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Day 3 of the "Why Won't #Krugman Post On Bill Black?" Watch

OK, OK, day one million. See the FBI's warnings on bankster fraud from 2004. So who's doing the perp walk? Nobody. Nobody at all. Odd, that. Or not:

See Bill Black’s take on the fraud and the systemic response to it. You should note that, while the FBI was concentrated on criminal gangs outside of financial institutions, Black believes the problem is the collusion of the financial institutions themselves in the frauds. Obviously, in an environment that relies largely on self-reporting by regulated institutions, there is no incentive to report, if much of the criminal activity is within those institutions.

Human nature being what it is, as Miss Marple would say.

Since Edward Harrison at NC posted the first of this five part series on accounting control fraud from Bill Black, I'll post the last, but listen to them all (and not Morning Edition, mkay?):

So, to Paul Krugman. Here's Bill Black -- who, as a former S&L enforcer, is fully credentialled -- explains how these still-on-the-streets bankster perps used accounting control fraud to loot their companies (in his Moyers interview):

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?

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. [See Yves here on the further, meta-fraudulent complexity layered on top of already fraudulent mortgages.] 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 you're suggesting, saying that CEOs of some of these banks and mortgage firms in order to increase their own personal income, deliberately set out to make bad loans?

WILLIAM K. BLACK: Yes.

So, in Paul Krugman, we've got a liberal and Nobel prizewinning economist -- though I grant that finance and economics are not the same -- with a bully pulpit at Izvestia, and he's silent on accounting control fraud by the banksters. Why is that? Why isn't the dog barking? Could it be that Krugman's just talking to the wrong guys at Princeton? Did Obama threaten his cats? What's going on?

NOTE For the great Bill Black on accounting control fraud, see his interview with Bill Moyers. He's making the case Krugman need to debunk, refute, or accept (and then take the appropriate action).

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