Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Incomes Surge, Wages and Salaries FallThis is entirely due to the administration's one off $250 payments to various groups receiving government benefits like Social Security; otherwise, the figures were noteworthy because they document that workers received their first quarterly drop in wages in 50 years. Also: savings increased to an almost unheard-of (well, not for more than a decade) 7%, which sits uneasily with the green shoots notions of recovery, dependent as they are on a sustained revival in consumer spending and, especially, in housing. From the Financial Times:US incomes surge as stimulus kicks in By Alan Rappeport in New York Financial Times Published: June 26 2009 14:16 | Last updated: June 26 2009 15:33 Personal income in the US surged in May thanks to an infusion of government stimulus funds, while consumers raised their spending modestly as confidence about the state of the economy continues to improve. However, most of the monthly rise was the result of Federal benefit transfers and lower taxes. Americans, still facing rising job cuts and falling home prices, have been hoarding most of the additional funds, lifting the savings rate to a 16-year high in May. Households are reverting to a more sustainable spending path vis-à-vis income that allows scope for paying down debt and adding to savings,” said Joshua Shapiro, chief US economist at MFR. Official figures showed on Friday that incomes jumped by 1.4 per cent last month, or $167.1bn, beating economists' expectations and doubling the previous month’s revised rise of 0.7 per cent. Read the rest of the article Labels: baillout, financial crisis, fiscal stimulus, personal income guarantee, savings and loan crisis Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Interview with Bill Black on MoyersRegular readers of this blog know that William K. Black, author of The Best Way to Rob a Bank Is to Own One, a history of the S&L crisis, wrote a prescient history of the U.S. banking industry for us a couple of years ago. (A shorter version of the piece was the cover story in our Nov/Dec 2007 issue; a longer version appeared in our anthology Real World Banking and Finance, which was published in January of 2008.) Bill Black was one of the regulators whom the "Keating Five" tried to deceive, and he has been in the media quite a bit over the past year or so, first during the presidential election commenting on John McCain's unfitness to even be a senator (McCain was one of the Keating Five), and more recently to comment on the role of "control fraud" in the current financial meltdown. He did a terrific interview with Bill Moyers last week. Hat-tip to LF.BILL MOYERS: For months now, revelations of the wholesale greed and blatant transgressions of Wall Street have reminded us that "The Best Way to Rob a Bank Is to Own One." In fact, [William K. Black] wrote a book with just that title. It was based upon his experience as a tough regulator during one of the darkest chapters in our financial history: the savings and loan scandal in the late 1980s. Labels: Bill Moyers, control fraud, financial crisis, savings and loan crisis, William K. Black Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Bill Black on IndyMac/Thrift FraudThe article on the fraud at IndyMac in the business section of today's New York Times quotes UMKC professor and D&S author William K. Black. (Black wrote the cover story for our November/December 2007 issue on banking deregulation.) If you haven't been briefed on the situation with IndyMac yet, here are the basics: an official from the Office of Thrift Supervision, Darrel W. Dochow (he is the west coast director), "allowed IndyMac's parent company to backdate an $18 million contribution to preserve its status as a 'well-capitalized' institution," according to the Times. In particular, he allowed IndyMac "to receive $18 million from its parent company on May 9 but to book the money as having arrived on March 31." IndyMac collapsed in July.Dochow apparently played a role in the S&L scandal of the 1980s. Black was was deputy director of the Federal Savings and Loan Insurance Corporation during that crisis. Here's what he told the Times: William K. Black, a senior bank regulator during the savings and loan crisis and the author of "The Best Way to Rob a Bank is to Own One," said Mr. Dochow’s lenience highlighted the longstanding unwillingness of the Office of Thrift Supervision to take charge. The Times has found Black in its Roladex several times in recent months, most notably in the incendiary article back in February about John McCain's dalliances with a lobbyist (but as we pointed out at the time, the real meat of the article was about McCain's role in the S&L scandal; the Times quoted Black basically saying that McCain shouldn't even still be a senator). In today's article, though, the Times mentions the title of Black's book--The Best Way to Rob a Bank Is to Own One. Read the rest of the article. Labels: bank closures, Darrel W. Dochow, financial crisis, IndyMac, Office of Thrift Supervision, savings and loan crisis, William K. Black Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Bill Black on McCain on Fox NewsWilliam K. Black, who wrote the cover story of our November/December issue, (Mis)Understanding a Banking Industry in Transition, was interviewed for a Fox News special on John McCain's role in the "Keating Five" scandal, which was the major political fallout of the savings & loan scandal. The special will air at 8pm on Tuesday, August 19th (but check your local listings to see exactly when it will air.) He was also interviewed for a CNN special on the same topic.McCain's central (negative) role in that scandal has been underreported in this year's presidential election, so this coverage by Fox and CNN is most welcome, especially if Bill Black can provide his perspectives. As we mentioned on the D&S blog in February, Bill played a central (positive) role in that scandal:
Click here and here for earlier postings on Bill Black, McCain, and the S&L crisis. The Fox special will apparently be a one-hour documentary on McCain that "looks at the character and conduct of the candidate, both pro and con"; a subsequent one-hour Fox News documentary on Obama will examine "the tragedies of his early years, growing up with his grandparents and going to college, his job as a community organizer and later as a Harvard Law School student and Illinois legislator," according to the Hollywood Reporter. Labels: Bill Black, CNN, Fox News, Freddie Mac, john mccain, Keating Five, savings and loan crisis, William K. Black Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). McCain in Bed with Lobbyists; Taxpayers Get ScrewedToday's New York Times quotes D&S author Bill Black, in the article critical of Sen. John McCain that is raising such a ruckus among the political commentariat—especially among the right-wing types who had been so down on McCain until recently.Black was deputy director of the Federal Savings and Loan Insurance Corporation when McCain, along with the rest of the "Keating Five" (Sens. Alan Cranston, Dennis DeConcini, John Glenn, and Don Riegle) tried to influence regulators on behalf of Charles Keating, chairman of the then-failing Lincoln Savings & Loan. Black was one of the regulators the senators tried to influence; Edwin J. Gray, chairman of the Federal Home Loan Bank Board, was another. Keating had donated to all the senators' campaigns, and McCain's wife, Cindy, whom the Times describes as "the heiress to a beer fortune" in Arizona, had "joined Mr. Keating in investing in an Arizona shopping mall." The collapse of the Lincoln S&L cost taxpayers approximately $3.4 billion; the S&L crisis as a whole cost taxpayers more than $124 billion, according to the General Accounting Office. (Side note: the scandal did not end the careers of any of the Keating Five; Cranston, DeConcini, and Riegle all served out their terms; Glenn and McCain both stood for re-election and won. Perversely, after his senate term ended, DeConcini was appointed by President Clinton to the the Board of Directors of the Federal Home Loan Mortgage Corporation, aka "Freddie Mac".) The fuss about the Times article seems to be mostly about the somewhat weakly sourced suggestion that McCain had an affair with a lobbyist named Vicki Iseman. But to our way of thinking, McCain's participation in the Keating Five scandal and the S&L crisis is still the bigger story. Here is what Bill Black told the Times: Some people involved think Mr. McCain got off too lightly. William Black, one of the banking regulators the senator met with, argued that Mrs. McCain’s investment with Mr. Keating created an obvious conflict of interest for her husband. (Mr. McCain had said a prenuptial agreement divided the couple’s assets.) He should not be able to “put this behind him,” Mr. Black said. “It sullied his integrity.” Black presents a full history of the S&L crisis in his book The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&L Industry. That crisis—much like the current banking crisis—was the result of banking deregulation and the "control fraud" that inevitably follows it, as Black's recent D&S article shows. Labels: banking regulation, Bill Black, deregulation, john mccain, Keating Five, savings and loan crisis, William Black, William K. Black Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
