FROM THE PUBLISHER
The catastrophic collapse of companies such as Enron, WorldCom, ImClone, and
Tyco left angry investors, employees, reporters, and government
investigators demanding to know how the CEOs deceived everyone into
believing their companies were spectacularly successful when in fact they
were massively insolvent. Why did the nation's top accounting firms give
such companies clean audit reports? Where were the regulators and
whistleblowers who should expose fraudulent CEOs before they loot their
companies for hundreds of millions of dollars?
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.
He also authoritatively links the S&L crash to the business failures of the early 2000s, 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 requiresactive, 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.
TABLE OF CONTENTS
Ch. 1 Theft by deception : control fraud in the S&L industry
Ch. 2 "Competition in laxity"
Ch. 3 The most unlikely of heroes
Ch. 4 Keating's unholy war against the bank board
Ch. 5 The Texas control frauds enlist Jim Wright
Ch. 6 "The Faustian bargain"
Ch. 7 The miracles, the massacre, and the speaker's fall
Ch. 8 M. Danny Wall : "child of the senate"
Ch. 9 Final surrender : Wall takes up Neville Chamberlain's umbrella
Ch. 10 It's the things you do know, but aren't so, that cause disasters
App. A Keating's plan of attack on Gray and reregulation
App. B Hamstringing the regulator
App. C Get Black . . . kill him dead
BACKGROUND: In this book, author William Black offers an expert insider's
account of the savings and loan debacle of the 1980s, 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.
"My central message is that we can do things to detect and terminate
individual control frauds and to prevent, or at least reduce substantially,
future waves of control fraud," Black wrote in the book's preface.
"This is an extraordinary book," said George A. Akerlof of the University of
California, Berkeley, winner of the 2001 Nobel Prize for Economics. "No
other account gives a complete picture of the control fraud that occurred in
the S&L crisis. There is no one else in the whole world who understands so
well exactly how these lootings occurred in all their details and how the
changes in government regulations and in statutes in the early 1980s caused
this spate of looting.. This book will be a classic."
Black has a Ph.D. in criminology, law and society from the University of
California at Irvine and a J.D. from the University of Michigan Law School.
His background includes appointments as senior deputy chief counsel for the
San Francisco Office of Thrift Supervision; deputy director of the National
Commission on Financial Institution Reform, Recovery, and Enforcement;
general counsel for the Federal Home Loan Bank of San Francisco; and
director of litigation for the Federal Home Loan Bank Board in Washington,
D.C. He was an assistant professor at the LBJ School of Public Affairs from
1996 to 2005.