A recent study confirmed that control fraud was endemic among our most elite financial institutions. Asset Quality Misrepresentation by Financial Intermediaries: Evidence from RMBS Market. Tomasz Piskorski, Amit Seru & James Witkin (February 2013) (“PSW 2013”).
The key conclusion of the study is that control fraud was “pervasive” (PSW 2013: 31).
“[A]lthough there is substantial heterogeneity across underwriters, a significant degree of misrepresentation exists across all underwriters, which includes the most reputable financial institutions” (PSW 2013: 29).
Finance scholars are not known for their sense of humor, but the irony of calling the world’s largest and most harmful financial control frauds our “most reputable” banks is quite wondrous. The point the financial scholars make is one Edwin Sutherland emphasized from the beginning when he announced the concept of “white-collar” crime. It is the officers who control seemingly legitimate, elite business organizations that pose unique fraud risks because we are so loath to see them as frauds.New Economic Perspectives
“Pervasive” Fraud by our “Most Reputable” Banks
William K. Black | Professor of Economics and Law, UMKC
2 comments:
So let's repudiate them already!
Surely our most repudiatable banks are not too big to repudiate?
And still no one has gone to jail!
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