Meet Alayne Fleischmann, the JPMorgan Chase whistleblower who explains how the bank helped to wreck the economy — and then got away with it.
“For a long time I believed that the government would do their investigation and come forward with it. It’s actually taken a really long time … I’m in the position where If I keep silent and the statute of limitation runs out, or they do one of these agreements where they whitewash everything, then it’s too late.”
Fleischmann joins investigative reporter Matt Taibbi for an exclusive interview on Democracy Now! today.
“Anyone who has ever struggled to get her landlord to fix a broken appliance can imagine how much worse it could have been if she were paying rent to a faceless hedge fund based thousands of miles away. That tenant’s nightmare may be on its way to reality for hundreds of thousands of Americans, as Wall Street firms have snapped up 200,000 family houses with the intention of renting them out.
"While firms like Blackstone often farm out the day-to-day management of the rental properties to third-party companies, those intermediaries are often also based in faraway states. Some have a track record of being unresponsive to basic things like broken sewer pipes, as the Huffington Post has reported. The banks and their intermediaries may neglect basic upkeep of these properties. In that worst-case scenario for renters, local and attentive property managers and building supers will get replaced with “Wall Street-based absentee slumlords,” in David Dayen’s phrase.
"On-the-ground concerns for communities and renters go beyond neglect, however. The rising influence of financial titans turned local landlords could threaten all sorts of public services. In the case of Huber Heights, OH, the hedge fund Magnetar Capital has become the largest landlord in the whole town and is using that influence to try to extract lower property tax charges from the town — a change that would undermine funding for schools and other public services for locals, but boost the bottom line of the Illinois-based financial giant. (Magnetar’s dodgy past dealings from the sub-prime era also underscore an unsettling dynamic to Wall Street’s entry into the rental market: the same companies that helped turn homeowners into renters through mass foreclosures are now preparing to make even more money off of the same rental demand they helped create.)
"But firms like Blackstone aren’t just renting the homes, of course. The real money for the firm is in turning the rent payments it will receive from those 40,000 units into financial products called securities that it can sell to other investors. The practice could prove to be a broadly beneficial way to allocate scarce housing resources — or it could mirror the casino culture that turned the sub-prime bubble into an economy-wrecking conflagration.”
So the government forces banks to make shoddy sub-prime mortgage loans, because of racially dubious practices which ultimately leads to a climate of lax mortgage practices.
Banks, plush with all these shoddy mortgages try to reduce risk, by bundling slices of thousands of these mortgages into MBS, or mortgage backed securities, then get these MBS insured by AIG against default with credit default swaps.
Then they convince ratings agencies Moody’s and S&P to rate them highly, and they get them backed by Fannie and Freddie Mac, which are government-sponsored agencies (much like the Federal Reserve). Sp when they sell these high yielding MBS’ to unsuspecting investors and banks it turns out all the mortgages are junk and everything collapses and the government bails out the very banks they induced into making this mess in the first place.
Carl runs an auto disposal service in rural Tennessee, dismantling older cars, selling the individual parts, and turning the rest into scrap metal. Carl’s lot is starting to run out of room. “People are buying cars they shouldn’t be buying.”
Many of the cars are sent to him by repo men: “I do my best business when others are doing their worst. Someone loses a job, I gain a car.”
Many people are buying those cars with they help of Wall Street banks, which are lending money to people with bad credit again – just as they did prior to the financial crisis of 2007. In the last crisis, it was houses.
These material misstatements occurred during a time of acute investor interest in financial institutions’ exposure to subprime loans, and misled the market about the amount of risk on the company’s books.
Securities and Exchange Commission enforcement division director Robert Khuzami • Discussing the civil fraud charges that the SEC filed against six former top execs at Fannie Mae and Freddie Mac, charges that came about due to alleged misrepresentation of investors’ exposure to the subprime mortgage crisis. Lawyers for the six officials claim that the executives acted in the best interests of investors despite the allegations otherwise.
“Some liberal and progressive pundits are fond of trotting out the term “income inequality” to support their thesis that class immobility represents the deepest divide in American society. Echoing President Obama’s Middle America-appeasing claim that income inequality is as much about class as it is about race, these pundits assiduously avoid the role institutional racism and white supremacy play in economic injustice. In the shadow of the 2016 presidential election, the catch-all “income inequality” has become the national bromide du jour.
"Income inequality doesn’t begin to address the enormous economic gulf that exists between white America and people of color. Black “wealth” was virtually wiped out by the mortgage debacle. The vast majority of black wealth comes from home equity—equity that has long been undermined by deeply entrenched de facto segregation. Whites of all income levels have greater investments in stocks, bonds, mutual funds, retirement accounts, benefits and income-generating property.
"So the racial homogenization of the term “income inequality” masks the racial roots of economic apartheid. For example, middle class African Americans and Latinos are disproportionately concentrated in high poverty areas with lower property values than are working class whites. This has more to do with the legacy of restrictive covenants and discriminatory lending policies than simple income inequality. Income inequality does not account for why African American and Latino homebuyers with good credit, middle class incomes and stable jobs were systematically targeted by Wells Fargo, Countrywide and Bank of America for subprime home loans. Income inequality also does not account for why LGBTQ workers of color have among the lowest wages, greatest incidences of workplace discrimination and least access to equitable housing, education and health care.”
The 2008 financial crisis was an “avoidable” disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a federal inquiry.
As a final demonstration of the right wing’s total rewriting of history on the subject, when our committee did vote out a bill to restrict subprime mortgages, we were attacked in an editorial on Nov. 6, 2007, by The Wall Street Journal for interfering with the free market. In a passage they now must wish they never wrote, the editorialists strongly defended the subprime loans that were a major cause of the crisis: “But for all the demonizing, about 80 percent of even sub-prime loans are being repaid on time and another 10 percent are only 30 days behind. Most of these new homeowners are low-income families, often minorities, who would otherwise not have qualified for a mortgage. In the name of consumer protection, Mr. Frank’s legislation will ensure that far fewer of these loans are issued in the future.”
As to Cheney, I guess I should feel consoled that he simply lied about me, and did not invade my home.
As in love as people are in general with famous last words, these from the Wall Street Journal prior to 2008 are worth a gander.
emptybrackets says: it seems a little disingenuous to me to call 335m “massive” considering the scale countrywide and boa operate on
» SFB says: Well, considering it’s the “largest residential fair-lending settlement in history,” as the source article puts it, there’s not another settlement of this type bigger than this one, so that’s why we called it a “massive” settlement. And let’s face it, $335 million is not something the average person has lying around. — Ernie @ SFB