Will Lawmakers Avert The Next Financial Collapse?
(Photo by Robin Holland)
In this week's JOURNAL, Bill Moyers spoke with veteran regulator William K. Black about the proposed new financial reform legislation and the systemic problems that led to the economic collapse in 2008.
Black expressed disappointment with President Obama's speech on financial regulation this week, and said that the pervasive influence of Wall Street money and ideology has created what he calls a "criminogenic" environment:
"I was disappointed that [President Obama] wasn't willing to be blunt. He used a number of euphemisms, but he was unwilling to use the 'F word,' which is fraud in this. It's the word that explains why we have these recurrent, intensifying crises... A criminogenic environment is a steal from pathology - a pathogenic environment [is] one that spreads disease. In this case, it's an environment that spreads fraud... [The SEC] could have acted at any time to regulate all of these securities bankers to the extent that their problems had to do with mortgages, and they overwhelmingly caused by mortgages. They refused. They [and] the Fed refused to use that authority... There wasn't going to be significant reform or significant crackdowns in the financial sphere because the leading source of contributions to the Obama candidacy and the McCain candidacy was the financial industry... It's deeply criminogenic. And this ideology that both parties are dominated by says 'No, big corporations wouldn't cheat. Fraud can't happen. The market's automatically excluded.' It's insane. It's been falsified for 25 years by event after event here and abroad."
What do you think?