Mark to Fantasy Accounting And Other Crimes

William Black, a top regulator unwinding the Savings and Loan Crisis of the 1980’s offers a surprisingly blunt assessment of where things stand in our current financial crisis in a presentation at UCLA’s Hammer Forum. The author of “The Best Way to Rob a Bank Is to Own One” does not parse words, describing Timothy Geithner and Alan Greenspan as serial incompetent failures, declaring all the major banks as insolvent, condemning as essentially fraudulent the recent changes in accounting rules for banks that eliminated mark to market accounting and describing both the Bush and Obama administrations irresponsible in meeting their regulatory obligations. He describes the collusion of big banks, captive regulators, credit rating agencies nothing short of criminal.

This isn’t some radical right wing nut out to attack the Obama agenda. He is clearly  in favor of more government controls of the financial system and he has the credibility of having been the top regulator cleaning up the last big financial mess in the country who put a lot of the responsible people in jail.

Its a long video, but well worth watching.

Its interesting to note that in her latest report on the “Continuing Risk of Troubles Assets”, Eizabeth Warren, Chair of the Congressional Oversight Panel, which Congress established  to “review the current state of financial markets and the regulatory system” describes recent changes in Mark to Market Accounting in essentially the same way, though being actively empolyed by the government, her language is a bit more constrained.

In his latest report, “The FDIC IS Broke – Now What?”, Chris Martenson describes the impacts of “Mark to Fantasy” accounting and other continuing efforts to paper over the severity of the financial mess still facing the country with senseless happy talk.

It is hard to be hopeful about “green shoots” if one actually pays attention to the numbers. It’s alarming that President Obama has chosen to surround himself with people like Timothy Geithner, Lawrence Summers and Sheila Bair.

One wonders how many indictments there would be this time around if William Black were cleaning up the mess. And one has to wonder what federal response to the financial crisis would have looked like if Elizabeth Warren were Chair of the Federal Reserve or Treasury Secretary.


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