Moyers drops bailout bomb on Obama

[LP NOTE: We have commented earlier on the criticism the Obama administration has received for its handling of the current financial crisis. We have also noted that the criticism has come from a broad spectrum of economists, former regulators and other individuals who do not have a particular political axe to grind. The following is just one more example.]

e PluribusMedia
Posted Fri, 04/03/2009 by Tony Wikrent

This evening, Bill Moyers interviewed William K. Black, the former senior regulator during the savings and loan crisis of the 1980s, who blew the whistle on the Keating Five (the U.S. Senators implicated in taking “gifts” from S&L bankster Charles Keating [who was] convicted of racketeering and fraud in both state and federal court after his Lincoln Savings & Loan [went bust]). Black is now an Associate Professor of Economics and Law at the University of Missouri, and the author of the recently released book, The Best Way to Rob a Bank is to Own One.

Black, who supported the presidential campaign of Barack Obama, excoriated both President Obama and former President Bush, and their Treasury Secretaries Timothy Geithner and Hank Paulson respectively, for deliberately and consciously violating the law. Specifically, the Prompt Corrective Action law, passed after the savings and loan crisis, which mandates that severely undercapitalized banks be promptly put into receivership (i.e., nationalized).

From the Bill Moyers Journal this evening:

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: In other words, they could have closed these banks without nationalizing them?

WILLIAM K. BLACK: Well, you do a receivership. No one -- Ronald Reagan did receiverships. Nobody called it nationalization.

BILL MOYERS: And that's a law?

WILLIAM K. BLACK: That's the law.

BILL MOYERS: So, Paulson could have done this? Geithner could do this?

WILLIAM K. BLACK: Not could. Was mandated—

BILL MOYERS: By the law.

WILLIAM K. BLACK: By the law.

SNIP

WILLIAM K. BLACK: In the Savings and Loan debacle, we developed excellent ways for dealing with the frauds, and for dealing with the failed institutions. And for 15 years after the Savings and Loan crisis, didn't matter which party was in power, the U.S. Treasury Secretary would fly over to Tokyo and tell the Japanese, "You ought to do things the way we did in the Savings and Loan crisis, because it worked really well. Instead you're covering up the bank losses, because you know, you say you need confidence. And so, we have to lie to the people to create confidence. And it doesn't work. You will cause your recession to continue and continue." And the Japanese call it the lost decade. That was the result. So, now we get in trouble, and what do we do? We adopt the Japanese approach of lying about the assets. And you know what? It's working just as well as it did in Japan.

(Continued here.)