In this expert insider’s account of the savings and loan debacle of the 1980s, William Black lays bare the strategies that corrupt CEOs and CFOs—in collusion with those who have regulatory oversight of their industries—use to defraud companies for their personal gain. Recounting the investigations he conducted as Director of Litigation for the Federal Home Loan Bank Board, Black fully reveals how Charles Keating and hundreds of other S&L owners took advantage of a weak regulatory environment to perpetrate accounting fraud on a massive scale. In the new afterword, he also authoritatively links the S&L crash to the business failures of 2008 and beyond, showing how CEOs then and now are using the same tactics to defeat regulatory restraints and commit the same types of destructive fraud.
Black uses the latest advances in criminology and economics to develop a theory of why “control fraud”—looting a company for personal profit—tends to occur in waves that make financial markets deeply inefficient. He also explains how to prevent such waves. Throughout the book, Black drives home the larger point that control fraud is a major, ongoing threat in business that requires active, independent regulators to contain it. His book is a wake-up call for everyone who believes that market forces alone will keep companies and their owners honest.
Chapter 1. Theft by Deception: Control Fraud in the S&L Industry
Chapter 2. “Competition in Laxity”
Chapter 3. The Most Unlikely of Heroes
Chapter 4. Keating’s Unholy War against the Bank Board
Chapter 5. The Texas Control Frauds Enlist Jim Wright
Chapter 6. “The Faustian Bargain”
Chapter 7. The Miracles, the Massacre, and the Speaker’s Fall
Chapter 8. M. Danny Wall: “Child of the Senate”
Chapter 9. Final Surrender: Wall Takes Up Neville Chamberlain’s Umbrella
Chapter 10. It’s the Things You Do Know, But Aren’t So, That Cause Disasters
Appendix A. Keating’s Plan of Attack on Gray and Reregulation
Appendix B. Hamstringing the Regulator
Appendix C. Get Black ... Kill Him Dead
Names and Terms
William K. Black is Associate Professor of Economics and Law at the University of Missouri, Kansas City, where he teaches White-Collar Crime, Public Finance, Antitrust, Law & Economics. He covers markets and regulation with his speech "Unsound Theories and Policies Produce Epidemics of Fraud and Regulatory and Market Failures."