The roots of our economic mess in plain English

In 2004, the FBI warned about an epidemic of mortgage fraud. But the Bush Administration didn’t heed the warning. The credit rating agencies handed out triple-A ratings to mortgage security bond issuers without ever taking a look at a single loan backing the debt. Treasury Secretary Timothy Geithner — the “failed legacy regulator” — is engaging in a $2 trillion taxpayer-backed enterprise to cover up the simple fact that our major banks are insolvent.

Those are just a few of the assertions former S&L regulator William Black shares with Bill Moyers in a gripping 28-minute interview tearing through Twitter (h/t MicrocapTwits).  Black damns the hands-off policies of the Bush Administration but minces no words when it comes to President Obama, whom he backed in the election. His policies are “substantively bad” and “violate the law.”

It’s a compelling interview, to say the least. But what makes it truly irresistible is Black’s plain English explanations of the crisis. He avoids jargon and speaks in terms that anyone can understand. He doesn’t indulge in any screed or name-calling. His command and interpretation of the facts speak for themselves; it is a mature and devastating piece of analysis that essentially argues that the CEOs at major lending institutions perpetrated a Ponzi scheme on a mind-boggling scale. Bernie Madoff, by contrast, is a piker.

Black’s disarms as he explains outrageous uses of taxpayer money — like  AIG deploying $5 billion in bailout funds to repay UBS. UBS, Black reminds us, is not only a satisfied AIG counterparty but also a scofflaw recently forced to fork over a $780 million fine to avoid prosecution for helping US citizens dodge taxes. In other words, the taxpayer paid the penalty for UBS and never even got a “danke schoen.”

Forego the popcorn as you watch this video. You may choke. (Bill Moyers Journal: William Black on the Bust)

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2 thoughts on “The roots of our economic mess in plain English

  1. I’ve seen this interview linked or posted on dozens of websites. Kudos to Bill Black and Moyers to put out a corollary on this scandal that points so many now in the right direction. It may become regarded as the seminal turning point in time to come. I can’t imagine how many hits PBS is getting for this video.

  2. Dear Ms. Miller:

    You have neglected to discuss the late 1990s push by Democrats in Congress in league with the Clinton administration, and later with the Bush administration, to radically loosen mortgage lending rules to allow unqualified borrowers to buy houses they could **never** afford.

    The housing collapse is strongly concentrated in four “Sand States” and New Jersey. The Sand States contain ***7/8ths*** of the mortgage money that was lost in bad loans. Steve Sailer’s analysis is here:

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