Eighteen months ago William Black was interviewed by Bill Moyers on PBS. The subject of the interview was fraud.
WILLIAM K. BLACK – when we look at these liar’s loans, we find 90 percent fraud. 90 percent. And we find that most of the frauds are not induced by the borrower, but they’re overwhelmingly done by the loan brokers.
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No real questions asked. Certainly no answers checked. In fact, we just had hearings last week about WaMu, which is also a huge player in these frauds. Washington Mutual, which used to make, run all those ads making fun of bankers who, because they were stuffy and looked at loan quality before they made a loan. Well, WaMu didn’t do any of that stuff. And of course, WaMu had just massive failures. And who got in trouble at WaMu? Who got in trouble at Lehman? You got in trouble if you told the truth. They fired the people who found the problems. They promoted the people that caused the problem, and they gave them massive bonuses.
It wasn’t just low-level employees. Matthew Lee, vice-president of Lehman Brothers, was fired without advanced notice for trying to expose the fraud in his company. It’s what Black refers to as “control fraud”.
This was all known in the months after the 2008 collapse, yet there hasn’t been a single, solitary executive sent to jail for causing this disaster. So why should anyone be surprised that the fraud on Wall Street has continued to get worse?