Matt Taibbi writes: A great many people around the county were rightfully shocked and horrified by the recent excellent and hard-hitting PBS documentary, The Untouchables, which looked at the problem of high-ranking Wall Street crooks going unpunished in the wake of the financial crisis. The PBS piece certainly rattled some cages, particularly in Washington, in a way that few media efforts succeed in doing. (Scroll to the end of this post to watch the full documentary.)
Now, two very interesting and upsetting footnotes to that groundbreaking documentary have emerged in the last weeks.
The first involves one of the people interviewed for the story, a former high-ranking executive from Countrywide financial who turned whistleblower named Michael Winston. You can see Michael’s segment of The Untouchables at around the 4:20 mark of the piece. The story Winston told during the documentary is essentially an eyewitness account of the beginning of the financial crisis.
When I spoke to him last week, Winston was still as amazed and repulsed by what he saw at Angelo Mozilo’s crooked subprime mortgage company as he was when he worked there. Winston, who had worked for years at high-level positions at companies like Motorola and Lockheed before joining Countrywide in the 2000s, described a moment in his first months at the company, when he rolled into the parking lot at the company headquarters.
“There was a guy there, a well-dressed guy, standing next to a car that had a vanity plate,” he said. “And the plate read, ‘FUND’EM.'”
Winston, curious, asked the guy what the plate meant. The man laughed and said, “That’s Angelo Mozilo’s growth strategy for 2006.” Here’s how Winston described the rest of the story to PBS – i.e. what happened when he asked the man to elaborate:
“What if the person doesn’t have a job?”
“Fund ’em,” the – the guy said.
And I said, “What if he has no income?”
“What if he has no assets?” And he said, “Fund ’em.”
Later on, Winston would hear that the company’s unofficial policy was that if a loan applicant could “fog a mirror,” he would be given a loan.
This kind of information is absolutely crucial to understanding what caused the subprime crisis. There are people out there still willing to argue that the government somehow “forced the banks to lend” to unworthy applicants. In reality, it was unscrupulous companies like Countrywide that were cranking out loans en masse, knowing that these loans would be unloaded down the line, first to banks and then to sucker investors like pension funds and foreign trade unions, almost as soon as they were created.
Winston was a witness to all of this. Eventually, he would be asked by the firm to present false information to the Moody’s ratings agency, which was about to give Countrywide a negative rating because of some trouble the company was having in working a smooth succession from one set of company leaders to another.
When Winston refused, he was essentially stripped of his normal responsibilities and had his corporate budget slashed. When Bank of America took over the company, Winston’s job was terminated. He sued, and in one of the few positive outcomes for any white-collar whistleblower anywhere in the post-financial-crisis universe, won a $3.8 million wrongful termination suit against Bank of America last February.
Well, just weeks after the PBS documentary aired, the Court of Appeals in the state of California suddenly took an interest in Winston’s case. Normally, a court of appeals can only overturn a jury verdict in a case like this if there is a legal error. It’s not supposed to relitigate the factual evidence.
Yet this is exactly what happened: [Continue reading…]