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Truthdiggers of the Week: Two Mortgage Meltdown Whistle-Blowers

Posted on Dec 9, 2011

Richard M. Bowen III appears on Capitol Hill to testify on April 7, 2010, in this still from “60 Minutes.”

It’s all too rare that a mainstream news network goes after just the sort of financial heavy hitters that tend to have ties to their own corporate sponsors, but thankfully, that’s what CBS News’ “60 Minutes” did last weekend with the help of two principled mortgage specialists. In fact, the news magazine and anchor Steve Kroft wouldn’t have had much of a story without former Countrywide Executive Vice President Eileen Foster and former Citigroup Senior Vice President Richard M. Bowen III. Note that they share the “former” designation, which is no coincidence.

Both whistle-blowers made headlines before agreeing to sit for their “60 Minutes” interviews, but their stories have a certain open-ended quality to them in that, as Kroft points out in the news magazine’s report that aired Dec. 4, the Justice Department has yet to bring charges against any major Wall Street players who shared responsibility for the cataclysmic financial implosion that first registered in 2008 and still resonates today. This glaring failure on the part of the DOJ to carry out its duties becomes even more infuriating considering top-tier executives from implicated companies such as Citigroup and Countrywide blatantly denied the parts they played in the meltdown and signed what should have been damning documents to back up their claims.

File that information under business as usual for the ever cozier relationship between Wall Street and the White House. But luckily, people such as Foster and Bowen were willing to do their jobs—and themselves, and consumers—justice by first reporting signs of trouble to their higher-ups at Countrywide and Citigroup, respectively, and then refusing to let their former employers buy their silence, even if their ethics cost them their jobs.

It’s also clear, from both of their accounts on “60 Minutes,” that they were aware of the risks that taking action might involve, once they got over the shock of discovering the widespread fraud happening under their noses at both firms. In fact, Bowen found that 60 percent of Citigroup’s mortgages for the year 2006 were defective. And the circumstances under which their employment status changed were also sketchy at best, if not criminal. As Foster put it: “It’s a crime to retaliate against someone for making reports of mail fraud, bank fraud, wire fraud, mortgage fraud—things that would harm stockholders and investors—and that’s what I did, and that’s why I was terminated.”

However, she got some satisfaction (other than the nearly $1 million case she eventually won in court against her former employer, now absorbed into Bank of America) by refusing to sign a 14-page document guaranteeing her silence. “I wanted them to have some sleepless nights thinking about what they would say to a federal investigator and worry about being exposed and being held accountable for committing a crime,” she told Kroft.


Square, Site wide

For his part, Bowen made waves by taking his story to the top, first at Citigroup (he even sent an email to Robert Rubin in 2007) and then on Capitol Hill on April 7, 2010, before the Financial Crisis Inquiry Commission. Bowen described his motivation in simple terms: “Somebody needed to pay attention. Somebody needed to take action.” Good thing that he, as well as Foster, did—even if the Justice Department couldn’t follow their examples.  —KA

“60 Minutes” with Steve Kroft:

Part 1:

Part 2:

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By energyman, December 12, 2011 at 2:29 pm Link to this comment
(Unregistered commenter)

I am sorry to say, I don’t believe the OWS movement can achieve anything significant, besides overload police work.
There is a great need for coordinated action.
The action could begin with thousands of people mailing real letters (not email) to Mr. Eric Holder, with a simple message:  When will you go after the banksters?
He cannot avoid the publicity of huge bags of mail delivered to his front porch every day.
This would also serve to support the USPS, in such dire straits lately.
Somebody find out his home address and spread the “suggestion” among the OWS. It should not be that expensive to post a letter over 1st class mail.
Yours truly

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By ReadingJones, December 11, 2011 at 7:40 pm Link to this comment

Wonderful reporting. I submit that the 1% should be
renamed the Predators. Perhaps the rest of us could
be the Cash Cows. More seriously I think that OWS
should make its principle aim to put as many of these
people in jail as possible. We should aim to take
down at least one of the big banks We should end too
big to fail.

Doing this will require study and dedication and
trickery and careful planning. There are a great many
intelligent and well educated people who are either
in OWS or sympathize. It can be done. It will take a
sort of legal guerilla warfare.

Did anyone besides myself notice that Julian Assange
pulled the tails of the military and the diplomats
and came to no harm, but when he promised to reveal
the secrets of a major bank the world fell in on him.

We need more whistleblowers, more leakers, more
computer experts who can gather facts and devise a
sort of graffiti that keeps this information in the
public eye.

Maybe we will have to hold our noses and make a deal
with an established politician. Pragmatism can be a
reasonable response when your very survival and the
survival of your family and friends is at stake.

Illegality is however, self defeating.

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HarlowMarlowe's avatar

By HarlowMarlowe, December 11, 2011 at 4:35 pm Link to this comment

Decade after decade, rampant and blatant high crimes among elected
government officials and among the uber-wealthy whom run large
corporations, continues to grow worse here in America.  As I look on in utter
disbelief, as political events unfold both here in America and around the world,
a rather clear pattern emerges:  Not one of these political and/or corporate
powerhouses is ever prosecuted for breaking any laws, whether U. S. laws or
International laws. 

And, make no mistake, the laws that these apparent “untouchables” brazenly
breaking are very, very serious laws, such as fraud, scheme to defraud, elder
(financial) abuse, profiteering, and, of course, constant war crimes. 

Again and again, year after year, I see these filthy criminals breaking every
single law on the books, and still not one of them is ever held accountable for
any of their blatant crimes!!  One of the most glaring and recent examples
without a doubt are the Bush, Cheney, Rumsfeld, Rice, Rove, WAR crimes. And,
of course, all the other clansmen that get away with every crime imaginable up
to and including murder.  Not only is this incredible;  it is also unforgivable.

I also see that NONE of the (corporate-owned) media/press follows through on
ANY of the facts of any of the many cases.  One blip may appear one day on a
back page of a (corporate-owned) newspaper, but then it just…disappears. 

The U.S. Department of Justice, along with any and all other law enforcement
agencies, do absolutely NOTHING;  In fact, the criminals get FULL Pardons, Full
ASYLUM, right here in America;  None are ever investigated, indicted,
prosecuted or punished. In fact, they are ABOVE ALL LAWS.

And Just Remember:  It was President Obama that clearly stated that he would
not get involved in prosecutions of these (war crimes and financial terrorism)
crimes;  He said, “I want to look forward, not go backward.”  Well, I say to him, I
want to move forward by upholding both the U.S. laws and the world’s laws.

If the DOJ, SEC, OBAMA, et al, continue to totally ignore SERIOUS CONSTANT
HIGH crimes, and the criminals walk away scott-free every time, it only gives
both the criminals and the would-be criminals license to behave as if they’re
above the law.  And that is exactly how they conduct themselves.  Indeed this is
a travesty…And it also smacks of LAWLESSNESS which may just “trickle down…”

Christina Marlowe

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By PatRM2, December 11, 2011 at 4:00 pm Link to this comment

All the corporate talking heads, and let’s include a large number of non-corporate lefties (blogs, internet, and independent media stations) are saying or asking the same thing…where does OWS go now.  I think it is a wasted opportunity if the movement does not press for indictment of a large number of these big bank crooks.  The majority of the nation is with the movement.  But we all know that, even though some commenters advocate otherwise, that our bumper stickers this time around will read “OBAMA..not as bad as the other guy”.  That is the reality, and for those that think we are hurting the dems by not voting…they are just shooting themselves, and us, in the foot.  So, until we really get serious about building a political movement, we have a 2 party system.  One party is plain nuts, and the other one does something for us once in a while.

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By Marian Griffith, December 11, 2011 at 10:36 am Link to this comment
(Unregistered commenter)


The only thing I would like to add to this is that it is not a failing of Obama specific or in general.
Any other candidate would have resulted in the same. Cain would not have acted any different, and regardless if the next president is Obama, Romney or Gingrich as far as the banks are concerned is will be business as usual. They will keep funneling billions of dollars out of the middle class (having already pretty much reduced the poor to destitute) and if laws are standing in the way of doing so they will make sure those laws get changed. And if their greed causes a scandal they will make sure that the law suits and the publicity goes away.

The root of the problem is not the president but the campaign financing and the fact that to become president one needs to run a con-and-smear campaign to the tune of 1 billion dollar.
Unless and until something is done about that and the presidential election ceases to be treated as reality television, the country will continue its slide towards third-world dictatorship status.

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By Outraged, December 10, 2011 at 6:37 pm Link to this comment

One imagines with all the crooks/Republicans out there
that the DOJ would be fairly busy.

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By John Poole, December 10, 2011 at 2:17 pm Link to this comment
(Unregistered commenter)

I saw the beginning of the housing equity scam back in the mid 80s. I had a
hunch that the banking elite had decided to “induce” consumers to borrow money
by saying they miraculously had a goldmine of equity in their home. A counterfeit
prosperity followed up to circa 2007 where people took out loans based on real
estate appraisers working quietly with banks. The banks then became trapped in
an impossible scenario of a permanent escalation of home worth.  People with
little means were courted out of desperation-not love- to try and stave off the
inevitable overpriced homes from dropping in value. 
    Both political parties were “party” to this scam. In a sad way Obama worships
wealth and the rich more than most so don’t expect him to have an epiphany on
the flaws of American style capitalism.

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By ardee, December 10, 2011 at 7:06 am Link to this comment

I would echo the words of Samson, December 9 at 4:56 pm, especially in light of the growing efforts by Democratic Loyalists, here and elsewhere, who are tuning up to attempt to infuse the voters with the idea that voting “the lesser of two evils” is a fine and dandy idea.

Shortly after the financial collapse our AG, Eric Holder, made some noises abut investigations. Those noises were rather quickly silenced, one might assume by his superior, our President, who contemplated the billion or so he would need to seek re-election.

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By Samson, December 9, 2011 at 5:56 pm Link to this comment

You say DOJ. Now practice saying “Obama”.  Come on,
it isn’t hard.  Say “Obama”.  Then pair it up with
the “DOJ” you did say, so that you say “Obama’s
Department of Justice”.  C’mon, give it a try.  You
can say it.  “Obama’s Department of Justice”. 

This piece is written as if the DOJ was some
completely independent part of the government.  When
in reality, its Obama’s DOJ, and on a political issue
like this, the DOJ does exactly what Obama tells it
to do.

Say “Obama’s DOJ” a few times, then you can connect
the dot to Goldman Sachs being the second largest
employer of Obama’s contributors.  GS employees and
pacs gave just under 1 million to the Obama Change
and Hope campaign in 2008.  Then you can connect that
dot to the fact that Obama’s DOJ hasn’t been doing
prosecutions of Wall $treet.  Especially when that
top ten list of employers of contributors had five of
the major Wall $treet firms on it (see

Understand that if Obama wanted to see Wall $treet
prosecutions, he could certainly call the AG and tell
him in no uncertain terms that he wanted them to
happen.  Do you think Obama’s political appointees at
the top of federal agencies would refuse if Obama
himself called up and told them that he thought it
was vital that there be such prosecutions?  Not
likely.  Remember, they hold those jobs at the
pleasure of the President.  Nope, obviously it worked
the other way around.  Obama has obviously been
telling the political appointees who work for him NOT
to prosecute the people who were the largest
contributors to Obama’s 2008 campaign.

Now, try again.  Try to say “Obama’s Department of
Justice.” There, see, it gets easier with practice.

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By dr wu, December 9, 2011 at 3:54 pm Link to this comment

Make clear what really happened: Countrywide, under CEO Mozillo, gave mortgages to almost anyone—job or no. Why? the banks wanted them like crazy, the more the better and they paid handsomely for them. Why? The banks, in turn, sold them like hotcakes to investors, pension funds, etc. by fraudulently turning these junk mortgages into AAA rated securities. In other words they turned crap into gold, not only that, but they worked hand in hand with the rating agencies who gave high marks to the foulest smelling junk the world has ever known. People should have gone to jail for less but not the mortgage fraudsters. The banksters thank our President.

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