The Center for Public Integrity’s Michael Hudson continues to turn up whistleblowers and pound on the culture of wrongdoing at the predatory lenders that created the housing catastrophe.
The Justice Department famously declined to go after executives, including former CEO Angelo Mozilo, at Countrywide, but Hudson tracks down former management executives at Countrywide who were fired after raising questions.
Ye shall know them by their fruits, yes. But Hudson finds four former HR executives at Countrywide who talk about the company’s rotten culture and how it was dictated from the top.
Mozilo benefits from the plausible-deniability defense all CEOs use these days when crimes are uncovered at their companies. Hudson is chipping away at that shield, one story at a time:
One of them was Dave Sullivan, an executive vice president and co-author of a book on bad management, “Why Leaders Fail.” Sullivan told iWatch News that Countrywide was “definitely the most top-down company I’ve ever seen. Mozilo was God. Whatever he said went”…As Niemela immersed herself in the culture and talked to her colleagues, she says, some executives were frank about how things were run, telling her: “Angelo makes every decision. We really are not empowered to make decisions. Angelo signs every expense report. He micro-manages us.”
Here’s Niemela, a former Countrywide HR exec, on the evidence of systemic fraud she came across in routine surveys of employees:
After reading many similar comments, Niemela says, she urged Countrywide executives to open a full-scale investigation of fraud within the company. The investigation never happened, she says. “They just shut the whole thing down. They didn’t want to hear that.”
Hudson links to a Gretchen Morgenson column from February on one of the executives he interviews, Michael Winston, who won a $3.8 million wrongful-termination lawsuit against Countrywide for retaliating against him for reporting an environmental hazard to regulators and for refusing to sign false corporate-governance reports. That column is worth re-reading.
These aren’t low-level people. They’re executive types. What do you want to bet that, like with Eileen Foster, the Justice Department has never bothered to talk to them.
Thankfully for us, Hudson has.
Stop bashing Angelo Mozilo. He is a genius who saw an opportunity and capitalized on it. His true mastery is in the way he negotiated with Bank of America for the sale of Countrywide to include waivers on fines for any wrongdoing that may have been discovered after the fact.
http://www.thenakedemperor.com/oligarch/angelo-mozilo
#1 Posted by Oli Garch, CJR on Thu 15 Dec 2011 at 09:05 PM
Here come the Chittum 5000 Black Helicopters, in full Whisper Mode!...
"As Niemela immersed herself in the culture and talked to her colleagues, she says, some executives were frank about how things were run, telling her: “Angelo makes every decision. We really are not empowered to make decisions. Angelo signs every expense report. He micro-manages us.”
Once again...No names! WHO are these "some" executives? HUH?
All we get is hearsay from disgruntled employees, and we're supposed to start tying nooses for the lynching? For real?
And here we go again:
"After reading many similar comments, Niemela says, she urged Countrywide executives to open a full-scale investigation of fraud within the company. The investigation never happened, she says. “They just shut the whole thing down. They didn’t want to hear that.”
Urged WHICH Countrywide executives? WHO are the "they" that supposedly just "shut the whole thing down'?
Only in Chittumland do the unsupported and thoroughly vague allegations of misconduct by adverse litigious parties constitute "evidence" of anything.
And as for DOJ "not talking" with Eileen Foster... The Justice Department spokesmen specifically invited Foster to speak with him - it's right there on video dude in the link on YOUR story, Ryan... Try being honest with your readers, OK? The only thing stopping Eileen Foster from talking to DOJ is herself. What is DOJ supposed to do? Abduct the woman?
You biased "professional journalists" don't have the stones to ask her why she or any of the other of these "whistleblowers" don't simply walk into (or phone) an FBI or a US Attorney's office and file criminal complaints, like any other citizens who witness crime do. You are cheating your readers of the truth to further your own anti-capitalist agenda (which can no longer be called a "commie agenda" under Pravda's... er, I mean CJR's new comment censorship policy)..
#2 Posted by padikiller, CJR on Fri 16 Dec 2011 at 08:27 AM
Can we see some of that "CJR's new comment censorship policy" in action here, because the comment above was copy pasted into what now... a half a dozen threads?
I mean man, if all you're going to get is whining about censorship no matter how tolerant you act, you might as well act a little less tolerant. Maybe just search and destroy any post with Chittumland + black + helicopter in it. Nothing of value will be lost.
#3 Posted by Thimbles, CJR on Fri 16 Dec 2011 at 11:08 AM
It's always the liberals calling for censorship. Liberal (though not "commie" under Pravda's... er, I mean CJR's new comment censorship policy) nonsense can't withstand scrutiny, and leftists have no tolerance for any opposition.
Of course, my admittedly (and quite appropriately) harsh comment merely doled out the stark Reality - namely that Ryan is misleading his readers when he states that DOJ never "bothered to talk" to Countrywide accuser Ms. Foster.
The simple, undeniable FACT of the matter is that the DOJ spokesman on 60 minutes stated plainly that he wished to talk with her and openly and publicly invited her to do so.
Sorry to rain some REALITY on the parade of those who can no longer be called commies under Pravda's... er, I mean CJR's new comment censorship policy.
But the truth is what it is.
#4 Posted by padikiller, CJR on Fri 16 Dec 2011 at 01:00 PM
Have you not made the same points a dozen times in the past? What new insight or information did your post bring to the table? Nothing? Then it's not censorship. It's not censorship to delete spam. You don't want to be deleted? Post something worth while. Copy pasted rants are not worth the real estate on the many cjr readers' computer screens.
We dealt with the affidavit issue here.
http://www.cjr.org/the_audit/60_minutes_tough_piece_on_the.php
Unless she is compelled by the state to offer testimony, she is exposed to liability through her non-defamation / non-disclosure agreements.
And if she were to offer that statement unsolicited, there's little guarantee that any investigation nor follow up will be done. Gail Kubiniec has her sworn testimony on file. Steve Toomey has his sworn testimony on file. Eileen Foster has sworn testimony on file that was solid enough to earn her a million dollar wrongful dismissal judgement.
If the justice department wanted to initiate something, they could in a heart beat. They don't. Therefore there is nothing to be gained by offering unsolicited testimony except lawsuits and dismissal of testimony due to its offering in violation of said agreements as what was attempted in the Marino vs Cross Country Bank lawsuits. You are making a red herring argument to distract from the trillion dollar frauds at your friends' banks, and they are old arguments.
Get some new tricks, for the love of Ishtar.
#5 Posted by Thimbles, CJR on Fri 16 Dec 2011 at 03:33 PM
Thimbles...
The DOJ spokesman went on 60 minutes and invited this lady to discuss the case.
What the Hell else are they supposed to do? Kidnap her?
Why in the Hell didn't she call the authorities? HUH?
WHY is nobody asking her that question?
Get real.
#6 Posted by padikiller, CJR on Fri 16 Dec 2011 at 05:01 PM
Point of order...
Black Helicopters work for the public sector, not the private sector.
Paddikook never seems to get that straight.
#7 Posted by Czerka, CJR on Fri 16 Dec 2011 at 05:32 PM
Thimbles wrote: "If the justice department wanted to initiate something, they could in a heart beat."
padikiller responds: Bullshit. The Justice Department is not empowered to launch a criminal investigation because a disgruntled employee makes non-specific accusations against unnamed people.
Somebody has to make a complaint. The police don't launch a criminal investigation every time somebody sues somebody and makes general accusations of wrongdoing. It doesn't work this way.
Thimbles blithered: "And if she were to offer that statement unsolicited, there's little guarantee that any investigation nor follow up will be done"
padikiller responds: Bullshit. The DOJ spokesman invited her to come in and tell her story.
Thimbles just makes shit up: "Unless she is compelled by the state to offer testimony, she is exposed to liability through her non-defamation / non-disclosure agreements."
padikiller schools: Bullshit. Contract terms such as these are unenforceable as contrary to public policy.
#8 Posted by padikiller, CJR on Fri 16 Dec 2011 at 05:39 PM
@Czerka
The Chittum 5000 Black Helicopters are a joint Soros/Halliburton/CJR venture.
They're powered by Solyndra solar cells using LightSquared's wireless technology.
#9 Posted by padikiller, CJR on Fri 16 Dec 2011 at 05:44 PM
padi, are you a lawyer or not?
If not then shut up about things you don't know about (like that's ever stopped you in the past).
If so, then stop lying.
Language such as this:
"Proprietary Information may be disclosed if either party is required to make such disclosure as a result of a court order, subpoena or similar legal duress, provided that disclosing party gives the other party prompt prior written notice upon its receipt of any such order or subpoena and provided further that it gives the other party a reasonable opportunity prior to disclosure to seek a protective order or to take other appropriate action."
is pretty standard. And if you play around with your employer agreement:
http://www.guardian.co.uk/media/2011/aug/17/whistleblower-murdoch-empire
it is in their interest to make you pay for it. If you make charges without the documents to back them up, you can be sued for defamation. If you release documents without permission from your employer, you can be sued for breach of contract.
And, as previously listed cases demonstrate. even if the employer doesn't win the legal battle, they bankrupt and cause years of harm to the whistleblower in the legal war. You're supposed to be the lawyer, Stop demonstrating how bad you are at your profession.
#10 Posted by Thimbles, CJR on Fri 16 Dec 2011 at 07:25 PM
Meanwhile:
http://bottomline.msnbc.msn.com/_news/2011/12/16/9494796-sec-charges-ex-fannie-freddie-ceos-with-fraud
It's not like the SEC can't file charges, it's not like the fed can't follow up on them, but there are on;y certain types of people the government wants to go after.
And Robert Khuzami, Director of the SEC's Enforcement Division, does not seem to want to go after his former cocktail buddies from his Deutsche Bank days. Nor does Eric Holder since his Covington & Burling days when he used to defend the companies that
hiredpaid money to the AUC to hack people's heads off.It's what they (don't) do.
#11 Posted by Thimbles, CJR on Fri 16 Dec 2011 at 07:41 PM
Thimbles...
You're full of crap and talking out of your A$$.
Any contract term that forbids the report of a crime is unconscionable and any court in America would void it as a matter of public policy.
NOTHING is stopping anyone from reporting a crime. PERIOD.
#12 Posted by padikiller, CJR on Fri 16 Dec 2011 at 08:28 PM
In the County of Suffolk New York.I have personally experienced law enforcement agencies.Including the SCPD,Thomas Spota Dist.Attorney.Blew me right off on the more than a few times I stopped into their various precincts in a vain attempt to report mortgage fraud.
Later on with more clarity.It became apparent that they would not address this huge mortgage fraud issue in Suffolk County due to the fact that.The above are some of the biggest benefactors of the profits from this fraud.
I would welcome the chance to sit down & show Mr.Hudson the many unknown pieces to this mortgage fraud puzzle.Many high ups have unclean hands I am finding.
#13 Posted by Mired in it by default, CJR on Sat 17 Dec 2011 at 12:57 AM
"Any contract term that forbids the report of a crime is unconscionable and any court in America would void it as a matter of public policy.
NOTHING is stopping anyone from reporting a crime. PERIOD."
That's right. The best you have is "Thimbles is talking out of his orfice." I'm not a lawyer and I recognize that the agreements signed by employees will be used either in fights between the justice department and the employer, which will attempt to limit the scope of the subpoena, or by the employer and the employee, which will attempt to punish the employee. Punative suits do not require a plausible chance of winning to get their point across, they just need to cost the defendant enough time and money to make everyone else aware they don't need the hassle of speaking out.
I repeat, I'm not a lawyer and you are, but you don't seem to know enough about your own legal processes to stop offering bad anonymous counsel. You don't seem to either know or care about how someone's actions expose them to legal repercussions, justified or not. I was under the impression that clown colleges did not offer law programs but, after discussion with you, it appears I was mistaken.
Enjoy your Christmas.
#14 Posted by Thimbles, CJR on Sat 17 Dec 2011 at 02:22 AM
Thimbles...
This is an important act of journalistic malfeasance on Ryan's part, so lets nail down some FACTS:
1. There is no evidence that Ms. Foster EVER provided the names of any particular people she alleges committed crimes to anyone - not in a police report, not in testimony, not to anybody. PERIOD.
2. She refused to provide names to 60 Minutes but said that she would talk to the Feds.
3. The DOJ spokesman, on national television, invited her to make a report.
4. She did not make a report.
5. Ryan's claim that the DOJ has "never bothered to talk" to her is therefore utterly false - the FACT of the matter is that Ms. Foster has never bothered to call them!
6. Evidence admissible in civil trials is not generally admissible in criminal trials - there are different standards of proof, different rules of evidence and procedure, and enhanced constitutional requirements of evidence used in criminal prosecutions.
7. Investigators and prosecutors are not generally empowered to pour through evidence in civil cases in criminal fishing expeditions.
8. Nothing is stopping anyone from reporting a crime. PERIOD.
All of your fantastic and fictitious claims contrary to these facts are just silly.
Given her obvious seven figure financial motive in propounding her allegations against Countrywide, what a REAL "professional journalist" should be asking Ms. Foster is "Why didn't you report these crimes to the Feds or respond to DOJ's request to talki with you"?
But it will be a snowy day in Hell before you see anyone like Ryan summon the stones to overcome his bias and do his job in this simple manner.
#15 Posted by padikiller, CJR on Sat 17 Dec 2011 at 09:21 AM
Yeah, you know what paidy? I've posted details of actual lawsuits and actual measures taken by actual banks to make sure that employees are acquainted with their legal departments before snitching to the Feds. You are wrong.
Meanwhile, the sec seems to be operating on the testimony of Mr. Pinto and his AEI mouth puppet, Wallison.
Really cheesy article ahead:
http://dealbook.nytimes.com/2011/12/16/s-e-c-sues-6-former-top-fannie-and-freddie-executives/
"The agency has come under fire for not pursuing top Wall Street and mortgage industry executives who contributed to the financial crisis. In cases contending the deceptive marketing of securities tied to mortgages, the S.E.C. has been criticized for citing only midlevel bankers while settling with the Wall Street firms themselves. Recently, the agency drew criticism from a federal judge after allowing Citigroup to settle a fraud case without conceding wrongdoing."
Okay, good so far..
"On Friday, S.E.C. officials trumpeted their actions in the Fannie and Freddie case as part of a renewed effort to crack down on wrongdoing at the highest levels of Wall Street and corporate America.
“All individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country’s investors,” said Robert S. Khuzami, the agency’s enforcement chief."
Uhmm, Freddy and Fannie sucked, but they don't represent anywhere near the wrong doing at the highest levels of wallstreet and corporate America. They are the ones forcing institutions like Bank of America to buy back their non-industry conforming crap. What we're seeing here is what happens when an institution loses its constituency. The GSE's have few political friends, lots of political enemies, so they are being stuck with the rap. "They tricked investors!" No, they were under pressure from investors to fall for countrywide tricks. Who tricked investors? Citibank. Have you glanced at their executives? No, that wouldn't be civil. Regulators exist to help the banks, and using Daniel Mudd as a scape goat and cover for their other sweetheart deals helps the banks.
"The S.E.C.’s commitment to the long-running investigation — more than 100 depositions were produced over its course — highlights the major roles that Fannie Mae and Freddie Mac played in the financial crisis and subsequent government bailout."
Hiya Wallison!
"Success for the S.E.C. in the Fannie and Freddie case will largely hinge on the meaning of the word subprime, which the government itself has never fully defined. While the term often refers to borrowers with low credit scores, Fannie and Freddie decided to classify loans as prime or subprime based on the lender type, not the borrower’s credit score. A Wall Street bank, for instance, was usually considered a prime lender, despite extending subprime loans."
Argh! Subprime is a type of loan product which charges a higher than prime rate of interest (or has other types of nasty conditions like prepayment penalties, exploding interest rate resets, etc..) often in exchange for a streamlined approval process with lower documentation requirements.
It can be used by people with low credit scores, but it was also used by people who qualified for prime. I'm not what the article is talking about as far as bank lender type.
"the government’s complaint contends that this kind of disclosure masked risk. Loans not considered subprime often defaulted at higher rates than those classified as subprime."
Fanny and Freddy bought subprime securities, they made subprime like products, but they did not have higher default rates f
#16 Posted by Thimbles, CJR on Sat 17 Dec 2011 at 03:58 PM
I'm not arguing the point of whether fraud existed or not.
I'm hammering away at Ryan's ridiculously false assertion that DOJ "never bothered to talk" to Eileen Foster.
The FACT of the matter is that DOJ spokesman extended a public invitation to Ms. Foster to talk with the Department. It's right there on the 60 Minutes video for Pete's sake!
Ding Ding!
That's the Reality Bell tolling.
We need to deal with this latest example of his typical anti-capitalist hackery.
#17 Posted by padikiller, CJR on Sun 18 Dec 2011 at 09:47 AM
Padi sure likes to repeat himself, don't he. Like readers won't know the difference between being sought out to aid an investigation and releasing non-public information to open one.
Yes, we know Padi, Eileen Foster is the villain. She should have kept her disgruntled mouth shut.
Moving on, what is the SEC really trying to pull? Predictable response from Wally Wonka here:
http://m.theatlantic.com/business/print/2011/12/for-the-last-time-fannie-and-freddie-didnt-cause-the-housing-crisis/250121/
"Now that the SEC has sued Fannie Mae and Freddie Mac for failure to disclose the subprime and other low quality loans they held and securitized, this really is the last time we'll hear from David Min and others who have been trying to protect the government from blame for the financial crisis.
"The SEC's suit is based on the failure of Fannie and Freddie to disclose the poor quality of the mortgages that they were buying, holding and securitizing. As the SEC said in its press release on the suit: "Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was." This explains why Min and others--despite the insolvency of Fannie and Freddie-- have continue to argue that the two companies did not hold substantial amounts of subprime and other low quality loans. Fannie and Freddie simply failed to disclose this information.
"The Financial Crisis Inquiry Commission failed completely in its mission because it refused to inquire seriously into what Fannie and Freddie had done. My dissent however, based on the research of my AEI colleague Edward Pinto, contains all this data, and even points out that Fannie and Freddie had failed to disclose it to the market. Although the FCIC had subpoena power and could have put Fannie and Freddie executives under oath, the FCIC did not want to know the facts that the SEC has now discovered. It was a travesty and a whitewash, and a waste of taxpayer funds. It has also misled people like David Min and others into believing that Fannie and Freddie were--as the FCIC said in its majority report--only "marginal" players in the financial crisis. It's lucky for the FCIC that the SEC doesn't have jurisdiction over false government reports.
"When all the facts come out at trial, the roles of Fannie and Freddie, and the government housing policies they were implementing, will become painfully clear."
They've found a patsy, and his name is Mudd.
#18 Posted by Thimbles, CJR on Sun 18 Dec 2011 at 02:33 PM
So I want to make sure I get this right. The way law enforcement in America operates -- and should operate -- is to sit around and wait for some average citizen to file a police report. Correct? Then and only then will/should law enforcement deign to investigate matters of public importance. Correct?
Police would be exactly in the right if they were to, for example, declare:
--We couldn't investigate the terrorist cell because no one came into a police station and swore out a formal complaint specifying names, dates, etc.
--We found an unidentified victim of multiple gunshots and knife wounds in an alley. We can't attempt to establish the victim's identify or in any way investigate until someone comes in and files a formal complaint. That's just the way the system works.
--We simply react to complaints. You can't expect us, with our thousands of investigators and multi-million dollar budgets to try to identify patterns of criminal conduct that cause great harm. That would be, um, inappropriate. Reaching out to insiders in key positions to have seen potentially illegal activity and asking them questions? That's simply not allowed.
Correct?
#19 Posted by learningcriminallaw, CJR on Mon 19 Dec 2011 at 11:48 PM
LCL gets it. A crime does not get investigated by relevant agencies just because the details are on record in various countrywide lawsuits by employees and shareholders and the evidence of fraud is littered around the real estate market.
Such a thing would be a commie fishing expedition.
Whereas going after executives of institutions who invested in garbage loans sold by crook banks
http://mobile.bloomberg.com/news/2010-11-30/banks-in-u-s-resisting-calls-to-repurchase-fannie-mae-freddie-mac-loans.html
we're going to investigate the crap out of them for buying the crooks' crappy products, and lying in public statements about the amount of those purchases, instead of going after the crooks who made the crappy products in the first place.
A regulatory agency needs to set priorities, no?
#20 Posted by Thimbles, CJR on Tue 20 Dec 2011 at 02:04 AM
So I want to make sure I get this right. The way law enforcement in America operates -- and should operate -- is to sit and wait for some average citizen to file a police report. Correct? Then and only then will/should law enforcement investigate matters of public importance. Correct?
Police would be exactly in the right if they were to, for example, declare:
--We couldn't investigate the terrorist cell because no one came into a police station and swore out a formal complaint specifying names, dates, etc. Proactivity? Initiative? Not in our job description, folks.
--We found an unidentified victim of multiple gunshots and knife wounds in an alley. We can't attempt to establish the victim's identify or in any way investigate until someone comes forward and files a formal complaint. That's just the way the system works.
--We simply react to complaints. You can't expect us, with our thousands of investigators and multi-million dollar budgets, to try to identify patterns of criminal conduct that cause great harm. That would be, um, inappropriate. Reaching out to insiders in key positions to have seen potentially illegal activity and asking them questions? That's simply not allowed.
#21 Posted by studentofcrimlaw, CJR on Tue 20 Dec 2011 at 12:53 PM
More on the sec suit here:
http://www.ritholtz.com/blog/2011/12/what-is-sec-suit-gse-execs/
And yeah, Ryan linked to how a real DA handles a real investigation of a crime they really want to prosecute:
http://www.ft.com/intl/cms/s/0/8cc25a5a-2972-11e1-8b1a-00144feabdc0.html
Once again, Schneiderman? You're never going to become an industry lobbyist and pick up a sweet post with the banks that way! Shouldn't you be twiddling your thumbs over reams of testimony, documents, and evidence like Eric Holder instead of working with the GSE's on the criminal crappy loans they are trying to push back? For guys with the same name, you couldn't be more different.
Ps. The reason why Schneiderman is using the Freddy and Fannie documents is because many of those sales took place in 2006-7, and the dithering Federal prosecution has let the clock run out on fraud previous to 2007 as of 2012. 5 years is too small a window for fraud charges when you've got entire industries using fraud to butter their bread. There should be a movement to expand the statue of limitations on that.
#22 Posted by Thimbles, CJR on Tue 20 Dec 2011 at 12:54 PM
The sex is selling a story, but few people are buying.
http://www.nytimes.com/2011/12/20/opinion/nocera-an-inconvenient-truth.html
#23 Posted by Thimbles, CJR on Tue 20 Dec 2011 at 01:27 PM
@studentofcriminallaw
There is no evidence (that I've heard of) that any particular person at Countrywide engaged in the behavior that the whistleblower alleges.
If, for example, there were documents in public records that indicated the type of fraud that Ms. Foster alleges, then of course the Feds should investigate. But such is not the case.
The situation we find ourselves in now is more aptly compared to the following - a citizen suing a homeowner tells the press that in some particular house owned by the homeowner, unnamed people have murdered unnamed victims at the behest of the homeowner and there are some unspecified number of dead bodies littering the floor. The police ask the citizen to call them to discuss the allegations, and the citizen refuses to do so. Can the police barge into the house on the basis of these vague allegations? Can the police force the citizen to talk to them?
No.
See, we have this "Constitution-thingie" that keeps law enforcement from doing this.
#24 Posted by padikiller, CJR on Tue 20 Dec 2011 at 05:27 PM
Omg.
"The sex is selling a story, but few people are buying."
That was supposed to be SEC. DYAC!
#25 Posted by Thimbles, CJR on Tue 20 Dec 2011 at 08:04 PM