CASE 4.6 The Fraud Recipe for CEO\'s, Why Banks Hate Free Markets and Love Crony

Question

CASE 4.6 The Fraud Recipe for CEO's, Why Banks Hate Free Markets and Love Crony Capitalism William F. Black On the "Technocrats" Running the Show in echnocrat, that could do the equivalent of making Europe: There are no "technocrats," especially two penalty kicks out of ten. "genius'" technocrats. I suggest a new rule of thumb What We Learned from the Savings &Loan; for judging a "genius technocrat." They have to Crisis: George Santayana famously said that "those be right at least two out of ten times. There is not who cannot remember the past are condem a single economist in Europe, who calls himself a repeat it." But, even if we remember the mistakes we ned to From William K. Black's presentation at the Modern Monetary Theory Summit in Rimini, Italy, Febuary 2012

Explanation / Answer

Gresham's dynamic indicate that bad money drive out good money. This law applies when the market value of something is different from the value customer are reqired to accept.

Here in this case study same principle is applied by banker. When people can not afford loan what bank do is that bank just do underwriting and charge high interest rate and high fee for those customers they already know cannot affored the repayment. and this how they maximising short gain for receivable interest and fee. So this the best possible way for CEO to be wealthy and put bank in insolvency range. In economy no honest bank can opereate in adverse selection.

For example, Valuer of home inflated the value of home to attract dishonest bank by corrupting some appraisers. and they send all business to corrupt appraisers. So cheaters get prospered and that bad ethics drives good ethics out of market place.

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