When a society's I-O police tilt to the right they become more Iv-Oy themselves, secretive and deceptive. The Y-V companies in society use Iv-Oy agents themselves, here Y-V Wall Street uses subprime salesmen to do their dirty work of often ripping off R-B subprime borrowers. In this process R-B people are also often deceptive using liar loans that were later believed to be honest by Y-V, this is an unstable interaction where the deceptions of R-B people can often beat Y-V teams. When the I-O police are more Iv-Oy themselves then Iv-Oy agents that decide to whistle blow for a commission or conscience have no one neutral to talk too, instead the I-O police are more like agents of Y-V themselves. Usually the I-O police use whistle blowers to moderate Iv-Oy crime and get to the Y-V bosses making profits this way, when the police are not neutral whistle blowers have nowhere to go and the contagion in the system cannot be exposed until it becomes much more visible or collapses.
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?""Fund 'em.""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: The court decided that the evidence that
Winston was wrongfully terminated was insufficient, and then from there
determined that the "legal error" in the original Winston suit against
Bank of America and Countrywide was that the judge in the case failed to
throw out the jury's verdict:
In short, having scoured the record for evidence supporting the jury's verdict on the issue of causation, we have found none. It follows that the trial court erred in denying defendants' motion for judgment notwithstanding the verdict.
"I was flabbergasted," Winston says now. "Think of all the hard work the jury did, and [the court] overturns it just like that."
While
it's impossible to say just exactly what a fair financial award should
be for a person who reports bad corporate activity to the public, it's
certainly true that when these whistleblower suits end in failure, it
has a chilling effect on other people thinking about coming forward. Not
many people are willing to risk their jobs if they think it will cost
them every last dime in the end. This is just one more example of how
hard it is for whistleblowers to come out even, even if they win jury
trials.
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