial system created an "intellectual hole" that was "enough to drive the world's largest financial bubble through and the biggest epidemic of elite fraud in the history of the world", which of course is the foundation of most derivatives.

Like 50 Cent's movie "Get Rich or Die Tryin'", the financial system gets rich or gets bailed out trying! Crony capitalism FTW! Listen to part #1 below and part #2 at Chris Martenson's site.




Source: ChrisMartenson.com


Source: FBI.gov: Mortgage Fraud Report 2006



Related: Janet Tavakoli on Bank "Control Fraud", Credit Default Swaps, MF Global's Total Return Swap-to-Maturity Trade, and Missing Money

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