William Black, author of “The Best Way to Rob a Bank Is to Own One” talks about the deliberate fraud on Wall Street during this interview on The Real News Network. Key points from his interview include:

Part One
– The current financial crisis is a deliberate fraud, not just some systemic anomaly or mistake.
– The FBI has been warning against this fraud, but resources for white-collar crime have been stripped.
– 80% of the fraud losses are lender-induced via writing of deliberately bad loans.
– Even if banks aren’t bailed out, senior officers walk off rich. Failure of the firm is not failure of the fraud scheme.
– The banks got Congress to change rules so that banks do not have to recognize losses on toxic loans until they sell them.
– The rule change allow banks to pay massive bonuses on profits that are not real.
– There has not a single arrest of a senior banking executive.
– This lack of accountability turns out the sociopaths and psychopaths that are now running our financial system.

Part Two
– Banks were insolvent on a market basis without a government bailout.
– The financial industry has grown from 5% of profits in America to over 40%.
– The industry does not help Main St., but transfers wealth from the poor and middle class to the rich, creating inequality.
– Geithner was a failed regulator as head of the Federal Reserve Bank of NY, yet was promoted to Treasury Secretary.
– Bernanke was also an utter failure that did not foresee the collapse, yet he was re-appointed.
– Credit-rating agencies intentionally misrepresented and gave AAA ratings to stuff known in the trade as “liars’ loans.”
– Modern America looks like Suharto’s Indonesia – crony capitalism.

Part Three
– The crisis has been covered up by ignoring the losses and gimmicking the accounting rules, which will lead to debacle.
– America is doing exactly what Japan did – cover up the losses – which produced the “lost decade(s)” in Japan.
– Justice Department numbers show we have less than one sixth of FBI/prosecutor resources as during S&L crisis.
– The current financial reform bill has nothing in it to hold anyone accountable for the collapse.
– Marcy Kaptur has introduced a bill to hire 1,000 new FBI agents to work on while-collar crime.
– The idea of housing the consumer protection bureau within the Fed would be hilarious if it weren’t so nasty and destructive.

Takeaways for Investors
If you are a regular reader of this site, you are familiar with much of the information in this interview. But is serves to reinforce our thesis that the current economic recovery is nothing but a mirage led by a financial industry that is cooking the books to produce the illusion of huge profits. So while the bounce has created some short-term profit opportunities, investors would be wise to exercise caution and utilize stop loss orders as the other shoe could drop at any given moment. I believe the biggest gains will be made on the short side of the market over the next few years.

Professor Black also confirms the extent to which the bankers and big business have taken over the U.S. government. Thus, we can expect more looting of the Treasury, bailing out of private enterprise and devaluation of the dollar. Stay long precious metals as a hedge against the coming inflation and means of protecting and increasing your purchasing power. To subscribe to the Gold Stock Bull contrarian newsletter, view our model portfolio and receive trading alerts, become a Premium Member at just $35 per month.