>> on to assault to theft. officially crime declined in 2011 in this country. but what is a stolen car compared to trillions of dollars being sucked out of our economy while a giant slug of debt lays over our housing market preventing any adaptation while a few individuals collect all the money from a savings and loan crisis . our next guest says white collar crime is so pervasive in this country that it has exploded and yet the handcuffs are nowhere. joining us is former banking regulator bill black . how do you explain the lack of a culture of engagement in solving problems?
>> because we had unilateral disarmament against white collar crime . they already cut the number of prosecutions of financial fraud by more than half from 20 years ago. fraud bigger or smaller these days from 20 years ago?
>> what about our conquering hero, barack obama , who is going to save us ?
>> he cut the prosecutions fewer from bush so that we have no white collar elite criminal who caused this crisis.
>> but surely there’s a reason why this president would reduce the number of prosecutors because there’s obviously a new technique for prosecuting financial fraud.
>> yes. it’s called nonprosecution.
>> that requires lower staffing levels.
>> it does. but it fits nicely into what we heard. you don’t get into the way of both parties. how did we reduce violent crime ? we studied it, god forbid . we spent resources. we looked for hot spots of crime.
>> you madman.
>> we looked for broken windows in civility that leads to crime. we looked for gangs that created crime.
>> what would be the equivalent of the braten method for white collar crime ?
>> maybe mortgage banking when they started making liar’s loans. that wasn’t subtle.
>> there might be fraud? that could be an indication of misrepresented security?
>> i have a ph.d. in criminology and that’s what i focused on. i think anybody in the world might figure out that a loan called fraudulent might be fraudulent. since one-third of all loans by 2006 were liars loans and nobody stopped it, nobody intervened in the hot spots . since we weakened the fiduciary duties .
>> i’m going to ask you the $30 trillion question. william bratton shows up and wants crime rates in the city. put the cops where the crime is. you roll in, william black , federal prosecutor . here to hot spot crime. here’s how you do it. fraud task force . go after the liars loans. you know where the states are. go to nevada. go to south florida . go to southern california . if you do that, unlike crime, you disrupt a massive, very profitable business that is perpetuating that fraud. whereas street crime , it’s politically advantageous.
>> and you have insufficient resources so you look for choke points. with few resources, you can get the biggest bang for your buck . there are three credit rating agencies . you velgt who was giving the liars loans. you would have shut down the market. there are only five investment banks . if you had gone after one of them, lehman brothers , the entity that did tens of billions of dollars of liars loans. they fired their fraud guy because he made a criminal referral.
>> that’s a good solution.
>> that’s a good solution. then with very few resources, you could have prevented this entire crisis. we can debate the amount.
>> that’s the point of hot spotting. when you know where to go, investigate the fraud. look at the funds at lehman brothers . you don’t need a nationwide task force of investigators. you need smart investigators going to the choke point. you want to go the way of lehman. fine. make my day.
>> that’s called hot spotting white-collar crime. thank you.
>> it’s what makes possible honest business.
>> you have to have the regulatory cops on the beat. and they took the cops off the beat.