William K. Black
Associate Professor of Economics and Law, UMKC
December 5, 2018 Bloomington, MN 55437
I cannot write many blogs during the fall semesters because I teach four classes (I co-teach one of them). The fall term of instruction at UMKC is now over so I am writing one piece before turning to grading. I have recently done additional research on a topic I know is of great interest – the prosecution of elite white-collar criminals. I have organized it in the form of a game in which the reader guesses who authored the quoted passage.
“But the number of complex regulations is only half the problem. As President [deleted] has repeatedly emphasized, it is also the adversarial and seemingly mindless enforcement methods that really get under people’s skins. Business owners are sick of being treated like criminals. They see a government that just doesn’t make sense, that charges them with safety violations when no one is in harm’s way.”
[Note that enforcement action is supposed to be ‘adversarial’ and that ‘business owners’ need to be ‘treated [as] [not ‘like’] criminals’ when they are criminals. A safety violation that does not cause injury because no worker is in the unsafe trench when it collapsed should be charged as a safety violation because it is. A well-run company with a strong safety record takes that approach to safety. The government must too.]
[T]hese investigations most often involve complicated paper trails leading to highly sophisticated schemes which disguise illegality under the veneer of legitimate business and financial transactions.
[Note that this AG understood the essential danger that makes ‘control frauds’ uniquely damaging – the fact that the CEO finds it far easier to ‘disguise illegality’ ‘under the veneer’ of seeming ‘legitima[cy].’]
“It takes a snake, a cold-blooded snake, to betray the trust and innocence of hard-working people,” [deleted] said in a speech to his administration’s U.S. attorneys in announcing his effort. “And so, if we have to look under rocks to find these white-collar criminals, then we will leave no stone unturned.”
“The American public relied upon banking institutions and financial institutions being soundly managed by people who were honest. Therefore, it is absolutely essential that this program go forward to the end no matter how long that takes.”
He discounted past arguments that Texas’ economy was the root cause for the state’s financial crisis. “Although it was the general economic downturn in Texas that surfaced the problem, it appears to the FBI as if a pervasive pattern of fraudulent lending activity began much earlier.”
[Note that the President was characterizing the American people as a mob out to murder the banksters that caused the financial crisis – and stressing that his administration would safeguard them from accountability for their crimes.]
“I met with [deleted] Director of [deleted], the day after he assumed office to map out a joint effort between the regulatory agencies and the Department of Justice to winnow through the mass of referrals that had already been made to ensure that we were focusing upon the most significant cases as our first priority.”
“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy.”
For bonus points, these questions relate to a non-government party.
“Our savings and loan industry has created the largest mess in the history of U.S. financial institutions,” [deleted] said in a letter to the [industry trade association – the ‘league’]. “The league responds to the savings and loan mess as Exxon would have responded to the oil spill from the Valdez if it had insisted thereafter on liberal use of whisky by tanker captains.” [Deleted] blamed the league for ‘constant and successful’ lobbying over many years that prevented government regulators from cracking down on S&Ls run by ‘crooks and fools’ and persuaded regulators to use ‘Mickey Mouse’ accounting….”
“It is not unfair to liken the situation now facing Congress to cancer and to liken the league to a significant carcinogenic agent….”
“Because the League has clearly misled its government for a long time, to the taxpayers’ great detriment, a public apology is in order, not redoubled efforts to mislead further.”
Answers: (plus the President that appointed the official):