Saturday, January 8, 2011

Robbing Banks

William K. Black of UMKC, former regulator and author of The Best Way to Rob a Bank is to Own One, opened the conference with an ASE keynote. He took us back to the last banking crisis - the savings and loan debacle of the 80's. The crisis was brought about by interest rate risk caused by the big run-ups in rates from the FED trying to wrench out inflation.

The high rates gave s and l's incentive to create high returns in order to eke out any profit. Some took it as a license to commit fraud. The most popular stories are the Keating (Lincoln Savings and Loan) and (Oklahoma stories) retold in Funny Money.

Black recounted the salient fact that federal regulators made thousands of referrals to criminal authorities during the s and l debacle. As far as we know there have been none as a result of our current crisis.

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