Miriam,
Agreed. Thinking about the loss of our hard earned equities and
investments is enough to cause us to tear hair and go screaming from
the room like a crazy person.
But that doesn't mean we should not talk about it, and begin looking
for ways to deal with it.
First, I consider that "loss", to actually be Theft...point blank
robbery. I understand that neither I, nor you nor our loved ones will
ever see a single red cent that was stolen from us. And while I do
believe that the thieves who robbed us should be held accountable for
their cruel and heartless actions, I know that they will not. They
are a protected part of the Empire. Think of who pays and who does
not pay for their crimes, and you can see who belongs to the outcast
Working Class, and who belongs to the Ruling Class.
While some would believe that we, the Working Class, have no power,
that myth is fostered by the Empire in an attempt to keep us in our
place. But I have the power to point out wherever I am able, the myth
and the reality. We Working Class folks do have the power, once we
choose to exercise it.
But it will only work if we get away from petty bickering over what is
the real cause of our situation.
And that brings me back to your query regarding the roll God plays in
all of this.
It is my contention that we have built our civilization on a faulty
foundation. Like my neighbor trying to fit square cabinets into a
house that has shrunk and twisted and settled with age, he is
attempting to alter the shape of that which cannot be changed. Not
without tearing down the entire building and starting from scratch.
And so it is with the foundation we have been building upon for
thousands of years.
Way back when Man first looked about himself in wonder and fear, he
made sense out of all that surrounded him by deciding that it was
created. And since Man made that determination, he also decided by
whom and for what purpose this universe was created.
All that followed was predicated on that decision. And Man became
different from all other life upon Planet Earth.
And down through the thousands of years, everything Man did to his
fellow Humans, to all life and to the entire planet, was justified and
blessed by God. Even today when many do not hold a belief in the
traditional God, we are conditioned to think of ourselves as Masters
of All we survey. We are special. We are smarter and more clever
than all other living things. It is this God Complex that will bring
down the Human Race. Mother Earth will win in the long haul, changing
herself and out lasting our meager efforts to continue existing.
There are no two ways about it. If we do not dismiss God and all the
surrounding beliefs that we are above all other life upon this planet,
we will continue pushing our way to the cliff's edge. We invented God
to explain all that we did not understand. Now we can uninvent God,,
knowing that there rational answers to all we once called,
"Mysteries", and given enough time and research and investigation,
many of the unknowns will be answered. But this will only come to
pass when Man takes his place among, rather than over, Earth's living
creatures. And in order to do this, we will have to dismiss God. We
can certainly thank Him for having given us the belief that we were
superior, and thus enabling us to survive in a very harsh, uncaring
world. But we have carried it far too far. And we are in danger of
that All Mighty Powerful All Knowing God becoming our Terminator.
Carl Jarvis
On 11/8/14, Miriam Vieni <miriamvieni@optonline.net> wrote:
> And if I begin to add up how much money I lost when I sold my house and
> purchased my apartment in 2006, given the loans I took out to be able to
> swing the deal because the house didn't sell for almost a year until after I
> bought the apartment, and the apartment lost a great deal of value after I
> bought it, I'll just begin tearing out my hair and screaming!
>
> Miriam
>
> -----Original Message-----
> From: Blind-Democracy [mailto:blind-democracy-bounces@octothorp.org] On
> Behalf Of Carl Jarvis
> Sent: Saturday, November 08, 2014 11:13 AM
> To: Blind Democracy Discussion List
> Subject: Re: The $9 Billion Witness
>
> The sad truth is that despite her bravery and the risk to her own
> future, most of the people she cares about will never see a thin dime
> of retribution. All three of my children were caught up in this mass
> scam by Wall Street, in one way or another. My nephew lost his house
> when his wife lost her job and the bank refused to refinance, in spite
> of the fact that my nephew had a secure teaching position and his wife
> had good prospects of being re-employed in a few months...which she
> was. But they lost the house and over $30,000 in equity.
> Our eldest daughter and her husband piled up huge medical bills due to
> her Rheumatoid Arthritis and his Parkinson's. Their health coverage
> was very inadequate. They refinanced their home through what appeared
> to be a reliable company. But to their surprise and dismay, they had
> been tricked and treated into a mortgage that was tied to some
> mysterious formula that doubled their house payment over a few short
> months. Our son was led into what he told us at the time was, "A deal
> too good to resist". It was also a deal that was too good to be true.
> He and his wife were lucky to sell on a short sale just before they
> were foreclosed.
> Our youngest daughter and her husband put $70,000 down on a home they
> bought for $325,000. They still have the house and earn enough to
> continue making the payments, but the bursting balloon wiped out all
> of their equity. In other words, Wall Street Bankers robbed them of
> $70,000. The house was just appraised for $255,000.
> As long as Cathy and I remain in our home, we are financially okay.
> But if we were to put it on the market, most of our equity would be
> gone. And the property we had planned to build our final retirement
> home on, has lost about half of what we paid for it. Again, as long
> as we don't sell anything, we look in good shape. But the truth is
> that our hands are tied, and our options are very limited.
> But our Fearless Leader, the Prince of Peace tells us that we mustn't
> look back. Let the past stay in the past. Doesn't he understand that
> for many millions of Working Class People, it is their present...and
> their future? Meanwhile a few billions of dollars are paid to the
> government with a weak promise that it will go toward repaying those
> who were cheated. But that is about as real as expecting the robbers
> to serve prison time.
>
> Carl Jarvis
>
>
> On 11/7/14, Miriam Vieni <miriamvieni@optonline.net> wrote:
>> I listened to the program tonight on the web, as I almost always do. She
>> reminded me of Edward Snowden in her responses when Amy asked why she was
>> going public at this point and whether she was worried about what might
>> happen to her as a result. Her livelihood is certainly at stake, but she
>> is
>> most concerned about helping the people who have been hurt by what J.P.
>> Morgan Chase did. And she felt that someone had to make all of this public
>> before the statute of limitations went into effect and it is all swept
>> under
>> the rug.
>>
>> Miriam
>>
>> -----Original Message-----
>> From: Blind-Democracy [mailto:blind-democracy-bounces@octothorp.org] On
>> Behalf Of Carl Jarvis
>> Sent: Friday, November 07, 2014 9:10 PM
>> To: Blind Democracy Discussion List
>> Subject: The $9 Billion Witness
>>
>> I heard Matt Taiddi and Alayne Fleischmann on Democracy Now. She is
>> what I consider an American Hero. Both of them make sense, in a time
>> of senselessness.
>> Democracy Now comes in on three public broadcast stations in my area.
>> I can listen at 5:00, 6:00 and 7:00 A.M., and again at 5:00 PM. I
>> seldom miss a day's broadcast.
>> In fact, I skip NPR most mornings because I find their format sounding
>> more and more like the major TV networks, minus the over load of ads.
>> I chuckle at Ted's comments about listening to Rush Limbaugh. I can't
>> stand the smug chatter of Steve and Renee...although she is not nearly
>> as bad...and I ask myself just how anyone can stay with old Rush long
>> enough to make sense out of his rambles.
>>
>> Carl Jarvis
>>
>>
>> On 11/7/14, Miriam Vieni <miriamvieni@optonline.net> wrote:
>>> Apparently, Tiaby is back with Rolling Stone after his falling out with
>>> Piere Amadir.
>>> Miriam
>>>
>>> Taibbi writes: "She tried to stay quiet, she really did. But after eight
>>> years of keeping a heavy secret, the day came when Alayne Fleischmann
>>> couldn't take it anymore."
>>>
>>> Chase whistle-blower Alayne Fleischmann risked it all. (photo: Andrew
>>> Querner/Rolling Stone)
>>>
>>>
>>> The $9 Billion Witness
>>> By Matt Taibbi, Rolling Stone
>>> 06 November 14
>>>
>>> Meet the woman JPMorgan Chase paid one of the largest fines in American
>>> history to keep from talking
>>>
>>> She tried to stay quiet, she really did. But after eight years of keeping
>>> a
>>> heavy secret, the day came when Alayne Fleischmann couldn't take it
>>> anymore.
>>> "It was like watching an old lady get mugged on the street," she says. "I
>>> thought, 'I can't sit by any longer.'"
>>> Fleischmann is a tall, thin, quick-witted securities lawyer in her late
>>> thirties, with long blond hair, pale-blue eyes and an infectious sense of
>>> humor that has survived some very tough times. She's had to struggle to
>>> find
>>> work despite some striking skills and qualifications, a common symptom of
>>> a
>>> not-so-common condition called being a whistle-blower.
>>> Fleischmann is the central witness in one of the biggest cases of
>>> white-collar crime in American history, possessing secrets that JPMorgan
>>> Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as
>>> regularly reported – more on that later) to keep the public from hearing.
>>> Back in 2006, as a deal manager at the gigantic bank, Fleischmann first
>>> witnessed, then tried to stop, what she describes as "massive criminal
>>> securities fraud" in the bank's mortgage operations.
>>> Thanks to a confidentiality agreement, she's kept her mouth shut since
>>> then.
>>> "My closest family and friends don't know what I've been living with,"
>>> she
>>> says. "Even my brother will only find out for the first time when he sees
>>> this interview."
>>> Six years after the crisis that cratered the global economy, it's not
>>> exactly news that the country's biggest banks stole on a grand scale.
>>> That's
>>> why the more important part of Fleischmann's story is in the pains Chase
>>> and
>>> the Justice Department took to silence her.
>>> She was blocked at every turn: by asleep-on-the-job regulators like the
>>> Securities and Exchange Commission, by a court system that allowed Chase
>>> to
>>> use its billions to bury her evidence, and, finally, by officials like
>>> outgoing Attorney General Eric Holder, the chief architect of the crazily
>>> elaborate government policy of surrender, secrecy and cover-up. "Every
>>> time
>>> I had a chance to talk, something always got in the way," Fleischmann
>>> says.
>>> This past year she watched as Holder's Justice Department struck a series
>>> of
>>> historic settlement deals with Chase, Citigroup and Bank of America. The
>>> root bargain in these deals was cash for secrecy. The banks paid big
>>> fines,
>>> without trials or even judges – only secret negotiations that typically
>>> ended with the public shown nothing but vague, quasi-official papers
>>> called
>>> "statements of facts," which were conveniently devoid of anything like
>>> actual facts.
>>> And now, with Holder about to leave office and his Justice Department
>>> reportedly wrapping up its final settlements, the state is effectively
>>> putting the finishing touches on what will amount to a sweeping,
>>> industrywide effort to bury the facts of a whole generation of Wall
>>> Street
>>> corruption. "I could be sued into bankruptcy," she says. "I could lose my
>>> license to practice law. I could lose everything. But if we don't start
>>> speaking up, then this really is all we're going to get: the biggest
>>> financial cover-up in history."
>>> Alayne Fleischmann grew up in Terrace, British Columbia, a snowbound
>>> valley
>>> town just a brisk 18-hour drive north of Vancouver. She excelled at
>>> school
>>> from a young age, making her way to Cornell Law School and then to Wall
>>> Street. Her decision to go into finance surprised those closest to her,
>>> as
>>> she had always had more idealistic ambitions. "I helped lead a group that
>>> wrote briefs to the Human Rights Chamber for those affected by ethnic
>>> cleansing in Bosnia-Herzegovina," she says. "My whole life prior to
>>> moving
>>> into securities law was human rights work."
>>> But she had student loans to pay off, and so when Wall Street came
>>> knocking,
>>> that was that. But it wasn't like she was dragged into high finance
>>> kicking
>>> and screaming. She found she had a genuine passion for securities law and
>>> felt strongly she was doing a good thing. "There was nothing shady about
>>> the
>>> field back then," she says. "It was very respectable."
>>> In 2006, after a few years at a white-shoe law firm, Fleischmann ended up
>>> at
>>> Chase. The mortgage market was white-hot. Banks like Chase, Bank of
>>> America
>>> and Citigroup were furiously buying up huge pools of home loans and
>>> repackaging them as mortgage securities. Like soybeans in processed food,
>>> these synthesized financial products wound up in everything, whether you
>>> knew it or not: your state's pension fund, another state's workers'
>>> compensation fund, maybe even the portfolio of the insurance company you
>>> were counting on to support your family if you got hit by a bus.
>>> As a transaction manager, Fleischmann functioned as a kind of
>>> quality-control officer. Her main job was to help make sure the bank
>>> didn't
>>> buy spoiled merchandise before it got tossed into the meat grinder and
>>> sold
>>> out the other end.
>>> A few months into her tenure, Fleischmann would later testify in a DOJ
>>> deposition, the bank hired a new manager for diligence, the group in
>>> charge
>>> of reviewing and clearing loans. Fleischmann quickly ran into a problem
>>> with
>>> this manager, technically one of her superiors. She says he told her and
>>> other employees to stop sending him e-mails. The department, it seemed,
>>> was
>>> wary of putting anything in writing when it came to its mortgage deals.
>>> "If you sent him an e-mail, he would actually come out and yell at you,"
>>> she
>>> recalls. "The whole point of having a compliance and diligence group is
>>> to
>>> have policies that are set out clearly in writing. So to have exactly the
>>> opposite of that – that was very worrisome." One former high-ranking
>>> federal
>>> prosecutor said that if he were taking a criminal case to trial, the
>>> information about this e-mail policy would be crucial. "I would begin and
>>> end my opening statement with that," he says. "It shows these people knew
>>> what they were doing and were trying not to get caught."
>>> In late 2006, not long after the "no e-mail" policy was implemented,
>>> Fleischmann and her group were asked to evaluate a packet of home loans
>>> from
>>> a mortgage originator called GreenPoint that was collectively worth about
>>> $900 million. Almost immediately, Fleischmann and some of the diligence
>>> managers who worked alongside her began to notice serious problems with
>>> this
>>> particular package of loans.
>>> For one thing, the dates on many of them were suspiciously old. Normally,
>>> banks tried to turn loans into securities at warp speed. The idea was to
>>> go
>>> from a homeowner signing on the dotted line to an investor buying that
>>> loan
>>> in a pool of securities within two to three months. Thus it was a huge
>>> red
>>> flag to see Chase buying loans that were already seven or eight months
>>> old.
>>> What this meant was that many of the loans in the GreenPoint deal had
>>> either
>>> been previously rejected by Chase or another bank, or were what are known
>>> as
>>> "early payment defaults." EPDs are loans that have already been sold to
>>> another bank and have been returned after the borrowers missed multiple
>>> payments. That's why the dates on them were so old.
>>> In other words, this was the very bottom of the mortgage barrel. They
>>> were
>>> like used cars that had been towed back to the lot after throwing a rod.
>>> The
>>> industry had its own term for this sort of loan product: scratch and
>>> dent.
>>> As Chase later admitted, it not only ended up reselling hundreds of
>>> millions
>>> of dollars worth of those crappy loans to investors, it also sold them in
>>> a
>>> mortgage pool marketed as being above subprime, a type of loan called
>>> "Alt-A." Putting scratch-and-dent loans in an Alt-A security is a little
>>> like putting a fresh coat of paint on a bunch of junkyard wrecks and
>>> selling
>>> them as new cars. "Everything that I thought was bad at the time,"
>>> Fleischmann says, "turned out to be a million times worse." (Chase
>>> declined
>>> to comment for this article.)
>>> When Fleischmann and her team reviewed random samples of the loans, they
>>> found that around 40 percent of them were based on overstated incomes –
>>> an
>>> astronomically high defect rate for any pool of mortgages; Chase's normal
>>> tolerance for error was five percent. One mortgage in particular that
>>> sticks
>>> out in Fleischmann's mind involved a manicurist who claimed to have an
>>> annual income of $117,000. Fleischmann figured that even working seven
>>> days
>>> a week, this woman would have needed to work 488 days a year to make that
>>> much. "And that's with no overhead," Fleischmann says. "It wasn't
>>> possible."
>>> But when she and others raised objections to the toxic loans, something
>>> odd
>>> started happening. The number-crunchers who had been complaining about
>>> the
>>> loans suddenly began changing their reports. The process she describes is
>>> strikingly similar to the way police obtain false confessions: The
>>> interrogator verbally abuses the target until he starts producing the
>>> desired answers. "What happened," Fleischmann says, "is the head
>>> diligence
>>> manager started yelling at his team, berating them, making them do
>>> reports
>>> over and over, keeping them late at night." Then the loans started
>>> clearing.
>>> As late as December 11th, 2006, diligence managers had marked a full 33
>>> percent of one loan sample as "stated income unreasonable for
>>> profession,"
>>> meaning that it was nearly inevitable that there would be a high number
>>> of
>>> defaults. Several high-ranking executives were copied on this report.
>>> Then, on December 15th, a Chase sales executive held a lengthy meeting
>>> with
>>> reps from GreenPoint and the diligence team to examine the remaining
>>> loans
>>> in the pool. When they got to the manicurist, Fleischmann remembers, one
>>> of
>>> the diligence guys finally caved under the pressure from the sales
>>> executive. "He had his hands up and just said, 'OK,' and he cleared it,"
>>> says Fleischmann, adding that he was shaking his head "no" even as he was
>>> saying yes. Soon afterward, the error rate in the pool had magically
>>> dropped
>>> below 10 percent – a threshold that itself had just been doubled to clear
>>> the way for this deal.
>>> After that meeting, Fleischmann testified, she approached a managing
>>> director named Greg Boester and pleaded with him to reconsider. She says
>>> she
>>> told Boester that the bank could not sell the high-risk loans as low-risk
>>> securities without committing fraud. "You can't securitize these loans
>>> without special disclosure about what's wrong with them," Fleischmann
>>> told
>>> him, "and if you make that disclosure, no one will buy them."
>>> A former Olympic ski jumper, Boester was such an important executive at
>>> Chase that when he later defected to the Chicago-based hedge fund
>>> Citadel,
>>> Dimon cut off trading with Citadel in retaliation. Boester eventually
>>> returned to Chase and is still there today despite his role in this
>>> affair.
>>> This moment illustrates the most basic element of the case against Chase:
>>> The bank knowingly peddled products stuffed with scratch-and-dent loans
>>> to
>>> investors without disclosing the obvious defects with the underlying
>>> loans.
>>> Years later, in its settlement with the Justice Department, Chase would
>>> admit that this conversation between Fleischmann and Boester took place
>>> (though neither was named; it was simply described as "an
>>> employee . . . told . . . a managing director") and that her warning was
>>> ignored when the bank sold those loans off to investors.
>>> A few weeks later, in early 2007, she sent a long letter to another
>>> managing
>>> director, William Buell. In the letter, she warned Buell of the
>>> consequences
>>> of reselling these bad loans as securities and gave detailed descriptions
>>> of
>>> breakdowns in Chase's diligence process.
>>> Fleischmann assumed this letter, which Chase lawyers would later jokingly
>>> nickname "The Howler" after the screaming missive from the Harry Potter
>>> books, would be enough to force the bank to stop selling the bad loans.
>>> "It
>>> used to be if you wrote a memo, they had to stop, because now there's
>>> proof
>>> that they knew what they were doing," she says. "But when the Justice
>>> Department doesn't do anything, that stops being a deterrent. I just
>>> didn't
>>> know that at the time."
>>> In February 2008, less than two years after joining the bank, Fleischmann
>>> was quietly dismissed in a round of layoffs. A few months later, proof
>>> would
>>> appear that her bosses knew all along that the boom-era mortgage market
>>> was
>>> rotten. That September, as the market was crashing, Dimon boasted in a
>>> ball-washing Fortune article titled "Jamie Dimon's SWAT Team" that he
>>> knew
>>> well before the meltdown that the subprime market was toast. "We
>>> concluded
>>> that underwriting standards were deteriorating across the industry." The
>>> story tells of Dimon ordering Boester's boss, William King, to dump the
>>> bank's subprime holdings in October 2006. "Billy," Dimon says, "we need
>>> to
>>> sell a lot of our positions. . . . This stuff could go up in smoke!"
>>> In other words, two full months before the bank rammed through the dirty
>>> GreenPoint deal over Fleischmann's objections, Chase's CEO was aware that
>>> loans like this were too dangerous for Chase itself to own. (Though Dimon
>>> was talking about subprime loans and GreenPoint was technically an Alt-A
>>> pool, the Fortune story shows that upper management had serious concerns
>>> about industry-wide underwriting problems.)
>>> In January 2010, when Dimon testified before the Financial Crisis Inquiry
>>> Commission, he told investigators the exact opposite story, portraying
>>> the
>>> poor Chase leadership as having been duped, just like the rest of us. "In
>>> mortgage underwriting," he said, "somehow we just missed, you know, that
>>> home prices don't go up forever."
>>> When Fleischmann found out about all of this years later, she was
>>> shocked.
>>> Her confidentiality agreement at Chase didn't bar her from reporting a
>>> crime, but the problem was that she couldn't prove that Chase had
>>> committed
>>> a crime without knowing whether those bad loans had been sold.
>>> As it turned out, of course, Chase was selling those rotten dog-meat
>>> loans
>>> all over the place. How bad were they? A single lawsuit by a single angry
>>> litigant gives some insight. In 2011, Chase was sued over massive losses
>>> suffered by a group of credit unions. One of them had invested $135
>>> million
>>> in one of the bank's mortgage--backed securities. About 40 percent of the
>>> loans in that deal came from the GreenPoint pool.
>>> The lawsuit alleged that in just the first year, the security suffered
>>> $51
>>> million in losses, nearly 50 times what had been projected. It's hard to
>>> say
>>> how much of that was due to the GreenPoint loans. But this was just one
>>> security, one year, and the losses were in the tens of millions. And
>>> Chase
>>> did deal after deal with the same methodology. So did most of the other
>>> banks. It's theft on a scale that blows the mind.
>>> In the spring of 2012, Fleischmann, who'd moved back to Canada after
>>> leaving
>>> Chase, was working at a law firm in Calgary when the phone rang. It was
>>> an
>>> investigator from the States. "Hi, I'm from the SEC," he said. "You
>>> weren't
>>> expecting to hear from me, were you?"
>>> A few months earlier, President Obama, giving in to pressure from the
>>> Occupy
>>> movement and other reformers, had formed the Residential Mortgage-Backed
>>> Securities Working Group. At least superficially, this was a serious show
>>> of
>>> force against banks like Chase. The group would operate like a kind of
>>> regulatory Justice League, combining the superpowers of investigators
>>> from
>>> the SEC, the FBI, the IRS, HUD and a host of other federal agencies. It
>>> included noted anti-corruption- investigator and New York Attorney
>>> General
>>> Eric Schneiderman, which gave many observers reason to hope that finally
>>> something would be done about the crimes that led to the crash. That
>>> makes
>>> the fact that the bank would skate with negligible cash fines an even
>>> more
>>> extra-ordinary accomplishment.
>>> By the time the working group was set up, most of the applicable statutes
>>> of
>>> limitations had either expired or were about to expire. "A conspiratorial
>>> way of looking at it would be to say the state waited far too long to
>>> look
>>> at these cases and is now taking its sweet time investigating, while the
>>> last statutes of limitations run out," says famed prosecutor and former
>>> New
>>> York Attorney General Eliot Spitzer.
>>> It soon became clear that the SEC wasn't so much investigating Chase's
>>> behavior as just checking boxes. Fleischmann received no follow-up phone
>>> calls, even though she told the investigator that she was willing to tell
>>> the SEC everything she knew about the systemic fraud at Chase. Instead,
>>> the
>>> SEC focused on a single transaction involving a mortgage company called
>>> WMC.
>>> "I kept trying to talk to them about GreenPoint," Fleischmann says, "but
>>> they just wanted to talk about that other deal."
>>> The following year, the SEC would fine Chase $297 million for
>>> misrepresentations in the WMC deal. On the surface, it looked like a
>>> hefty
>>> punishment. In reality, it was a classic example of the piecemeal,
>>> cherry-picking style of justice that characterized the post-crisis era.
>>> "The
>>> kid-gloves approach that the DOJ and the SEC take with Wall Street is as
>>> inexplicable as it is indefensible," says Dennis Kelleher of the
>>> financial
>>> reform group Better Markets, which would later file suit challenging the
>>> Chase settlement. "They typically charge only one offense when there are
>>> dozens. It would be like charging a serial murderer with a single assault
>>> and giving them probation."
>>> Soon Fleischmann's hopes were raised again. In late 2012 and early 2013,
>>> she
>>> had a pair of interviews with civil litigators from the U.S. attorney's
>>> office in the Eastern District of California, based in Sacramento.
>>> One of the ongoing myths about the financial crisis is that the
>>> government
>>> is outmatched by the legal talent representing the banks. But Fleischmann
>>> was impressed by the lead attorney in her case, a litigator named Richard
>>> Elias. "He sounded like he had been a securities lawyer for 10 years,"
>>> she
>>> says. "This actually looked like his idea of fun – like he couldn't wait
>>> to
>>> run with this case."
>>> She gave Elias and his team detailed information about everything she'd
>>> seen: the edict against e-mails, the sabotaging of the diligence process,
>>> the bullying, the written warnings that were ignored, all of it. She
>>> assumed
>>> that it wouldn't be long before the bank was hauled into court.
>>> Instead, the government decided to help Chase bury the evidence. It began
>>> when Holder's office scheduled a press conference for the morning of
>>> September 24th, 2013, to announce sweeping civil-fraud charges against
>>> the
>>> bank, all laid out in a detailed complaint drafted by the U.S. attorney's
>>> Sacramento office. But that morning the presser was suddenly canceled,
>>> and
>>> no complaint was filed. According to later news reports, Dimon had
>>> personally called Associate Attorney General Tony West, the third-ranking
>>> official in the Justice Department, and asked to reopen negotiations to
>>> settle the case out of court.
>>> It goes without saying that the ordinary citizen who is the target of a
>>> government investigation cannot simply pick up the phone, call up the
>>> prosecutor in charge of his case and have a legal proceeding canceled.
>>> But
>>> Dimon did just that. "And he didn't just call the prosecutor, he called
>>> the
>>> prosecutor's boss," Fleischmann says. According to The New York Times,
>>> after
>>> Dimon had already offered $3 billion to settle the case and was turned
>>> down,
>>> he went to Holder's office and upped the offer, but apparently not by
>>> enough.
>>> A few days later, Fleischmann, who had by then moved back to Vancouver
>>> and
>>> was looking for work, was at a mall when she saw a Wall Street Journal
>>> headline on her iPhone: JPMorgan Insider Helps U.S. in Probe. The story
>>> said
>>> that the government had a key witness, a female employee willing to
>>> provide
>>> damaging testimony about Chase's mortgage operations. Fleischmann was
>>> stunned. Until that moment, she had no idea that she was a major part of
>>> the
>>> government's case against Chase. And worse, nobody had bothered to warn
>>> her
>>> that she was about to be effectively outed in the newspapers. "The stress
>>> started to build after I saw that news," she says. "Especially as I
>>> waited
>>> to see if my name would come out and I watched my job possibilities
>>> evaporate."
>>> Fleischmann later realized that the government wasn't interested in
>>> having
>>> her testify against Chase in court or any other public forum. Instead,
>>> the
>>> Justice Department's political wing, led by Holder, appeared to be using
>>> her, and her evidence, as a bargaining chip to extract more hush money
>>> from
>>> Dimon. It worked. Within weeks, Dimon had upped his offer to roughly $9
>>> billion.
>>> In late November, the two sides agreed on a settlement deal that covered
>>> a
>>> variety of misbehaviors, including the fraud that Fleischmann witnessed
>>> as
>>> well as similar episodes at Washington Mutual and Bear Stearns, two
>>> companies that Chase had acquired during the crisis (with federal bailout
>>> aid). The newspapers and the Justice Department described the deal as a
>>> "$13
>>> billion settlement," hailing it as the biggest white-collar regulatory
>>> settlement in American history. The deal released Chase from civil
>>> liability. And, in what was described by The New York Times as a "major
>>> victory for the government," it left open the possibility that the
>>> Justice
>>> Department could pursue a further criminal investigation against the
>>> bank.
>>> But the idea that Holder had cracked down on Chase was a carefully
>>> contrived
>>> fiction, one that has survived to this day. For starters, $4 billion of
>>> the
>>> settlement was largely an accounting falsehood, a chunk of bogus
>>> "consumer
>>> relief" added to make the payoff look bigger. What the public never
>>> grasped
>>> about these consumer--relief deals is that the "relief" is often not paid
>>> by
>>> the bank, which mostly just services the loans, but by the bank's other
>>> victims, i.e., the investors in their bad mortgage securities.
>>> Moreover, in this case, a fine-print addendum indicated that this
>>> consumer
>>> relief would be allowed only if said investors agreed to it – or if it
>>> would
>>> have been granted anyway under existing arrangements. This often comes
>>> down
>>> to either forgiving a small portion of a loan or giving homeowners a
>>> little
>>> extra time to pay up in full. "It's not real," says Fleischmann. "They
>>> structured it so that the homeowners only get relief if they would have
>>> gotten it anyway." She pauses. "If a loan shark gives you a few extra
>>> weeks
>>> to pay up, is that 'consumer relief'?"
>>> The average person had no way of knowing what a terrible deal the Chase
>>> settlement was for the country. The terms were even lighter than the
>>> slap-on-the-wrist formula that allowed Wall Street banks to "neither
>>> admit
>>> nor deny" wrongdoing – the deals that had helped spark the Occupy
>>> protests.
>>> Yet those notorious deals were like the Nuremberg hangings compared to
>>> the
>>> regulatory innovation that Holder's Justice Department cooked up for
>>> Dimon
>>> and Co.
>>> Instead of a detailed complaint naming names, Chase was allowed to sign a
>>> flimsy, 10-and-a-half-page "statement of facts" that was: (a) so short, a
>>> first-year law student could read it in the time it takes to eat a tuna
>>> sandwich, and (b) so vague, a halfway intelligent person could read it
>>> and
>>> not know anyone had done anything wrong.
>>> The ink was barely dry on the deal before Chase would have the balls to
>>> insinuate its innocence. "The firm has not admitted to violations of the
>>> law," said CFO Marianne Lake. But the deal's most brazen innovation was
>>> the
>>> way it bypassed the judicial branch. Previously, federal regulators had
>>> had
>>> bad luck with judges when trying to dole out slap-on-the-wrist
>>> settlements
>>> to banks. In a pair of celebrated cases, an unpleasantly honest federal
>>> judge named Jed Rakoff had rejected sweetheart deals worked out between
>>> banks and slavish regulators and had commanded the state to go back to
>>> the
>>> drawing board and come up with real punishments.
>>> Seemingly not wanting to deal with even the possibility of such a thing
>>> happening, Holder blew off the idea of showing the settlement to a judge.
>>> The settlement, says Kelleher, "was unprecedented in many ways, including
>>> being very carefully crafted to bypass the court system. . . . There can
>>> be
>>> little doubt that the DOJ and JP-Morgan were trying to avoid disclosure
>>> of
>>> their dirty deeds and prevent public scrutiny of their sweetheart deal."
>>> Kelleher asks a rhetorical question: "Can you imagine the outcry if
>>> [Bush-era Attorney General] Alberto Gonzales had gone into the backroom
>>> and
>>> given Halliburton immunity in exchange for a billion dollars?"
>>> The deal was widely considered a good one for both sides, but Chase
>>> emerged
>>> with barely a scratch. First, the ludicrously nonspecific language
>>> surrounding the settlement put you, me and every other American taxpayer
>>> on
>>> the hook for roughly a quarter of Chase's check. Because most of the
>>> settlement monies were specifically not called fines or penalties, Chase
>>> was
>>> allowed to treat some $7 billion of the settlement as a tax write-off.
>>> Couple this with the fact that the bank's share price soared six percent
>>> on
>>> news of the settlement, adding more than $12 billion in value to
>>> shareholders, and one could argue Chase actually made money from the
>>> deal.
>>> What's more, to defray the cost of this and other fines, Chase last year
>>> laid off 7,500 lower-level employees. Meanwhile, per-employee
>>> compensation
>>> for everyone else rose four percent, to $122,653. But no one made out
>>> better
>>> than Dimon. The board awarded a 74 percent raise to the man who oversaw
>>> the
>>> biggest regulatory penalty ever, upping his compensation package to about
>>> $20 million.
>>> While Holder was being lavishly praised for releasing Chase only from
>>> civil
>>> liability, Fleischmann knew something the rest of the world did not: The
>>> criminal investigation was going nowhere.
>>> In the days leading up to Holder's November 19th announcement of the
>>> settlement, the Justice Department had asked Fleischmann to meet with
>>> criminal investigators. They would interview her very soon, they said,
>>> between December 15th and Christmas.
>>> But December came and went with no follow-up from the DOJ. She began to
>>> wonder: If she was the government's key witness, how was it possible that
>>> they were still pursuing a criminal case without talking to her? "My
>>> concern," she says, "was that they were not investigating."
>>> The government's failure to speak to Fleischmann lends credence to a
>>> theory
>>> about the Holder-Dimon settlement: It included a tacit agreement from the
>>> DOJ not to pursue criminal charges in earnest. It sounds outrageous, but
>>> it
>>> wouldn't be the first time that the government used a wink and a nod to
>>> dispose a bank of major liability without saying so publicly. Back in
>>> 2010,
>>> American Lawyer revealed Goldman Sachs wanted a full release from
>>> liability
>>> in a dozen crooked mortgage deals, while the SEC didn't want to give the
>>> bank such a big public victory. So the two sides quietly agreed to a
>>> grimy
>>> compromise: Goldman agreed to pay $550 million to settle a single case,
>>> and
>>> the SEC privately assured the bank that it wouldn't recommend charges in
>>> any
>>> of the other deals.
>>> As Fleischmann was waiting for the Justice Department to call, Chase and
>>> its
>>> lawyers had been going to tremendous lengths to keep her muzzled. A
>>> number
>>> of major institutional investors had sued the bank in an effort to
>>> recover
>>> money lost in investing in Chase's fraud-ridden home loans. In October
>>> 2013,
>>> one of those investors – the Fort Worth Employees' Retirement Fund –
>>> asked
>>> a
>>> federal judge to force Chase to grant access to a series of current and
>>> former employees, including Fleischmann, whose status as a key cooperator
>>> in
>>> the federal investigation had made headlines in The Wall Street Journal
>>> and
>>> other major media outlets.
>>> In response, Dorothy Spenner, an attorney representing Chase, told the
>>> court
>>> that Fleischmann was not a "relevant custodian." In other words, she
>>> couldn't testify to anything of importance. Federal Magistrate Judge
>>> James
>>> C. Francis IV took Chase's lawyers at their word and rejected the Fort
>>> Worth
>>> retirees' request for access to Fleischmann and her evidence.
>>> Other investors bilked by Chase also tried to speak to Fleischmann. The
>>> Federal Home Loan Bank of Pittsburgh, which had sued Chase, asked the
>>> court
>>> to force Chase to turn over a copy of the draft civil complaint that was
>>> withheld after Holder's scuttled press conference. The Pittsburgh
>>> litigants
>>> also specified that they wanted access to the name of the state's
>>> cooperating witness: namely, Fleischmann.
>>> In that case, the judge actually ordered Chase to turn over both the
>>> complaint and Fleischmann's name. Chase stalled. Later in the fall, the
>>> judge ordered the bank to produce the information again; it stalled some
>>> more.
>>> Then, in January 2014, Chase suddenly settled with the Pittsburgh bank
>>> out
>>> of court for an undisclosed amount. Months after being ordered to allow
>>> Fleischmann to talk, they once again paid a stiff price to keep her
>>> testimony out of the public eye.
>>> Chase's determination to hide its own dirt while forcing Fleischmann to
>>> keep
>>> her secret was becoming more and more absurd. "It was a hard time to look
>>> for work," she says. All that prospective employers knew was that she had
>>> worked in a department that had just been dinged with what was then the
>>> biggest regulatory fine in the history of capitalism. According to the
>>> terms
>>> of her confidentiality agreement, she couldn't even tell them that she'd
>>> tried to keep the bank from committing fraud.
>>> Despite it all, Fleischmann still had faith that the Justice Department
>>> or
>>> some other federal agency would make things right. "I guess I was just a
>>> trusting person," she says. "I wasn't cynical. I kept hoping."
>>> One day last spring, Fleischmann happened across a video of Holder giving
>>> a
>>> speech titled "No Company Is Too Big to Jail." It was classic Holder:
>>> full
>>> of weird prevarication, distracting eye twitches and other facial
>>> contortions. It began with the bold rejection of the idea that overly
>>> large
>>> financial institutions would receive preferential treatment from his
>>> Justice
>>> Department.
>>> Then, within a few sentences, he seemed to contradict himself, arguing
>>> that
>>> one must apply a special sort of care when investigating supersize banks,
>>> tweaking the rules so as not to upset the world economy. "Federal
>>> prosecutors conducting these investigations," Holder said, "must go the
>>> extra mile to coordinate closely with the regulators who oversee these
>>> institutions' day-to-day operations." That is, he was saying, regulators
>>> have to agree not to allow automatic penalties to kick in, so that bad
>>> banks
>>> can stay in business.
>>> Fleischmann winced. Fully fluent in Holder's three-faced rhetoric after
>>> years of waiting for him to act, she felt that he was patting himself on
>>> the
>>> back for having helped companies survive crimes that otherwise might have
>>> triggered crippling regulatory penalties. As she watched in mounting
>>> outrage, Holder wrapped up his address with a less-than-reassuring
>>> pronouncement: "I am resolved to seeing [the investigations] through."
>>> Doing
>>> so, he added, would "reaffirm" his principles.
>>> Or, as Fleischmann translates it: "I will personally stay on to make sure
>>> that no one can undo the cover-up that I've accomplished."
>>> That's when she decided to break her silence. "I tried to go on with the
>>> things I was doing, but I just stopped sleeping and couldn't eat," she
>>> says.
>>> "It felt like I was trying to keep this secret and my body was literally
>>> rejecting it."
>>> Ironically, over the summer, the government contacted her again. A new
>>> set
>>> of investigators interviewed her, appearing to have restarted the
>>> criminal
>>> case. Fleischmann won't comment on that investigation. Frustrated as she
>>> has
>>> been by the decisions of the higher-ups in Holder's Justice Department,
>>> she
>>> doesn't want to do anything to get in the way of investigators who might
>>> be
>>> working the case. But she emphasizes she still has reason to be deeply
>>> worried that nothing will be done. Even if the investigators build strong
>>> cases against executives who oversaw Chase's fraud, Holder or whoever
>>> succeeds him can still make the whole thing disappear by negotiating a
>>> soft
>>> landing for the company. "That's the thing I'm worried about," she says.
>>> "That they make the whole thing disappear. If they do that, the truth
>>> will
>>> never come out."
>>> In September, at a speech at NYU, Holder defended the lack of
>>> prosecutions
>>> of top executives on the grounds that, in the corporate context,
>>> sometimes
>>> bad things just happen without actual people being responsible.
>>> "Responsibility remains so diffuse, and top executives so insulated,"
>>> Holder
>>> said, "that any misconduct could again be considered more a symptom of
>>> the
>>> institution's culture than a result of the willful actions of any single
>>> individual."
>>> In other words, people don't commit crimes, corporate culture commits
>>> crimes! It's probably fortunate that Holder is quitting before he has
>>> time
>>> to apply the same logic to Mafia or terrorism cases.
>>> Fleischmann, for her part, had begun to find the whole situation almost
>>> funny.
>>> "I thought, 'I swear, Eric Holder is gas-lighting me,' " she says.
>>> Ask her where the crime was, and Fleischmann will point out exactly how
>>> her
>>> bosses at JPMorgan Chase committed criminal fraud: It's right there in
>>> the
>>> documents; just hand her a highlighter and some Post-it notes – "We
>>> lawyers
>>> love flags" – and you will not find a more enthusiastic tour guide
>>> through
>>> a
>>> gazillion-page prospectus than Alayne Fleischmann.
>>> She believes the proof is easily there for all the elements of the crime
>>> as
>>> defined by federal law – the bank made material misrepresentations, it
>>> made
>>> material omissions, and it did so willfully and with specific intent,
>>> consciously ignoring warnings from inside the firm and out.
>>> She'd like to see something done about it, emphasizing that there still
>>> is
>>> time. The statute of limitations for wire fraud, for instance, has not
>>> run
>>> out, and she strongly believes there's a case there, against the bank's
>>> executives. She has no financial interest in any of this, no motive other
>>> than wanting the truth out. But more than anything, she wants it to be
>>> over.
>>> In today's America, someone like Fleischmann – an honest person caught
>>> for
>>> a
>>> little while in the wrong place at the wrong time – has to be willing to
>>> live through an epic ordeal just to get to the point of being able to
>>> open
>>> her mouth and tell a truth or two. And when she finally gets there, she
>>> still has to risk everything to take that last step. "The assumption they
>>> make is that I won't blow up my life to do it," Fleischmann says. "But
>>> they're wrong about that."
>>> Good for her, and great for her that it's finally out. But the
>>> big-picture
>>> ending still stings. She hopes otherwise, but the likely final verdict is
>>> a
>>> Pyrrhic victory.
>>> Because after all this activity, all these court actions, all these
>>> penalties (both real and abortive), even after a fair amount of noise in
>>> the
>>> press, the target companies remain more ascendant than ever. The people
>>> who
>>> stole all those billions are still in place. And the bank is more
>>> untouchable than ever – former Debevoise & Plimpton hotshots Mary Jo
>>> White
>>> and Andrew Ceresny, who represented Chase for some of this case, have
>>> since
>>> been named to the two top jobs at the SEC. As for the bank itself, its
>>> stock
>>> price has gone up since the settlement and flirts weekly with five-year
>>> highs. They may lose the odd battle, but the markets clearly believe the
>>> banks won the war. Truth is one thing, and if the right people fight hard
>>> enough, you might get to hear it from time to time. But justice is
>>> different, and still far enough away.
>>> Error! Hyperlink reference not valid. Error! Hyperlink reference not
>>> valid.
>>>
>>> Chase whistle-blower Alayne Fleischmann risked it all. (photo: Andrew
>>> Querner/Rolling Stone)
>>> http://www.rollingstone.com/politics/news/the-9-billion-witness-20141106http://www.rollingstone.com/politics/news/the-9-billion-witness-20141106
>>> The $9 Billion Witness
>>> By Matt Taibbi, Rolling Stone
>>> 06 November 14
>>> Meet the woman JPMorgan Chase paid one of the largest fines in American
>>> history to keep from talking
>>> he tried to stay quiet, she really did. But after eight years of keeping
>>> a
>>> heavy secret, the day came when Alayne Fleischmann couldn't take it
>>> anymore.
>>> "It was like watching an old lady get mugged on the street," she says. "I
>>> thought, 'I can't sit by any longer.'"
>>> Fleischmann is a tall, thin, quick-witted securities lawyer in her late
>>> thirties, with long blond hair, pale-blue eyes and an infectious sense of
>>> humor that has survived some very tough times. She's had to struggle to
>>> find
>>> work despite some striking skills and qualifications, a common symptom of
>>> a
>>> not-so-common condition called being a whistle-blower.
>>> Fleischmann is the central witness in one of the biggest cases of
>>> white-collar crime in American history, possessing secrets that JPMorgan
>>> Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as
>>> regularly reported – more on that later) to keep the public from hearing.
>>> Back in 2006, as a deal manager at the gigantic bank, Fleischmann first
>>> witnessed, then tried to stop, what she describes as "massive criminal
>>> securities fraud" in the bank's mortgage operations.
>>> Thanks to a confidentiality agreement, she's kept her mouth shut since
>>> then.
>>> "My closest family and friends don't know what I've been living with,"
>>> she
>>> says. "Even my brother will only find out for the first time when he sees
>>> this interview."
>>> Six years after the crisis that cratered the global economy, it's not
>>> exactly news that the country's biggest banks stole on a grand scale.
>>> That's
>>> why the more important part of Fleischmann's story is in the pains Chase
>>> and
>>> the Justice Department took to silence her.
>>> She was blocked at every turn: by asleep-on-the-job regulators like the
>>> Securities and Exchange Commission, by a court system that allowed Chase
>>> to
>>> use its billions to bury her evidence, and, finally, by officials like
>>> outgoing Attorney General Eric Holder, the chief architect of the crazily
>>> elaborate government policy of surrender, secrecy and cover-up. "Every
>>> time
>>> I had a chance to talk, something always got in the way," Fleischmann
>>> says.
>>> This past year she watched as Holder's Justice Department struck a series
>>> of
>>> historic settlement deals with Chase, Citigroup and Bank of America. The
>>> root bargain in these deals was cash for secrecy. The banks paid big
>>> fines,
>>> without trials or even judges – only secret negotiations that typically
>>> ended with the public shown nothing but vague, quasi-official papers
>>> called
>>> "statements of facts," which were conveniently devoid of anything like
>>> actual facts.
>>> And now, with Holder about to leave office and his Justice Department
>>> reportedly wrapping up its final settlements, the state is effectively
>>> putting the finishing touches on what will amount to a sweeping,
>>> industrywide effort to bury the facts of a whole generation of Wall
>>> Street
>>> corruption. "I could be sued into bankruptcy," she says. "I could lose my
>>> license to practice law. I could lose everything. But if we don't start
>>> speaking up, then this really is all we're going to get: the biggest
>>> financial cover-up in history."
>>> Alayne Fleischmann grew up in Terrace, British Columbia, a snowbound
>>> valley
>>> town just a brisk 18-hour drive north of Vancouver. She excelled at
>>> school
>>> from a young age, making her way to Cornell Law School and then to Wall
>>> Street. Her decision to go into finance surprised those closest to her,
>>> as
>>> she had always had more idealistic ambitions. "I helped lead a group that
>>> wrote briefs to the Human Rights Chamber for those affected by ethnic
>>> cleansing in Bosnia-Herzegovina," she says. "My whole life prior to
>>> moving
>>> into securities law was human rights work."
>>> But she had student loans to pay off, and so when Wall Street came
>>> knocking,
>>> that was that. But it wasn't like she was dragged into high finance
>>> kicking
>>> and screaming. She found she had a genuine passion for securities law and
>>> felt strongly she was doing a good thing. "There was nothing shady about
>>> the
>>> field back then," she says. "It was very respectable."
>>> In 2006, after a few years at a white-shoe law firm, Fleischmann ended up
>>> at
>>> Chase. The mortgage market was white-hot. Banks like Chase, Bank of
>>> America
>>> and Citigroup were furiously buying up huge pools of home loans and
>>> repackaging them as mortgage securities. Like soybeans in processed food,
>>> these synthesized financial products wound up in everything, whether you
>>> knew it or not: your state's pension fund, another state's workers'
>>> compensation fund, maybe even the portfolio of the insurance company you
>>> were counting on to support your family if you got hit by a bus.
>>> As a transaction manager, Fleischmann functioned as a kind of
>>> quality-control officer. Her main job was to help make sure the bank
>>> didn't
>>> buy spoiled merchandise before it got tossed into the meat grinder and
>>> sold
>>> out the other end.
>>> A few months into her tenure, Fleischmann would later testify in a DOJ
>>> deposition, the bank hired a new manager for diligence, the group in
>>> charge
>>> of reviewing and clearing loans. Fleischmann quickly ran into a problem
>>> with
>>> this manager, technically one of her superiors. She says he told her and
>>> other employees to stop sending him e-mails. The department, it seemed,
>>> was
>>> wary of putting anything in writing when it came to its mortgage deals.
>>> "If you sent him an e-mail, he would actually come out and yell at you,"
>>> she
>>> recalls. "The whole point of having a compliance and diligence group is
>>> to
>>> have policies that are set out clearly in writing. So to have exactly the
>>> opposite of that – that was very worrisome." One former high-ranking
>>> federal
>>> prosecutor said that if he were taking a criminal case to trial, the
>>> information about this e-mail policy would be crucial. "I would begin and
>>> end my opening statement with that," he says. "It shows these people knew
>>> what they were doing and were trying not to get caught."
>>> In late 2006, not long after the "no e-mail" policy was implemented,
>>> Fleischmann and her group were asked to evaluate a packet of home loans
>>> from
>>> a mortgage originator called GreenPoint that was collectively worth about
>>> $900 million. Almost immediately, Fleischmann and some of the diligence
>>> managers who worked alongside her began to notice serious problems with
>>> this
>>> particular package of loans.
>>> For one thing, the dates on many of them were suspiciously old. Normally,
>>> banks tried to turn loans into securities at warp speed. The idea was to
>>> go
>>> from a homeowner signing on the dotted line to an investor buying that
>>> loan
>>> in a pool of securities within two to three months. Thus it was a huge
>>> red
>>> flag to see Chase buying loans that were already seven or eight months
>>> old.
>>> What this meant was that many of the loans in the GreenPoint deal had
>>> either
>>> been previously rejected by Chase or another bank, or were what are known
>>> as
>>> "early payment defaults." EPDs are loans that have already been sold to
>>> another bank and have been returned after the borrowers missed multiple
>>> payments. That's why the dates on them were so old.
>>> In other words, this was the very bottom of the mortgage barrel. They
>>> were
>>> like used cars that had been towed back to the lot after throwing a rod.
>>> The
>>> industry had its own term for this sort of loan product: scratch and
>>> dent.
>>> As Chase later admitted, it not only ended up reselling hundreds of
>>> millions
>>> of dollars worth of those crappy loans to investors, it also sold them in
>>> a
>>> mortgage pool marketed as being above subprime, a type of loan called
>>> "Alt-A." Putting scratch-and-dent loans in an Alt-A security is a little
>>> like putting a fresh coat of paint on a bunch of junkyard wrecks and
>>> selling
>>> them as new cars. "Everything that I thought was bad at the time,"
>>> Fleischmann says, "turned out to be a million times worse." (Chase
>>> declined
>>> to comment for this article.)
>>> When Fleischmann and her team reviewed random samples of the loans, they
>>> found that around 40 percent of them were based on overstated incomes –
>>> an
>>> astronomically high defect rate for any pool of mortgages; Chase's normal
>>> tolerance for error was five percent. One mortgage in particular that
>>> sticks
>>> out in Fleischmann's mind involved a manicurist who claimed to have an
>>> annual income of $117,000. Fleischmann figured that even working seven
>>> days
>>> a week, this woman would have needed to work 488 days a year to make that
>>> much. "And that's with no overhead," Fleischmann says. "It wasn't
>>> possible."
>>> But when she and others raised objections to the toxic loans, something
>>> odd
>>> started happening. The number-crunchers who had been complaining about
>>> the
>>> loans suddenly began changing their reports. The process she describes is
>>> strikingly similar to the way police obtain false confessions: The
>>> interrogator verbally abuses the target until he starts producing the
>>> desired answers. "What happened," Fleischmann says, "is the head
>>> diligence
>>> manager started yelling at his team, berating them, making them do
>>> reports
>>> over and over, keeping them late at night." Then the loans started
>>> clearing.
>>> As late as December 11th, 2006, diligence managers had marked a full 33
>>> percent of one loan sample as "stated income unreasonable for
>>> profession,"
>>> meaning that it was nearly inevitable that there would be a high number
>>> of
>>> defaults. Several high-ranking executives were copied on this report.
>>> Then, on December 15th, a Chase sales executive held a lengthy meeting
>>> with
>>> reps from GreenPoint and the diligence team to examine the remaining
>>> loans
>>> in the pool. When they got to the manicurist, Fleischmann remembers, one
>>> of
>>> the diligence guys finally caved under the pressure from the sales
>>> executive. "He had his hands up and just said, 'OK,' and he cleared it,"
>>> says Fleischmann, adding that he was shaking his head "no" even as he was
>>> saying yes. Soon afterward, the error rate in the pool had magically
>>> dropped
>>> below 10 percent – a threshold that itself had just been doubled to clear
>>> the way for this deal.
>>> After that meeting, Fleischmann testified, she approached a managing
>>> director named Greg Boester and pleaded with him to reconsider. She says
>>> she
>>> told Boester that the bank could not sell the high-risk loans as low-risk
>>> securities without committing fraud. "You can't securitize these loans
>>> without special disclosure about what's wrong with them," Fleischmann
>>> told
>>> him, "and if you make that disclosure, no one will buy them."
>>> A former Olympic ski jumper, Boester was such an important executive at
>>> Chase that when he later defected to the Chicago-based hedge fund
>>> Citadel,
>>> Dimon cut off trading with Citadel in retaliation. Boester eventually
>>> returned to Chase and is still there today despite his role in this
>>> affair.
>>> This moment illustrates the most basic element of the case against Chase:
>>> The bank knowingly peddled products stuffed with scratch-and-dent loans
>>> to
>>> investors without disclosing the obvious defects with the underlying
>>> loans.
>>> Years later, in its settlement with the Justice Department, Chase would
>>> admit that this conversation between Fleischmann and Boester took place
>>> (though neither was named; it was simply described as "an
>>> employee . . . told . . . a managing director") and that her warning was
>>> ignored when the bank sold those loans off to investors.
>>> A few weeks later, in early 2007, she sent a long letter to another
>>> managing
>>> director, William Buell. In the letter, she warned Buell of the
>>> consequences
>>> of reselling these bad loans as securities and gave detailed descriptions
>>> of
>>> breakdowns in Chase's diligence process.
>>> Fleischmann assumed this letter, which Chase lawyers would later jokingly
>>> nickname "The Howler" after the screaming missive from the Harry Potter
>>> books, would be enough to force the bank to stop selling the bad loans.
>>> "It
>>> used to be if you wrote a memo, they had to stop, because now there's
>>> proof
>>> that they knew what they were doing," she says. "But when the Justice
>>> Department doesn't do anything, that stops being a deterrent. I just
>>> didn't
>>> know that at the time."
>>> In February 2008, less than two years after joining the bank, Fleischmann
>>> was quietly dismissed in a round of layoffs. A few months later, proof
>>> would
>>> appear that her bosses knew all along that the boom-era mortgage market
>>> was
>>> rotten. That September, as the market was crashing, Dimon boasted in a
>>> ball-washing Fortune article titled "Jamie Dimon's SWAT Team" that he
>>> knew
>>> well before the meltdown that the subprime market was toast. "We
>>> concluded
>>> that underwriting standards were deteriorating across the industry." The
>>> story tells of Dimon ordering Boester's boss, William King, to dump the
>>> bank's subprime holdings in October 2006. "Billy," Dimon says, "we need
>>> to
>>> sell a lot of our positions. . . . This stuff could go up in smoke!"
>>> In other words, two full months before the bank rammed through the dirty
>>> GreenPoint deal over Fleischmann's objections, Chase's CEO was aware that
>>> loans like this were too dangerous for Chase itself to own. (Though Dimon
>>> was talking about subprime loans and GreenPoint was technically an Alt-A
>>> pool, the Fortune story shows that upper management had serious concerns
>>> about industry-wide underwriting problems.)
>>> In January 2010, when Dimon testified before the Financial Crisis Inquiry
>>> Commission, he told investigators the exact opposite story, portraying
>>> the
>>> poor Chase leadership as having been duped, just like the rest of us. "In
>>> mortgage underwriting," he said, "somehow we just missed, you know, that
>>> home prices don't go up forever."
>>> When Fleischmann found out about all of this years later, she was
>>> shocked.
>>> Her confidentiality agreement at Chase didn't bar her from reporting a
>>> crime, but the problem was that she couldn't prove that Chase had
>>> committed
>>> a crime without knowing whether those bad loans had been sold.
>>> As it turned out, of course, Chase was selling those rotten dog-meat
>>> loans
>>> all over the place. How bad were they? A single lawsuit by a single angry
>>> litigant gives some insight. In 2011, Chase was sued over massive losses
>>> suffered by a group of credit unions. One of them had invested $135
>>> million
>>> in one of the bank's mortgage--backed securities. About 40 percent of the
>>> loans in that deal came from the GreenPoint pool.
>>> The lawsuit alleged that in just the first year, the security suffered
>>> $51
>>> million in losses, nearly 50 times what had been projected. It's hard to
>>> say
>>> how much of that was due to the GreenPoint loans. But this was just one
>>> security, one year, and the losses were in the tens of millions. And
>>> Chase
>>> did deal after deal with the same methodology. So did most of the other
>>> banks. It's theft on a scale that blows the mind.
>>> In the spring of 2012, Fleischmann, who'd moved back to Canada after
>>> leaving
>>> Chase, was working at a law firm in Calgary when the phone rang. It was
>>> an
>>> investigator from the States. "Hi, I'm from the SEC," he said. "You
>>> weren't
>>> expecting to hear from me, were you?"
>>> A few months earlier, President Obama, giving in to pressure from the
>>> Occupy
>>> movement and other reformers, had formed the Residential Mortgage-Backed
>>> Securities Working Group. At least superficially, this was a serious show
>>> of
>>> force against banks like Chase. The group would operate like a kind of
>>> regulatory Justice League, combining the superpowers of investigators
>>> from
>>> the SEC, the FBI, the IRS, HUD and a host of other federal agencies. It
>>> included noted anti-corruption- investigator and New York Attorney
>>> General
>>> Eric Schneiderman, which gave many observers reason to hope that finally
>>> something would be done about the crimes that led to the crash. That
>>> makes
>>> the fact that the bank would skate with negligible cash fines an even
>>> more
>>> extra-ordinary accomplishment.
>>> By the time the working group was set up, most of the applicable statutes
>>> of
>>> limitations had either expired or were about to expire. "A conspiratorial
>>> way of looking at it would be to say the state waited far too long to
>>> look
>>> at these cases and is now taking its sweet time investigating, while the
>>> last statutes of limitations run out," says famed prosecutor and former
>>> New
>>> York Attorney General Eliot Spitzer.
>>> It soon became clear that the SEC wasn't so much investigating Chase's
>>> behavior as just checking boxes. Fleischmann received no follow-up phone
>>> calls, even though she told the investigator that she was willing to tell
>>> the SEC everything she knew about the systemic fraud at Chase. Instead,
>>> the
>>> SEC focused on a single transaction involving a mortgage company called
>>> WMC.
>>> "I kept trying to talk to them about GreenPoint," Fleischmann says, "but
>>> they just wanted to talk about that other deal."
>>> The following year, the SEC would fine Chase $297 million for
>>> misrepresentations in the WMC deal. On the surface, it looked like a
>>> hefty
>>> punishment. In reality, it was a classic example of the piecemeal,
>>> cherry-picking style of justice that characterized the post-crisis era.
>>> "The
>>> kid-gloves approach that the DOJ and the SEC take with Wall Street is as
>>> inexplicable as it is indefensible," says Dennis Kelleher of the
>>> financial
>>> reform group Better Markets, which would later file suit challenging the
>>> Chase settlement. "They typically charge only one offense when there are
>>> dozens. It would be like charging a serial murderer with a single assault
>>> and giving them probation."
>>> Soon Fleischmann's hopes were raised again. In late 2012 and early 2013,
>>> she
>>> had a pair of interviews with civil litigators from the U.S. attorney's
>>> office in the Eastern District of California, based in Sacramento.
>>> One of the ongoing myths about the financial crisis is that the
>>> government
>>> is outmatched by the legal talent representing the banks. But Fleischmann
>>> was impressed by the lead attorney in her case, a litigator named Richard
>>> Elias. "He sounded like he had been a securities lawyer for 10 years,"
>>> she
>>> says. "This actually looked like his idea of fun – like he couldn't wait
>>> to
>>> run with this case."
>>> She gave Elias and his team detailed information about everything she'd
>>> seen: the edict against e-mails, the sabotaging of the diligence process,
>>> the bullying, the written warnings that were ignored, all of it. She
>>> assumed
>>> that it wouldn't be long before the bank was hauled into court.
>>> Instead, the government decided to help Chase bury the evidence. It began
>>> when Holder's office scheduled a press conference for the morning of
>>> September 24th, 2013, to announce sweeping civil-fraud charges against
>>> the
>>> bank, all laid out in a detailed complaint drafted by the U.S. attorney's
>>> Sacramento office. But that morning the presser was suddenly canceled,
>>> and
>>> no complaint was filed. According to later news reports, Dimon had
>>> personally called Associate Attorney General Tony West, the third-ranking
>>> official in the Justice Department, and asked to reopen negotiations to
>>> settle the case out of court.
>>> It goes without saying that the ordinary citizen who is the target of a
>>> government investigation cannot simply pick up the phone, call up the
>>> prosecutor in charge of his case and have a legal proceeding canceled.
>>> But
>>> Dimon did just that. "And he didn't just call the prosecutor, he called
>>> the
>>> prosecutor's boss," Fleischmann says. According to The New York Times,
>>> after
>>> Dimon had already offered $3 billion to settle the case and was turned
>>> down,
>>> he went to Holder's office and upped the offer, but apparently not by
>>> enough.
>>> A few days later, Fleischmann, who had by then moved back to Vancouver
>>> and
>>> was looking for work, was at a mall when she saw a Wall Street Journal
>>> headline on her iPhone: JPMorgan Insider Helps U.S. in Probe. The story
>>> said
>>> that the government had a key witness, a female employee willing to
>>> provide
>>> damaging testimony about Chase's mortgage operations. Fleischmann was
>>> stunned. Until that moment, she had no idea that she was a major part of
>>> the
>>> government's case against Chase. And worse, nobody had bothered to warn
>>> her
>>> that she was about to be effectively outed in the newspapers. "The stress
>>> started to build after I saw that news," she says. "Especially as I
>>> waited
>>> to see if my name would come out and I watched my job possibilities
>>> evaporate."
>>> Fleischmann later realized that the government wasn't interested in
>>> having
>>> her testify against Chase in court or any other public forum. Instead,
>>> the
>>> Justice Department's political wing, led by Holder, appeared to be using
>>> her, and her evidence, as a bargaining chip to extract more hush money
>>> from
>>> Dimon. It worked. Within weeks, Dimon had upped his offer to roughly $9
>>> billion.
>>> In late November, the two sides agreed on a settlement deal that covered
>>> a
>>> variety of misbehaviors, including the fraud that Fleischmann witnessed
>>> as
>>> well as similar episodes at Washington Mutual and Bear Stearns, two
>>> companies that Chase had acquired during the crisis (with federal bailout
>>> aid). The newspapers and the Justice Department described the deal as a
>>> "$13
>>> billion settlement," hailing it as the biggest white-collar regulatory
>>> settlement in American history. The deal released Chase from civil
>>> liability. And, in what was described by The New York Times as a "major
>>> victory for the government," it left open the possibility that the
>>> Justice
>>> Department could pursue a further criminal investigation against the
>>> bank.
>>> But the idea that Holder had cracked down on Chase was a carefully
>>> contrived
>>> fiction, one that has survived to this day. For starters, $4 billion of
>>> the
>>> settlement was largely an accounting falsehood, a chunk of bogus
>>> "consumer
>>> relief" added to make the payoff look bigger. What the public never
>>> grasped
>>> about these consumer--relief deals is that the "relief" is often not paid
>>> by
>>> the bank, which mostly just services the loans, but by the bank's other
>>> victims, i.e., the investors in their bad mortgage securities.
>>> Moreover, in this case, a fine-print addendum indicated that this
>>> consumer
>>> relief would be allowed only if said investors agreed to it – or if it
>>> would
>>> have been granted anyway under existing arrangements. This often comes
>>> down
>>> to either forgiving a small portion of a loan or giving homeowners a
>>> little
>>> extra time to pay up in full. "It's not real," says Fleischmann. "They
>>> structured it so that the homeowners only get relief if they would have
>>> gotten it anyway." She pauses. "If a loan shark gives you a few extra
>>> weeks
>>> to pay up, is that 'consumer relief'?"
>>> The average person had no way of knowing what a terrible deal the Chase
>>> settlement was for the country. The terms were even lighter than the
>>> slap-on-the-wrist formula that allowed Wall Street banks to "neither
>>> admit
>>> nor deny" wrongdoing – the deals that had helped spark the Occupy
>>> protests.
>>> Yet those notorious deals were like the Nuremberg hangings compared to
>>> the
>>> regulatory innovation that Holder's Justice Department cooked up for
>>> Dimon
>>> and Co.
>>> Instead of a detailed complaint naming names, Chase was allowed to sign a
>>> flimsy, 10-and-a-half-page "statement of facts" that was: (a) so short, a
>>> first-year law student could read it in the time it takes to eat a tuna
>>> sandwich, and (b) so vague, a halfway intelligent person could read it
>>> and
>>> not know anyone had done anything wrong.
>>> The ink was barely dry on the deal before Chase would have the balls to
>>> insinuate its innocence. "The firm has not admitted to violations of the
>>> law," said CFO Marianne Lake. But the deal's most brazen innovation was
>>> the
>>> way it bypassed the judicial branch. Previously, federal regulators had
>>> had
>>> bad luck with judges when trying to dole out slap-on-the-wrist
>>> settlements
>>> to banks. In a pair of celebrated cases, an unpleasantly honest federal
>>> judge named Jed Rakoff had rejected sweetheart deals worked out between
>>> banks and slavish regulators and had commanded the state to go back to
>>> the
>>> drawing board and come up with real punishments.
>>> Seemingly not wanting to deal with even the possibility of such a thing
>>> happening, Holder blew off the idea of showing the settlement to a judge.
>>> The settlement, says Kelleher, "was unprecedented in many ways, including
>>> being very carefully crafted to bypass the court system. . . . There can
>>> be
>>> little doubt that the DOJ and JP-Morgan were trying to avoid disclosure
>>> of
>>> their dirty deeds and prevent public scrutiny of their sweetheart deal."
>>> Kelleher asks a rhetorical question: "Can you imagine the outcry if
>>> [Bush-era Attorney General] Alberto Gonzales had gone into the backroom
>>> and
>>> given Halliburton immunity in exchange for a billion dollars?"
>>> The deal was widely considered a good one for both sides, but Chase
>>> emerged
>>> with barely a scratch. First, the ludicrously nonspecific language
>>> surrounding the settlement put you, me and every other American taxpayer
>>> on
>>> the hook for roughly a quarter of Chase's check. Because most of the
>>> settlement monies were specifically not called fines or penalties, Chase
>>> was
>>> allowed to treat some $7 billion of the settlement as a tax write-off.
>>> Couple this with the fact that the bank's share price soared six percent
>>> on
>>> news of the settlement, adding more than $12 billion in value to
>>> shareholders, and one could argue Chase actually made money from the
>>> deal.
>>> What's more, to defray the cost of this and other fines, Chase last year
>>> laid off 7,500 lower-level employees. Meanwhile, per-employee
>>> compensation
>>> for everyone else rose four percent, to $122,653. But no one made out
>>> better
>>> than Dimon. The board awarded a 74 percent raise to the man who oversaw
>>> the
>>> biggest regulatory penalty ever, upping his compensation package to about
>>> $20 million.
>>> While Holder was being lavishly praised for releasing Chase only from
>>> civil
>>> liability, Fleischmann knew something the rest of the world did not: The
>>> criminal investigation was going nowhere.
>>> In the days leading up to Holder's November 19th announcement of the
>>> settlement, the Justice Department had asked Fleischmann to meet with
>>> criminal investigators. They would interview her very soon, they said,
>>> between December 15th and Christmas.
>>> But December came and went with no follow-up from the DOJ. She began to
>>> wonder: If she was the government's key witness, how was it possible that
>>> they were still pursuing a criminal case without talking to her? "My
>>> concern," she says, "was that they were not investigating."
>>> The government's failure to speak to Fleischmann lends credence to a
>>> theory
>>> about the Holder-Dimon settlement: It included a tacit agreement from the
>>> DOJ not to pursue criminal charges in earnest. It sounds outrageous, but
>>> it
>>> wouldn't be the first time that the government used a wink and a nod to
>>> dispose a bank of major liability without saying so publicly. Back in
>>> 2010,
>>> American Lawyer revealed Goldman Sachs wanted a full release from
>>> liability
>>> in a dozen crooked mortgage deals, while the SEC didn't want to give the
>>> bank such a big public victory. So the two sides quietly agreed to a
>>> grimy
>>> compromise: Goldman agreed to pay $550 million to settle a single case,
>>> and
>>> the SEC privately assured the bank that it wouldn't recommend charges in
>>> any
>>> of the other deals.
>>> As Fleischmann was waiting for the Justice Department to call, Chase and
>>> its
>>> lawyers had been going to tremendous lengths to keep her muzzled. A
>>> number
>>> of major institutional investors had sued the bank in an effort to
>>> recover
>>> money lost in investing in Chase's fraud-ridden home loans. In October
>>> 2013,
>>> one of those investors – the Fort Worth Employees' Retirement Fund –
>>> asked
>>> a
>>> federal judge to force Chase to grant access to a series of current and
>>> former employees, including Fleischmann, whose status as a key cooperator
>>> in
>>> the federal investigation had made headlines in The Wall Street Journal
>>> and
>>> other major media outlets.
>>> In response, Dorothy Spenner, an attorney representing Chase, told the
>>> court
>>> that Fleischmann was not a "relevant custodian." In other words, she
>>> couldn't testify to anything of importance. Federal Magistrate Judge
>>> James
>>> C. Francis IV took Chase's lawyers at their word and rejected the Fort
>>> Worth
>>> retirees' request for access to Fleischmann and her evidence.
>>> Other investors bilked by Chase also tried to speak to Fleischmann. The
>>> Federal Home Loan Bank of Pittsburgh, which had sued Chase, asked the
>>> court
>>> to force Chase to turn over a copy of the draft civil complaint that was
>>> withheld after Holder's scuttled press conference. The Pittsburgh
>>> litigants
>>> also specified that they wanted access to the name of the state's
>>> cooperating witness: namely, Fleischmann.
>>> In that case, the judge actually ordered Chase to turn over both the
>>> complaint and Fleischmann's name. Chase stalled. Later in the fall, the
>>> judge ordered the bank to produce the information again; it stalled some
>>> more.
>>> Then, in January 2014, Chase suddenly settled with the Pittsburgh bank
>>> out
>>> of court for an undisclosed amount. Months after being ordered to allow
>>> Fleischmann to talk, they once again paid a stiff price to keep her
>>> testimony out of the public eye.
>>> Chase's determination to hide its own dirt while forcing Fleischmann to
>>> keep
>>> her secret was becoming more and more absurd. "It was a hard time to look
>>> for work," she says. All that prospective employers knew was that she had
>>> worked in a department that had just been dinged with what was then the
>>> biggest regulatory fine in the history of capitalism. According to the
>>> terms
>>> of her confidentiality agreement, she couldn't even tell them that she'd
>>> tried to keep the bank from committing fraud.
>>> Despite it all, Fleischmann still had faith that the Justice Department
>>> or
>>> some other federal agency would make things right. "I guess I was just a
>>> trusting person," she says. "I wasn't cynical. I kept hoping."
>>> One day last spring, Fleischmann happened across a video of Holder giving
>>> a
>>> speech titled "No Company Is Too Big to Jail." It was classic Holder:
>>> full
>>> of weird prevarication, distracting eye twitches and other facial
>>> contortions. It began with the bold rejection of the idea that overly
>>> large
>>> financial institutions would receive preferential treatment from his
>>> Justice
>>> Department.
>>> Then, within a few sentences, he seemed to contradict himself, arguing
>>> that
>>> one must apply a special sort of care when investigating supersize banks,
>>> tweaking the rules so as not to upset the world economy. "Federal
>>> prosecutors conducting these investigations," Holder said, "must go the
>>> extra mile to coordinate closely with the regulators who oversee these
>>> institutions' day-to-day operations." That is, he was saying, regulators
>>> have to agree not to allow automatic penalties to kick in, so that bad
>>> banks
>>> can stay in business.
>>> Fleischmann winced. Fully fluent in Holder's three-faced rhetoric after
>>> years of waiting for him to act, she felt that he was patting himself on
>>> the
>>> back for having helped companies survive crimes that otherwise might have
>>> triggered crippling regulatory penalties. As she watched in mounting
>>> outrage, Holder wrapped up his address with a less-than-reassuring
>>> pronouncement: "I am resolved to seeing [the investigations] through."
>>> Doing
>>> so, he added, would "reaffirm" his principles.
>>> Or, as Fleischmann translates it: "I will personally stay on to make sure
>>> that no one can undo the cover-up that I've accomplished."
>>> That's when she decided to break her silence. "I tried to go on with the
>>> things I was doing, but I just stopped sleeping and couldn't eat," she
>>> says.
>>> "It felt like I was trying to keep this secret and my body was literally
>>> rejecting it."
>>> Ironically, over the summer, the government contacted her again. A new
>>> set
>>> of investigators interviewed her, appearing to have restarted the
>>> criminal
>>> case. Fleischmann won't comment on that investigation. Frustrated as she
>>> has
>>> been by the decisions of the higher-ups in Holder's Justice Department,
>>> she
>>> doesn't want to do anything to get in the way of investigators who might
>>> be
>>> working the case. But she emphasizes she still has reason to be deeply
>>> worried that nothing will be done. Even if the investigators build strong
>>> cases against executives who oversaw Chase's fraud, Holder or whoever
>>> succeeds him can still make the whole thing disappear by negotiating a
>>> soft
>>> landing for the company. "That's the thing I'm worried about," she says.
>>> "That they make the whole thing disappear. If they do that, the truth
>>> will
>>> never come out."
>>> In September, at a speech at NYU, Holder defended the lack of
>>> prosecutions
>>> of top executives on the grounds that, in the corporate context,
>>> sometimes
>>> bad things just happen without actual people being responsible.
>>> "Responsibility remains so diffuse, and top executives so insulated,"
>>> Holder
>>> said, "that any misconduct could again be considered more a symptom of
>>> the
>>> institution's culture than a result of the willful actions of any single
>>> individual."
>>> In other words, people don't commit crimes, corporate culture commits
>>> crimes! It's probably fortunate that Holder is quitting before he has
>>> time
>>> to apply the same logic to Mafia or terrorism cases.
>>> Fleischmann, for her part, had begun to find the whole situation almost
>>> funny.
>>> "I thought, 'I swear, Eric Holder is gas-lighting me,' " she says.
>>> Ask her where the crime was, and Fleischmann will point out exactly how
>>> her
>>> bosses at JPMorgan Chase committed criminal fraud: It's right there in
>>> the
>>> documents; just hand her a highlighter and some Post-it notes – "We
>>> lawyers
>>> love flags" – and you will not find a more enthusiastic tour guide
>>> through
>>> a
>>> gazillion-page prospectus than Alayne Fleischmann.
>>> She believes the proof is easily there for all the elements of the crime
>>> as
>>> defined by federal law – the bank made material misrepresentations, it
>>> made
>>> material omissions, and it did so willfully and with specific intent,
>>> consciously ignoring warnings from inside the firm and out.
>>> She'd like to see something done about it, emphasizing that there still
>>> is
>>> time. The statute of limitations for wire fraud, for instance, has not
>>> run
>>> out, and she strongly believes there's a case there, against the bank's
>>> executives. She has no financial interest in any of this, no motive other
>>> than wanting the truth out. But more than anything, she wants it to be
>>> over.
>>> In today's America, someone like Fleischmann – an honest person caught
>>> for
>>> a
>>> little while in the wrong place at the wrong time – has to be willing to
>>> live through an epic ordeal just to get to the point of being able to
>>> open
>>> her mouth and tell a truth or two. And when she finally gets there, she
>>> still has to risk everything to take that last step. "The assumption they
>>> make is that I won't blow up my life to do it," Fleischmann says. "But
>>> they're wrong about that."
>>> Good for her, and great for her that it's finally out. But the
>>> big-picture
>>> ending still stings. She hopes otherwise, but the likely final verdict is
>>> a
>>> Pyrrhic victory.
>>> Because after all this activity, all these court actions, all these
>>> penalties (both real and abortive), even after a fair amount of noise in
>>> the
>>> press, the target companies remain more ascendant than ever. The people
>>> who
>>> stole all those billions are still in place. And the bank is more
>>> untouchable than ever – former Debevoise & Plimpton hotshots Mary Jo
>>> White
>>> and Andrew Ceresny, who represented Chase for some of this case, have
>>> since
>>> been named to the two top jobs at the SEC. As for the bank itself, its
>>> stock
>>> price has gone up since the settlement and flirts weekly with five-year
>>> highs. They may lose the odd battle, but the markets clearly believe the
>>> banks won the war. Truth is one thing, and if the right people fight hard
>>> enough, you might get to hear it from time to time. But justice is
>>> different, and still far enough away.
>>>
>>>
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