Is the US Financial System One Big Ponzi Scheme?

April 5, 2009

(ChattahBox)— What only can be described as explosive revelations regarding our financial crisis, on a recent episode of PBS’ Bill Moyers Journal, is sending shock waves throughout Washington. William K. Black, an Economics and Law professor at the University of Missouri and a former regulator during the 1980s Savings and Loan scandal, accused the Bush administration, former Treasury Secretary Paulson, current Treasury Secretary Giethner and the Obama administration, of covering up the massive “Ponzi scheme” type fraud committed by banks and the dismal, near insolvent state they are in, for fear of frightening the public.

Bill Black, with his experience as a regulator in the trenches during the Savings and Loan scandal nearly 30 years ago, knows what he is talking about. He authored a book on the fraud and greed of Wall Street, entitled, “The Best Way to Rob a Bank Is to Own One.” He outed the so called “Keating Five,” five U.S. senators, including Senator McCain for doing favors, passing favorable legislation, for the S&L’s in exchange for contributions and free trips.

Black now sees disturbing parallels between the S&L crisis and our present collapse of financial entities like AIG, Goldman Sachs and many banks. He says the present crisis is based on massive fraud by American banks and credit agencies, which floated fraudulent instruments Black calls “liars loans” to secure AAA ratings, amounting to a large-scale Ponzi scheme. The Ponzi scheme guaranteed outrageous early profits that CEOs grabbed in bonuses, but like any Ponzi scheme, it all came to a crashing halt taking our economy down with it.

Black saves his most scathing criticism for the Bush administration and former Treasury Secretary Paulson. The Bush administration created the perfect storm for the financial crisis by de-regulating the entire financial industry, allowing the Wall Street Robber Barons to operate with their fraudulent schemes completely unfettered, with no oversight.

Paulson he says, a former CEO of Goldman Sachs, had a huge conflict of interest problem, when he steered the largest amount of the bailout funds, at $12.9 billion to his former firm. Paulson also placed Goldman Sachs on a committee that advised the Treasury on what actions to take regarding AIG, when Goldman Sachs had a huge personal stake in the outcome. Black is flabbergasted that Paulson was allowed to get away with his shenanigans, without a public outcry for a criminal investigation.

Black didn’t leave current, Treasury Secretary Geithner unscathed. He says Geithner failed to act during his reign as head of the Federal Reserve Bank of New York, by failing to stop the subprime scandal. Despite a warning from the FBI about epidemic fraud going on in financial sectors, Geithner failed to issue regulations to deal with it.

The Obama administration was left with a stinking cesspool of a financial mess to deal with, but Black believes the White House and Congress need to hold hearings to find out exactly what went wrong, so it isn’t repeated. Black goes on to remind the White House of the lessons learned from the 1980s S&L crisis and to implement the Prompt Corrective Action Law, which mandates regulators close down the bad banks.

Secretary Geithner recently asked Congress to extend these powers to non-bank financial institutions, such as AIG.



2 Responses to “Is the US Financial System One Big Ponzi Scheme?”

  1. Your worst nightmare on May 16th, 2009 9:38 pm

    What’s the matter cat got every ones tongue? The lie about 9/11 and the war was just a distraction to what will become the biggest ripoff in history. Bush and Cheney should not worry about their lies about the war or torture or anything else they should worry about covering their a$$e$ for how they gave our country away in a matter of 8 years with out a word from congress or any Republican or Democratic leaders. Is this the biggest conspiracy and Terror threat yet to our country or is this how the new world order is being created?

  2. sirgeraldbirkin on July 31st, 2009 11:25 pm

    According to SEC filing dated October 30, 2006 – Sidney D. “Trip” Camper was fired from Elandia Inc. when the Ahkoy family fell victim to investment fraud headed by Elandia’s Allen Stanford and Trip Camper. Forced to resign by Allen Stanford himself (see SEC link below), Trip Camper moved on to his next victim, a private company in Los Angeles. In true School of Stanford form, Trip Camper promised to take the private company public. Instead, Trip Camper recruited a new partner in crime, Ed Berkhof and together they formed a “shell” holding company, milked the private company of thousands of dollars, illegally obtained company stock and pretended to be the company owners- and owners of all the assets. By pretending to own the company’s assets, Trip Camper and Ed Berkhof worked to dupe private investors out of capitol that they used to pay themselves and their creditors. This is a Ponzi Scheme. Instead of taking the company public, Trip Camper and Ed Berkhof spent thousands of dollars, took a trip to London on a company American Express card, performed a hostile takeover, and ruined the honest, profitable company. Since then, the Ahkoy family is suing Elandia Inc., Allen Stanford is in Federal prison, and Trip Camper is still using The Stanford Group as a reference on his curriculum vitae. FBI will hopefully catch up with Allen Stanford’s den of thieves. Don’t let this happen to you.

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