Wall Street's WMD of Choice Is ACCOUNTING.

[Octafish]

5. Thank you! The Financial Crooks-n-Banksters use accounting for their frauds -- ''Control Fraud''

It's just another addition to their crooked armamentarium. Louis Francis explains:

Abstract: In his book, The Best Way to Rob a Bank is to Own One, William Black describes in detail the
complex collusion between bankers, regulators, and legislators that brought about the Savings and Loan
crisis of the 1980s and early 1990s. As part of the scheme, leverage was used to purchase bankrupt
companies that became the basis for a Ponzi-like speculative bubble that ultimately collapsed. Deceptive
accounting rules were used to hide the true state of the banks. Litigation and lobbyists were used to
delay and frustrate timely enforcement, adding significantly to the taxpayer’s bill. Since the bursting of
the S&L bubble, a number of additional financial bubbles and debacles have occurred, including Enron,
the Internet bubble, the subprime bubble, and the Madoff Ponzi scheme. The details of the S&L
crisis—civil and criminal trials and federal agency investigations—have been well-documented and will
serve as a model for later crises. This paper will describe how fraud and corruption played significant
roles in these financial crises, including the current crisis that began in 2007 and is still unfolding.

Motivation. Though “moral hazard” and “the principal agent problem” are frequently cited when
discussing the causes of the financial crisis, relatively little research has focused on the role of fraud.
This paper highlights the role of fraud and corruption in the financial crisis.

Method. We review the fraud literature with respect to past financial crises, and highlight
commonalities between some of the well-documented financial frauds of the past and the current global
financial crisis. We also support our arguments with some statistics from the current crisis that
predicted the bubble before it burst.

Results. The evidence indicates that a well-established and well-known permissive attitude towards
fraud created a global systemic risk of such significance that a financial crisis of major proportions was
all but inevitable.

Conclusions. Reinstitution of previously abandoned regulations that protected the banking system
from risk (i.e., Glass-Steagall Act) and a new commitment to SEC enforcement of already existing antifraud
laws are greatly needed. If fraud is not pursued and prosecuted, future financial crises where
fraud is a significant factor are likely to occur.

PDF with complete SOURCE: http://www.casact.org/pubs/forum/10fforumpt2/Francis.pdf

Finance is how money begets money these days. When I was younger, people built things to beget money. These things actually were used to make life, in general, better -- from cars and space ships to tractors and washing machines. Hence, the quality of life improved. Nowadays, not so much. When the Big Money boys get theirs, they move it offshore where it's safe or put it into something that makes them money -- not necessarily involve creating a single real thing. It's like Danny Dravot and Peachy Carnehan told Rudyard Kipling in John Huston's "The Man Who Would Be King":

“The less said about our professions, the better, for we have been most things in our time. We’ve been all over India, and decided it ain’t big enough for such as we: We’re going to Kaffiristan to be kings. It’s a place of war tribes, which is to say, it’s a land of opportunity for such as we, who know how to train men and lead them into battle. We’ll say to any chief we can find, ‘do you want to vanquish your foes?’ He’ll say ‘Of course!’ We’ll fight for him, make him king, then we’ll subvert that king. We’ll seize his royal throne and loot the country four ways from Sunday!” -- Danny Dravot