Unlike Joe Black, the Angel of Death in a dreadful 1998 Brad Pitt vehicle, Prof. Bill Black is a real rather than a figurative Grim Reaper, at least where white-collar criminals are concerned. The former bank regulator, now a University of Missouri Professor, was the main narrator of  this week’s Village Voice cover story by James Lieber, entitled:

We’ve Bailed out the Banks. When Do We Go After the Crooks Behind our Financial Collapse?

He’s on the Tech Ticker at Yahoo Finance today complaining about another government throwaway of billions of dollars, this time in the case of CIT.

The government was in no way obligated to lend the struggling CIT money and, in fact, initially refused to provide it bailout funds.  More importantly, being the lender of last resort, the government should have guaranteed we’d be the first to get paid if CIT eventually filed Chapter 11. By failing to do so,  “it’s like he [Geithner] burned billions of dollars again in government money, our money, gratuitously,” says Black.

Black believes the problem stems from regulators’ fears that if the banks recognize a loss on the bad assets it will create a domino effect that will wipe out the entire financial system.

“If that’s true we’ve got to get rid of capitalism,” he warns, “because if we can’t recognize losses in a capitalist system we have no future.”

A close look at the circumstances of the bank bailout of the past year, particularly the government’s decision to pay out AIG’s guarantees of other banks’ subprime derivative at 100 cents on the dollar, might reveal embezzlement on the grand scale. The AIG story has been all over the media, and suggests that then NY Fed chief Timothy Geithner paid AIG’s counterparties far more than he had to. A Google search on “AIG payout to Goldman Sachs” yields 104,000 hits. I haven’t seen all the evidence, but as a former derivatives trader and strategist for a credit-derivatives hedge fund, my professional judgment is that the case merits very close scrutiny by law enforcement.

Fat chance of that happening. At the Village Voice, Lieber’s story amounts to documentation of the rather alarming number of foxes entrusted with the henhouse of financial regulation. The firms who benefitted from the government bank bailout are amply represented in the ranks of the Obama administration, and his Treasury Secretary would be the prime suspect in a serious investigation of the AIG business.

I opposed bank nationalization at the beginning of this year (although it might have been done with little damage the previous September) because it was cheaper and easier to support the banks. But it is one thing to keep an institution afloat for economic reasons and another to let scoundrels and miscreants get away with theft.

It’s idiotic to believe that any framework for bank regulation will work unless existing laws against fraud are enforced.

Oh, did I mention that Geithner’s father was the Ford Foundation case officer paying for Obama’s mother’s field research in anthropology?

Lieber’s piece is entitled, “No Justice.” For once, I agree with the hard left: It’s time to ask why Obama won’t enforce the law of the land.