William K. Black prosecuted over 1,000 banking executives in the 1980s-90s - the last time bankers actually went to prison for financial crimes in America. He discovered a pattern he calls “control fraud” - when CEOs use their own companies as weapons to steal money.
The Savings & Loan Crisis Explained
The Setup (1970s-1980s):
Savings & Loans (S&Ls) were like local banks that made home loans
When interest rates shot up to 18% in 1981, these banks were technically bankrupt - they owed more than they were worth
The government insurance fund had only $6 billion to cover $150 billion in losses
The Scam: Instead of closing these zombie banks, fraudsters bought them and ran a predictable recipe:
Make terrible loans to fake projects (empty office buildings no one would rent)
Book these bad loans as “profits” using accounting tricks
Pay themselves huge bonuses based on fake profits
When loans were about to fail, make even bigger loans to hide the problem
Eventually the bank explodes, taxpayers pay the bill
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