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William K. Black

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William K. Black
Born(1951-10-06)October 6, 1951
NationalityAmerican
Other namesWilliam Kurt Black
Occupation(s)Lawyer, academic, author
former bank regulator
Known forDeveloping the concept of "control fraud"

William Kurt Black (born 6 September 1951) is an American lawyer, academic, author, and a former bank regulator.[1] Black's expertise is in white-collar crime, public finance, regulation, and other topics in law and economics. He developed the concept of "control fraud", in which a business or national executive uses the entity he or she controls as a "weapon" to commit fraud.

Background

Black is currently an Associate Professor of Economics and Law at the University of Missouri-Kansas City School of Law. He was the Executive Director of the Institute for Fraud Prevention from 2005-2007 and previously taught at the LBJ School of Public Affairs at the University of Texas, and at Santa Clara University. Black was litigation director for the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and the General Counsel of the Federal Home Loan Bank of San Francisco.[2]

He took the notes during the Keating Five meeting that were later published in the press, and brought the event to national attention and a congressional investigation.

Published works

Black is the author of, among others, The Best Way to Rob a Bank is to Own One: How Corporate Executives and Politicians Looted the S&L Industry, 2005, University of Texas Press, ISBN 0292721390.[3][4][5]

Bill Moyers Journal appearance

On April 3, 2009 Black appeared on Bill Moyers Journal on PBS and provided critical commentary on the U.S. banking crisis.[6] In the interview with Bill Moyers,[7] Black asserted that the banking crisis in the United States that started in late 2008 is essentially a big Ponzi scheme; that the "liar loans" and other financial tricks were essentially illegal frauds; and that the triple-A ratings given to these loans was part of a criminal cover-up. He said that the "Prompt Corrective Action Law" passed after the Savings and loan crisis mandated that ailing banks should be put into receivership. Black also stated that trying to hide how bad the situation is will simply prolong the problem, as happened in Japan's lost decade. Black stated that Timothy Geithner is engaged in a cover-up, and that the administration does not want people to understand what went wrong or how bad the banking situation is today.

Testimony before Congress on the bankruptcy of Lehman Brothers

On April 20, 2010, Black testified before the House Financial Services Committee in a hearing titled "Public Policy Issues Raised by the Report of the Lehman Bankruptcy Examiner." He testified about the role that Alt-A mortgages, what he called "liars loans," on residential real estate played in the downfall of Lehman Brothers. His testimony was that "Lehman’s failure is a story in large part of fraud. And it is fraud that begins at the absolute latest in 2001, and that is with their subprime and liars’ loan operations."[8]As explained in his prepared statement, his reference was to Aurora Loan Services, Inc., which was a subsidiary of Lehman: "Lehman’s principal source of (fictional) income and real losses was making (and selling) what the trade accurately called 'liar’s loans' through its subsidiary, Aurora. (The bland euphemism for liar’s loans was 'Alt-A.') Liar’s loans are 'criminogenic' (they create epidemics of mortgage fraud) because they create strong incentives to provide false information on loan applications."[9]

On the same page in his prepared testimony Black referenced an article from the Denver Post dated September 16, 2008, the day after Lehman filed for bankruptcy. The article reported on the uncertain fate of Aurora Loan Services, which was based nearby, and quoted Lehman's chief financial officer as saying the previous week that, "The majority of our write-downs were in Alt-A driven by an increase in.. . delinquencies and loss expectations." The article also said that Lehman was "among the first of its peers to originate home loans and securitize them for sale across the globe, and it fueled the growth of the Alt-A loan."[10]

References

  1. ^ "University of Missouri - Kansas City" (PDF).
  2. ^ "UMKC School of Law". Law.umkc.edu. Retrieved 2009-04-05; also see Norma M. Riccucci (1995). Unsung Heroes: Federal Execucrats Making a Difference. Georgetown University Press.. {{cite web}}: Check date values in: |accessdate= (help)
  3. ^ William K. Black, 2005. The Best Way to Rob a Bank Is to Own One. Description and chapter-preview links via scroll.
  4. ^ William K. Black, 2005. "'Control Frauds' as Financial Super-predators: How 'Pathogens' Make Financial Markets Inefficient," Journal of Socio-Economics, 34(6), pp. 734-755 (press Zoom). Abstract.
  5. ^ William K. Black, 2009. "Those Who Forget the Regulatory Successes of the Past are Condemned to Failure," Economic & Political Weekly, 44(13), pp. 80-86,. Abstract.
  6. ^ "PBS".
  7. ^ "Bill Moyers Journal. Transcripts". PBS. Retrieved 2009-04-05.
  8. ^ Hamsher, Jane (April 20, 2010). "Transcript & Video: Bill Black Testimony on Lehman Bankruptcy". FireDogLake. Retrieved April 25, 2010. {{cite web}}: Check |authorlink= value (help)
  9. ^ "Prepared Testimony of William K. Black" (PDF). Committee Hearing: Public Policy Issues Raised by the Report of the Lehman Bankruptcy Examiner. United States House of Representatives. April 20, 2010. p. 5. Retrieved April 25, 2010.
  10. ^ Griffin, Greg (September 16, 2008). "Local Lehman arm led in Alt-A loans". Denver Post. Retrieved April 25, 2010.


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