But worse still, said Black, Timothy Geithner, President Barack Obama’s Secretary of the Treasury, is currently engaged in a cover-up to keep the truth of America’s financial insolvency from its citizens.

The interview, which aired Friday night, is carried on the Bill Moyers Journal Web site.

Black’s most recent published work, “The Best Way to Rob a Bank is to Own One,” released in 2005, was hailed by Nobel-winning economist George A. Akerlof as “extraordinary.”

“There is no one else in the whole world who understands so well exactly how these lootings occurred in all their details and how the changes in government regulations and in statutes in the early 1980s caused this spate of looting,” he wrote. “This book will be a classic.”

But that book only covers the fallout from the 1980s Savings & Loan crisis; Black’s later first-hand involvement in that scandal being the ensuing liquidation of bad banks.

“A single bank, IndyMac, lost more money than the entire Savings and Loan Crisis,” reported PBS. “The difference between now and then, explains Black, is a drastic reduction in regulation and oversight, ‘We now know what happens when you destroy regulation. You get the biggest financial calamity of anybody under the age of 80.’”

That financial calamity, he explained, was brought about not by mishap or accident, but only after a concerted effort to undermine and remove all regulations, allowing a creditor free-for-all that hinged on fraudulent risk ratings for bad loans.

“[T]he way that you do it is to make really bad loans, because they pay better,” he told Moyers. “Then you grow extremely rapidly, in other words, you’re a Ponzi-like scheme. And the third thing you do is we call it leverage. That just means borrowing a lot of money, and the combination creates a situation where you have guaranteed record profits in the early years. That makes you rich, through the bonuses that modern executive compensation has produced. It also makes it inevitable that there’s going to be a disaster down the road.

“…This stuff, the exotic stuff that you’re talking about was created out of things like liars’ loans, that were known to be extraordinarily bad,” he continued. “And now it was getting triple-A ratings. Now a triple-A rating is supposed to mean there is zero credit risk. So you take something that not only has significant, it has crushing risk. That’s why it’s toxic. And you create this fiction that it has zero risk. That itself, of course, is a fraudulent exercise. And again, there was nobody looking, during the Bush years. So finally, only a year ago, we started to have a Congressional investigation of some of these rating agencies, and it’s scandalous what came out. What we know now is that the rating agencies never looked at a single loan file. When they finally did look, after the markets had completely collapsed, they found, and I’m quoting Fitch, the smallest of the rating agencies, “the results were disconcerting, in that there was the appearance of fraud in nearly every file we examined.”

He equated the entire US financial system to a giant “ponzi scheme” and charged Treasury Secretary Timothy Geithner, like Secretary Henry Paulson before him, of “covering up” the truth.

“Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?” asked Moyers.

“Absolutely, because they are scared to death,” he said. “All right? They’re scared to death of a collapse. They’re afraid that if they admit the truth, that many of the large banks are insolvent. They think Americans are a bunch of cowards, and that we’ll run screaming to the exits. And we won’t rely on deposit insurance. And, by the way, you can rely on deposit insurance. And it’s foolishness. All right? Now, it may be worse than that. You can impute more cynical motives. But I think they are sincerely just panicked about, ‘We just can’t let the big banks fail.’ That’s wrong.”

Ultimately, said Black, the financial downfall of the United States in the wake of the Bush years is due to “the most elite institutions in America engaging in or facilitating fraud.”

“When will Americans wake up and hold the real criminals – Banksters – accountable for their actions, and pressure the government to enact systemic changes to prevent future abuses?” asked Huffington Post blogger Mike Garibaldi-Frick.

Over the past month, Obama has reminded the public at every turn that he is facing problems “inherited” from the Bush administration, using increasingly bracing language to describe the challenges his administration is up against. The “deepening economic crisis” that the president described six days after taking office became “a big mess” in remarks this month to graduating police cadets in Columbus, Ohio.

“By any measure,” he said during a March 4 event calling for government-contracting reform, “my administration has inherited a fiscal disaster.”

Obama’s more frequent and acid reminders that former president George W. Bush left behind a trillion-dollar budget deficit, a 14-month recession and a broken financial system have come at the same time Republicans have ramped up criticism that the current president’s policies are compounding the nation’s economic problems.

Obama had initially been content to leave partisan defense strategy to his proxies, but as the fiscal picture has continued to darken, he has appeared more willing to risk his image as a politician who is above petty partisanship to personally remind the public of Bush’s legacy.

His approval ratings remain strong — above 60 percent, according to the most recent Gallup poll — but have dropped from their highs almost entirely because of falling support among Republicans since he took office.

Upon entering the White House in 2001, Bush pinned the lackluster economy on his predecessor, using the “Clinton recession” to successfully argue in favor of tax cuts that won some Democratic support. But for Obama, who built his candidacy on a promise to rise above Washington’s divisive partisan traditions — winning over many independent voters and moderate Republicans in the process — blaming his predecessor holds special risks.

He will need support beyond his Democratic base as he begins lobbying for his $3.6 trillion budget, which proposes sweeping changes in health care, the energy sector and the public education system. The president did not receive a single House Republican vote for his stimulus plan, prompting some in his administration to view his bipartisan outreach efforts as having little hope of success.

And Republicans have seemed only more emboldened in their rhetoric. Sen. John McCain (Ariz.), for example, recently called the borrowing needed to fund the president’s economic recovery plans “generational theft.”

“What the administration is involved in now is the politics of attribution,” said Lawrence R. Jacobs, a political scientist at the University of Minnesota. “Each week that goes by with falling job numbers and Republican criticism of the administration’s flaws means falling approval ratings. What’s the antidote? That the guilty party is George Bush.”

“The trick,” Jacobs said, “is how do you shift blame to George Bush and retain any credibility on the idea that you are looking past partisan warfare? This looks like a doubling down on a very partisan approach.”

One New Hampshire congresswoman said as much to Treasury Secretary Tim Geithner on Capitol Hill recently.

“I said, hurry, please hurry, because people are waiting and they are hurting, and they need the help now,” Rep. Carol Shea-Porter, D-New Hampshire, said.

She’s one of a growing number of nervous Democrats on edge or at odds with some of the Obama’s administration’s plans on the economy. Some are taking aim at the president’s budget proposals that would curb popular tax deductions for wealthier Americans. Video Watch more on why some Democrats are nervous

“I don’t think ultimately the criticism is surprising. That certainly happens and is all part of the process,” said White House Press Secretary Robert Gibbs.

As a nod to moderate concerns, Obama took steps to make his budget more transparent. He included items former President George W. Bush passed separately in recent years to obscure the true operating cost of the government, such as the money for the wars in Iraq and Afghanistan, an annual multibillion-dollar fix of the fees Medicare pays physicians and Alternative Minimum Tax relief for the middle class.
Sen. Evan Bayh, D-Indiana, who along with Nebraska Democrat Ben Nelson and Connecticut Independent Joe Lieberman is one of the so-called Gang of 15 — a coalition of moderate Democratic senators — says it’s all about the messaging.

“Like getting health care costs under control is important to the economy and getting the deficit down,” he said. “Sustainable sources of energy at reasonable prices is also important to the economy. Dealing with the financial crisis is obviously important to the economy.”

Bayh added: “So what needs to be done is, Obama’s got to move on all these fronts but also integrate them back to the same theme of always strengthening the economy, getting people to work, growing businesses, improving our standard of living.” Video Watch more of Obama’s solutions for the economy »

Rep. John Tanner, D-Tennessee, is a member of the “Blue Dog” group of 47 fiscally conservative Democrats in the House — six of whom voted against Obama’s stimulus plan. He said Obama at least is being honest about the dire condition of the economy.

“At least the budget that the Obama administration presented, even though it’s huge and it’s a huge deficit — and that enables the other team to beat up on it — the truth is that it’s honest and truthful,” he said.

Democratic media consultant Steve Murphy, who represents several moderate Democrats, said that Blue Dogs are all “deficit hawks,” so they’re “nervous about spending.”

“They’re against giving more money to the banks without any accountability, they want to zero in on wasteful spending and they strongly believe the shrinking deficit and eventual balanced budget was the underpinning of our economic success in the ’90’s,” he said.

Murphy added that these Democrats do, however, realize that more money is going to be needed.

“So I expect them to be about greater accountability and fairness for the taxpayer. They won’t join [GOP House Minority Whip Eric] Cantor’s ‘Hell No’ chorus.”

And that is something resonating with House Speaker Nancy Pelosi who said top economists told her a second stimulus package may be necessary.

“You have to keep the door open to see how this goes,” she said.

House Democrats, CNN has learned, heard that message in a meeting with top economists, who predicted the president’s stimulus plan will fall short of saving or creating three to four million jobs, as he promised.

“Over the first two years about 2 1/2 million jobs saved and created,” said economist Allen Sinai. “A little less than the administration and perhaps Speaker Pelosi has said … the jobs created may be a little disappointing.”

Sinai said that over time, the economy may produce the jobs president Obama promised, but that people should try to be patient.

But budget hawks in the party don’t like the sound of that.

“I mean, if we were to take a vote this afternoon, the stimulus package would probably fail,” said Rep. Earl Pomeroy, D-North Dakota. “If they want substantial, more public funds committed, they’re going to have to go out there and explain precisely how this is going to work.”

Shea-Porter said she’s simply on the message she’s getting at town meetings back home, a message that’s also aimed at some in the media.

“It’s terrifying people. Before, people were very optimistic and the leaders were optimistic. Then we hit a spell here where we’re hearing a lot of media … people who are frightening without necessarily giving both sides,” she added.