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Financial Crisis = Criminal Fraud?

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This interview is half an hour long, but it is lively and, for anyone concerned about the financial crisis in the U.S., well worth watching.

William K. Black, a former regulator who helped resolve the savings and loan crisis of the late 1980s and early 1990s, speaks to journalist Bill Moyers about our current financial meltdown. In his view, we are living through the consequences of a deliberate, coordinated, criminal fraud involving mortgage lenders, investment banks and rating agencies, all of whom conspired to make huge profits by repackaging worthless loans as safe, secure investements. People who knew what they were doing made a lot of money lying to the rest of us, and what’s remarkable is that most of these people are still running their institutions today.

What’s worse, the government is helping to enable the fraud in two ways. First, it is feeding the institutions tens of billions in taxpayer dollars to keep them alive, and second, it is helping them to conceal the true nature of the crisis from the American people. Despite Barack Obama’s promises of change on the campaign trail, his treasury secretary Timothy Geithner is, in Black’s words, a “failed regulator” who should have blown the whistle on this fraud while he was head of the New York Federal Reserve, but did not; and national economic advisor Larry Summers is one of the architects of the late-1990s deregulation that made this catastrophe possible in the first place. Black, an Obama supporter, feels that his presidency will be ruined unless he quickly reboots with a new economic team committed to cleanup rather than coverup.

In a similar vein, Shock Doctrine author Naomi Klein has just written an article in which she describes the disappointment felt by Obama supporters when they see their man sell out to failed ideologies, in both economic and foreign policy. She calls on us to stop waiting for Obama to deliver the change on his own, and start pushing back from below.

    If the superfan culture that brought Obama to power is going to transform itself into an independent political movement, one fierce enough to produce programs capable of meeting the current crises, we are all going to have to stop hoping and start demanding.

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