Taibbi: Ex-JP Morgan Lawyer With Smoking Gun on Mortgage Fraud Stymied by Holder Cover-Up

Matt Taibbi has pulled the curtain back on an offensive and obvious bit of Obama administration bank cronyism that disappeared too quickly from public attention. Earlier this year, JP Morgan settlement negotiations over mortgage misconduct had broken down over price. When word got out that the Department of Justice had a criminal suit that it was ready to file, Jamie Dimon called the DoJ and went to Washington to negotiate a deal. Let us turn the mike over to Georgetown law professor Adam Levitin who wrote at the time:

I’m floored that Attorney General Eric Holder was willing to take a private meeting with JPMorgan Chase CEO Jaimie Dimon while the bank is under criminal investigation and negotiating an enormous civil (and possibly criminal) settlement. I can’t recall something like this meeting happening before. There’s not anything illegal about such a meeting, but the optics are really bad and underscore the privileged position of the too-big-to-fail banks…

Who else is able to call up the AG and just get a meeting like that when their firm is under criminal investigation? Do other citizens get talk things through mano-a-mano with the AG himself? That Dimon even thought to initiate direct contact with Holder suggests that he has no sense of his place in society–or perhaps that he in fact does. Bottom line is that Dimon (and JPM) shouldn’t get any more special treatment than any other citizen, but it sure looks like he did.

But the whole point was to get special treatment. The criminal case went on hold. The settlement was structured to avoid court approval. Taibbi does not mention that the Administration acted as if it had really gotten a great deal by getting what looked like a really big dollar amount, but that was achieved via sleight of hand. The total was goosed up via throwing in a boatload of other claims, the biggest of which was Fannie/Freddie putback claims that constituted $4 billion of the $9 billion in total cash value of the deal. Holder took credit for that, when in fact that suit was launched by the much-pilloried Ed DeMarco of the FHFA (Taibbi correctly points out that the $4 billion of “consumer relief” that brought the headline total to $13 billion was show for the rubes). And JP Morgan admitted to pretty much nothing.

We now learn from Taibbi’s story that a whistleblower, Alayne Fleischmann, a securities lawyer who’d been hired by JP Morgan to help supervise the review of mortgages that were sold into securitizations. Shortly after she joined, the bank brought in a new manager for “diligence” who was technically senior to her. He focused on getting product out the door, no matter how toxic it was, browbeat managers who rejected clearly misrepresented loans, and implemented a “no email” policy to cover up what he was up to.

The centerpiece of the story is a package of particularly noxious mortgages from an originator called Greepoint. Their age alone made them suspect: they were unsecuritized after seven plus months, which meant they’d either already defaulted or had been rejected by another securitizer. One sample had 40% had overstated incomes, and 33% had incomes that were simply not plausible given the supposed employment of the borrower.

Fleischmann jumped ranks and spoke to a JP Morgan managing director, Greg Boester, and told him that selling these loans into securities would amount to fraud. Fleischmann was ignored. Boester is now at JP Morgan, after doing a brief stint at Citadel.

And here is the smoking gun:

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.”

As we learn, Fleischmann told her story to the SEC, which instead refused to hear anything about Greenpoint. The US Attorney’s office in the Eastern District of California, by contrast, built a case using her evidence, which eventually led to the successful Dimon end-run. Worse, the DoJ almost certainly released Fleischmann’s name to JP Morgan; within days of the Dimon phone call, the Wall Street Journal ran a story stating that the government had a major female witness. And the Morgan bank looks to have successfully blackballed her, as job possibilities suddenly vaporized.

Tabbi also details how JP Morgan lied to keep Fleischmann’s evidence out of private suits:

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 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.

This story alone show that the claim that Obama and Holder made, that there was bad conduct in the mortgage market, but it didn’t rise to the level of criminal activity, is almost certainly a lie. Pretty much anyone familiar with the subprime market knew that, but now we have evidence that the government had concrete, powerful evidence plus a credible witness and chose to let a powerful bank off. The fact that the bank continued to engage in fraud after getting two warnings to senior managers, one in writing, would seem to rise to the level of criminality.

And as reader MBS Guy points out, how can the Administration reconcile this “let’s enable a coverup, just make sure we get some decent optics” with its posture on Libor and foreign exchange abuses? Are we really supposed to believe that the bar the DoJ is using in those to establish intent is more stringent than having a written, detailed warning to executives that was ignored>

JP Morgan is the bank with far and away the worst rap sheet of any US financial firm. It’s a recidivist in mortgages and in other areas of the bank. In dealing with money-laundering at foreign banks, officials forced key executives out, including one of the very top officials at BNP Paribas. But that was at New York State superintendent of financial services Benjamin Lawsky’s insistence. You’ll see nothing so bloody minded out of the DoJ when left to its own devices.

But this story highlights another element familiar to NC regulars: how Dimon lies routinely to his shareholders and in official testimony. Dimon has repeatedly maintained that JP Morgan was smarter and cleaner in mortgages than its peers. In fact, the Morgan bank did indeed have less market share, but that was by virtue of being a late entrant and then only intermittently willing to pay market prices to hire seasoned staff. Taibbi’s account shows that its claims to virtue don’t stand up to scrutiny.

Keep in mind that the JP Morgan criminal case was never officially closed; Taibbi surmises, as we did at the time, that the Administration agreed informally not to take the prosecution any further. Given that Holder is already doing victory laps, it’s a safe bet that the well-warranted consternation that this article will stir up will not bring that lawsuit back to life.

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  1. YankeeFrank

    So Taibbi comes out swinging and utterly destroys Holder’s legacy once and for all. Couldn’t happen to a nicer guy.

    1. ex-PFC Chuck

      One wonders how much of the digging on this story Taibbi did with his Intercept hat on, and whether Omidyar killed it there.

      1. Doug Terpstra

        Yeah, there’s an intensely intriguing question. This is such a tight, damning indictment of high level criminals, with “financial crimes against humanity” as Nomi Prins put it yesterday, that when the dam breaks, there need only be brief trials and expedited perp walks to the lamppost for Jaime and his hand-Holder Eric, with his Enabler-in-Chief. Worse than Nixon would be an understatement. This is explicit deliberate evil.

      2. susan the other

        I was wondering about the Omidyar flap too. It’s nice to think that Taibbi is still this determined.

    1. flora

      ha. having a ton of gold or any commodity horded will do him no good unless he finds buyers at the right price. I see Greenspan – he of the “there is no housing bubble and it’s a good time to buy a house” fame – is now suggesting people buy gold.

      1. Doug Terpstra

        Greenspan’s investment advice should be considered carefully, as a lawyer would put it. Coming from the man who promoted ARMs circa 2005 and then hired on with subprime short tycoon Paulson, people should probably sell gold instead.

  2. change agent

    Great to see Taibbi back at RS. The story simply confirms what the conventional wisdom has been for anyone paying attention. Access pays. Do we really need to ask why Dem voters stayed home on Tuesday and middle class swing voters voted for more Republicans?

      1. Vatch

        No kidding! The Republicans are the masters of this sort of corruption. I wonder whether Change Agent was joking? It’s sometimes hard to tell on the Internet. In a spoken conversation, one can usually recognize humor from a person’s tone of voice or facial expression.

      2. Steven O'Neil

        Voting for Republicans won’t put an end to Dem corruption, but it could get an impeachment of a Democratic president who was in on this, and that may teach a lesson to future Democrats aspirants. Granted the impeachment won’t be for this crime – and the Republicans will probably continue and accelerate the farce if they win the presidency in 2016, but sympathy for the current occupant has run out.

    1. Larry

      It’s a good, and disheartening story. What’s so bothersome to me is that there were/are good people embedded in these banks as the story makes clear with Fleischmann’s efforts to stop the illegal securitization practices, yet they are routinely squashed when there is money to make. If the DoJ is not going to hold anybody accountable for odious practices, then their is no hope. This to me is one of the top reasons we need anybody but Hillary Clinton for our next executive. We don’t need more of the same treatment for Dimon.

  3. blowback

    This is overt criminality and it’s sickening. There is absolutely no reason that this story should not be front page headlines for the main stream media. I’d love for NC to do a story on that. Contact those papers and ask why they haven’t reported it.

    1. trish

      “absolutely no reason that this story should not be front page.”

      this story and countless others. If the MSM might have actually done its f*cking job for the past several years, such as harping on these and a gazillion other issues and actually acting as watchdogs rather than lapdoggy shills and infotainment spoon-feeders, the kleptocrats wouldn’t be so far ahead of the game.

  4. Dave McCrae

    November 6, 2014
    Trenz Pruca
    Company Name
    4321 First Street
    Anytown, State ZIP

    re:Case 1:14-cv-00733-ly
    Dear Trenz,
    I’m looking for legal assistance.
    In March of 2013 my mortgage servicer filed a foreclosure notice and attempted sale of my home. At that time, advance mortgage payments were made well in advance and fully described in the payment record. Due to the highly automated process and lack of human oversight characteristic of that industry at that time, I sought CH13 bankruptcy protection immediately before sale to protect assets.
    Under oversight of the federal trustee, I paid the remaining mortgage balance, and received clear title to property in 2014. I then acted to recover my expenses of defense. An initial pro se filing in 424 Court Burnet County to block sale was resurrected in July of 2014 and moved to Texas Western District Court. I amended complaint to include both the servicer, PHH Mortgage and the Texas mortgage mill, BBDFTE (now BDFTE, B is gone). The 424th had asked my wife to be included as plaintiff, the Western District asked for her to be removed. I filed this action qui tam the Consumer Financial Protection Bureau, who now represents the United States. I reported action to the Department of Justice, who showed no interest. Eric Holder currently runs that operation at his pleasure. I’ve solicited every State AG for any investigatory information they may have in their possession, with cryptic response.
    The defendants denied all actions and asked for dismissal. No one had foreclosed the house. The attempt was unsuccessful. I still live here. I agreed with their position and filed an amended complaint, removing ‘wrongful foreclosure’ and replacing it with ‘consumer fraud.’ The theft is the same. I have the same damages. I filed a demand under Rule 38 for jury trial of issues, and was docketed as such. The defendants employed at least eight attorneys; no one showed interest in attending a Rule 26(f) meeting. I asked the judge to consider order Alternative Dispute Resolution. I filed three settlement offers for the record, with expiration dates. The third offer is currently open, expiring at jury seating. I think I’ve been Fair and Generous.
    While we’ve been litigating my insignificant problems, Eric Holder’s DOJ, and all 50 State Attorneys general, have enteresd consent judgments with JP Morgan/Citibank, Bank of America, Ocwen, Ally, Greentree, and Wells Fargo, for an aggregate of >80 Billion+. The New Jersey Attorney General has entered a consent judgment with PHH Mortgage, one of my defendants here in Texas, at 615 Million. Possibly I’m a member of that class, Group E. No mortgage servicer has gone to trial anywhere in America in front of a jury. BetterMarkets.com continues to lobby in Washington DC for a more efective justice system. A jury in Yuba County, California, has awarded Philip Linza 16 Million, currently being appealed by PHH, who claim they haven’t done nuthin. Last year’s budget for the Mortgage Fraud Task Force was over 545 Million, so they’ve actually been running the only profitable operation in government. PHH Mortgage has about 2.4% of their industry, which is almost insignificant, but they’re the only ones who have damaged me, so they are the only ones where I have standing. In 2Q 2014 they only lost $500M, but they successfully divested themselves of $3.5B in assets of their transportation division and now they have great expectations of success in reengineering themselves and refocusing on their core business. They currently have about 1.2M mortgages under management in 46 states. Mine is paid off.
    On 4 November Judge Yeakel, rather quickly but not unexpectedly, dismissed the case and ordered me to pay some more costs. I offered a bond of One Dollar, possibly costs are higher by now. I believe I’ve at least preserved all necessary issues to the public record on PACER for appeal, and now I’d like to hire an attorney to manage the appeal and intervention. I’m flabbergasted that I’ve been denied a trial by jury. I’m flabbergasted that a Federal judge has effectively entered a judgment without even a cursory review of Rule 26(f) report, Alternative Dispute Report, or any trial exhibits. I feel my civil rights have been violated. I’d like the appeal court to remand the case for proper trial, and compel participation of the US Attorney Office, who appear to have substantial information concerning the mortgage servicing industry in general and PHH Corporation in particular.
    BTW, at this point I have to proceed In Pauperis. I have no money left. I’ll be glad to pay you later.

    For Truth, Justice, and America,

    David McCrae

  5. run75441


    As I was reading this last night and having been in court way too many times, what struck me as strange is the investigation stopped when the Federal Judge denied Fort Worth Employees Retirement access to records. Fleischman was a known commodity at the time. While she was not available as a witness, they still could have talked to her off record. Why didn’t they appeal the judge’s decision? Banks were appealing Radkoff’s decision(s) in other cases any number of times when his decisions went against him. Some weak-kneed attorneys here.

    1. diptherio

      While it’s barely a side-note to the larger story, I found this bit about Dimon’s bullying tactics interesting:

      After that meeting, Fleischmann testified, she approached a managing director named Greg Boester and pleaded with him to reconsider…

      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. [emphasis added]

      What, you think you get to decide where you work?!? You stupid $#!@%, your @$$ belongs to Chase! Get back to work, slave!!!!

      Boester is like the high-ticket version of an H1b visa worker. It’s almost enough to make me feel sorry for the guy…naaaah.

        1. run75441


          That is funny. I was wondering how that fit in with what I said until I got to your reply to yourself. I read that about Boester also. Dimon is an ass and it would be great to see him taken down in court.

  6. cnchal

    This story alone show that the claim that Obama and Holder made, that there was bad conduct in the mortgage market, but it didn’t rise to the level of criminal activity, is almost certainly a lie

    Jamie goes to Washington and uses the Narcissist in Chief’s flunky as a ventriloquist’s dummy.

    1. trish

      Jamie goes to Washington. As do many of our corporate overlords, whether Wall Street titans, techie billionaires, oil & gas sultans… They visit the White House, develop a nice cozy relationship, well before a quickie with Justice needed.

    1. diptherio

      +100 It makes me sick when unscrupulous work-class stiffs take advantage of naive, well-meaning finance professionals…the nerve {pounds table}

      1. Vatch

        Of course you’re both being satirical, but I really know some people who would sincerely say things like that. They would leave out the “naive, well-meaning” part, but they would say everything else. Die-hard conservatives who believe such foolishness remind me of the Soviets who would accuse dissidents of engaging in “hooliganism”, whatever that was.

        1. trish

          and it isn’t just “Die-hard conservatives.” many ignorant people blamed the borrowers rather than the predators (ie shoulda read the fine print (ie fixed rate converted to adjustable), they chose to live beyond their means, etc).
          Many of these people were minorities and it’s been a oft-used tactic to turn the the middle, white working class, etc on those farther down on the socioeconomic spectrum, especially those that look different or behave differently or have something they don’t have (ie govt employee pension). Those at the top inducing one of their prey to prey on an other.

  7. steelhead23

    I read this story last night and immediately became concerned for Ms Fleischmann’s well-being. Whistle-blowers have not fared well under Obama and while she wasn’t a government employee, my guess is that they will do everything in their power to shut her up and discredit her. Perhaps Dr. Black could find a position for her in his department at UMKC. The lady would make a great regulator.

  8. Howard Beale IV

    Holder’s still in office, no replacement has been named. Now Taibbi’s dropped this bombshell. If you’re the GOP, what do you do? This is like watching you hated mother-in-law drive off the cliff in your new Lexus.

    1. Yves Smith Post author

      The GOP is perfectly happy with banks getting away with selling bad mortgages. Remember, they insist the crisis was caused by the Community Reinvestment Act. So they won’t touch this with a ten foot pole.

  9. Kim Kaufman

    Taibbi and Fleischman on Democracy Now! this morning: http://www.democracynow.org. It’s not on website yet but will be soon (including transcript). Amy just asked him about Intercept… This piece was supposed to be his first piece at The Racket – so he’s been sitting on it for a long time. He says the whole thing was “horrible” and he’s glad to be back at RS – I am, too.

    1. steelhead23

      I just finished listening to that show. Wow. Something very interesting happened at the end of the show. Ms Fleischmann announced that she is working with those seeking to recover losses from the fraud she identified while employed by Chase. This ain’t over folks. Holder et al. may have been able to run out the clock on criminal prosecution (statute of limitations) but I suspect civil suits for fraud remain ripe. My guess is that this morning, Jamie’s hair is on fire. Good. Its about time.

      1. grayslady

        I thought I heard her say that the statute of limitations for criminal cases has not yet run out. She also said that in securities law there is very little additional data required to bring a criminal suit if you already have sufficient data to bring a civil suit. Apparently, she’s in a position to supply the additional data for some criminal suits.

        1. Yves Smith Post author

          Only a prosecutor can bring criminal suits. Please tell me one that will. Schneiderman went over to the mortgage task force, as we discussed at the time. to do nada. The DoJ is not going to allow any regional offices to take the case forward. The Manhattan DA’s office under Morgenthau might have, but under Cy Vance, no way.

  10. NY Geezer

    As this massive prosecutable fraud has become public there can be no justification for the failure of the Federal Government to criminally prosecuted those who have committed the fraud.

    I reread the accounts of the prosecutions conducted by Ferdinand Pecora in the 1930s and it seems clear to me that his successes were predicated on the fact that in the 1930s the President and both houses of Congress held themselves accountable to the people of the US and fully supported their interests. The democrat party landslide in 1932 was considered a political mandate for change. The Senate approved the investigation of the JP Morgan Bank and passed a resolution requiring the bank to open its books. That is what resulted in the successful prosecution of the Morgan Bank and the passage of bank unfriendly laws.

    In 2008 the democrat party had a similar landslide victory. In addition, Obama had run on the slogan “change you can believe in”. But they unexpectedly both the newly elected democrat president and his democrat Congress disregarded the will and interests of the people. They have not just failed to prosecute the criminals, they have sided with them and bailed them out.

    1. Chauncey Gardiner

      Excellent comment, Geezer. Particularly appreciated your observations about the break with precedent established by the Pecora Commission.

      Re: …”But then unexpectedly both the newly elected Democrat president and his Democrat Congress disregarded the will and interests of the people. They have not just failed to prosecute the criminals, they have sided with them and bailed them out.”

      One of the many questions I have regarding policy decisions in this New American Century is Why did they did so? What are the drivers behind their decisions?

      Another question I have is why states’ AGs have not initiated criminal prosecutions given the DoJ’s failure to act?

      1. NY Geezer

        I believe the decision to financially support and to insulate the bankers from criminal section was initiated at the very top of the US Government.

        In 2008 Hank Paulson initially could not get his TARP bailout program through Congress because Americans overwhelmingly opposed it. Close to 90% opposed it. It subsequently passed only because Obama while he was still only president elect threw his support behind it. Without that support Congress might well have rejected TARP and turned on the criminal element in banking.

        Prosecutions could have taken hold on the State AG level and probably would be in progress. But that potential trend was nipped in the bud by the Federal level investigation and the forced resignation of NY Gov. Eliot Spitzer, who had successfully taken on Wall Street as an AG. That sends a powerful message to other state AGs.

        1. Chauncey Gardiner

          Thanks, Geezer. The intimidation aspect of the Spitzer matter with respect to its possible effect on other jurisdictions had not occurred to me, although it should have.

          The powers and capacities that have been concentrated in the executive branch of our federal government are enormous.

    2. Doug Terpstra

      They are now, in fact, explicit co-conspirators in financial fraud and obstruction. Add that to the growing rap sheet that includes violated oaths and indisputable war crimes. The overall impression from the article is that Wall Street and Washington consitute an organized crime racket, with the executive playing a dual role as mob mouthpiece and muscle.

      1. Jess

        The fact that this amounts to an on-going cover-up might mean that the statute of limitations hasn’t run out because the conspiracy has never ended. I also wonder if a clever prosecutor with balls might find a way to go after this as a form of terrorism. Surely there are statutes on the books which link terrorism to financial crimes or to threats against the financial system.

    3. Ulysses

      “They have not just failed to prosecute the criminals, they have sided with them.” This is the key lesson for those of us living under the current kleptocratic regime. The Democrats are half of the problem in D.C. The whole, corrupt two-party system has pretty much stopped even pretending that they represent ordinary people.

      This has been clear for some time, yet thee are still some who don’t want to see it. Things have only gotten worse since 2010, when Chris Hedges accurately reported:

      “There are no longer any major institutions in American society, including the press, the educational system, the financial sector, labor unions, the arts, religious institutions and our dysfunctional political parties, which can be considered democratic. The intent, design and function of these institutions, controlled by corporate money, are to bolster the hierarchical and anti-democratic power of the corporate state.”


      There are still some rank-and-file labor union members, and street-level organizers who are trying to do the right thing, but the sad truth is Chris Hedges is correct when it comes to nearly all of the current “leadership” of organized labor.

  11. irenic

    Taibbi’s article is so infuriating that I have to go to my happy place . . .

    A place where truth and justice prevail. A place where a handful of honest Democratic Congresspersons are willing to press for articles of impeachment against their own President because of his high crimes and misdemeanors: which at a minimum are Obama not doing his job of prosecuting crimes in America(I believe it would qualify as nonfeasance of his duties, a misdemeanor I think), and at a maximum of aiding and abetting the criminals of Wall St who stole BILLIONS(which would qualify as a high crime). A place where members of the Congress and the Senate would then be forced to choose a side: a restoration of law and order by impeachment or their friends and donors, the criminals who have robbed this country.

    . . . but my happy place fades and I am back to reality. A reality that would never allow even an honest Democratic Congressperson to go against their tribal allegiances and impeach(or arrest!) Obama and Holder. A reality where the Republicans would try and impeach Obama for Benghazi or birtherism but would never allow a Republican to bring to the floor of the house and senate any references to the crimes of their friends on Wall St.

    I guess the only thing I can do now is wait for the FBI or Homeland Security to come after me because I have a happy place where I want their criminal friends put in jail.

    1. psychohistorian

      Don’t forget the CIA. They called me in 2004 to tell me to stop bad talking our then president on international calls.

  12. Xelcho

    RS seems to strongly censor its comments, that is too bad. Fortunately, NC does not.

    I found this article to be very inconsistent, perhaps other NC readers can help me understand a few things.

    Why did this person remain in such a criminogenic environment all the way until being laid-off? Did I miss the mention of trying to look for an honest employer?

    If she felt that the actions the mgmt was taking were so egregious why did she not think to set up a bolt-hole by way of securing these docs off site for later review/release?

    It sees that many players levered her comments to benefit themselves, in a capitalistic society is this not to be expected? We unfortunately do not have access to her separation agreement with JPM, did she secure a golden parachute in the 7,8 or 9 figures region? If not show us, if nothing else let’s see the canceled check. Further, it would seem fair to say when she was willing to “come out” in investigations and JPM et al were shutting her down she could have negotiated a gag deal. Maybe she did, do we know?

    So many questions so few answers…

    1. psychohistorian

      You write like someone who is a bit unfamiliar with NC. Perhaps you should know that we have fun with folks that attack the messengers and not the rampant corruption you seem blind to.

      May I suggest you try your plutocrat sympathy trolling somewhere else……and have a GREAT life.

      1. trish

        I don’t see any reason to jump on this commenter as “plutocrat sympathy [troll].”
        Don’t see what’s wrong with a few questions of anyone emerging from these criminal dens (some of which answered by other commenters below?).
        can be a big grey area between being a hero/heroine and one of the criminals themselves…
        and that said, whistle blowers are important if they get to the big criminals, so whether completely clean themselves or not, doesn’t often matter.

        1. trish

          though maybe in this case I’m blind to a troll…
          I just have seen many instances in the recent past (not necessarily at this site) where there seems to be a no-criticism-allowed rule for some we elevate to a certain stature…

          1. Xelcho

            Wow! Called out as a troll for asking questions! It seems some of you are willing to wear your emotions on your sleeve. I am asking as questions as they are relevant to the authenticity of the claims. Do you even contemplating these questions? Further, a messenger is not one who participates then later contemplates. While I desperately want to believe that the case is as presented being a skeptic is exactly what I thought NC was all about. So do you find the questions I am asking too “harsh” or unimportant or any other dis-qualifier? What about those who have ill-gotten gains but then feel bad about it to the point to complain but not cough up those gains?

            Critical thinking is why I like this site.

            Cheers :)

            1. psychohistorian

              I call BS on your critical thinking and call your comments an example of agnotology, not skepticism.

              Are we sure, we are sure, we are sure, we have an absolutely corrupt government bought by plutocrats or do we need to attack the messengers, study the problem further and in the interim let the perps slide or at the very least say nothing bad about them?

    2. Vatch

      “If she felt that the actions the mgmt was taking were so egregious why did she not think to set up a bolt-hole by way of securing these docs off site for later review/release?”

      This might have been illegal. You know, trade secrets, confidentiality, theft, and all that. By doing what you suggest, she could have set herself up for criminal prosecution. Then Eric Holder’s minions could have prosecuted her as a “corrupt banker”.

      1. Steven O'Neil

        They will argue that she stole actual and tangible assets (information and documents) and will go after her. I am not a lawyer, but I wonder if those documents will then be tainted as stolen and no longer admissible in either civil or criminal court.

    3. grayslady

      According to remarks made on Democracy Now this morning, she didn’t know, at the time she left the institution, whether the deals she had worked on were ever packaged into securities and, if so, what rating those securities had been given. She was axed, along with 2000 other employees, in April or May of 2008, as I recall.

    4. Oliver Budde

      You mean all the way to two years of employment before being laid off, while ringing the bell and trying to fix things from the inside the entire time? Yeah, wow, you’ve got a point; we all should suspect her of…something.

      The better question, Xelcho, is why–assuming say 500 people at each of the top 10 manufacturers of these toxic bonds being fully aware of what was happening–has she not been joined by any of those other 4,999 employees in blowing the whistle?

      And a golden parachute from, or a gag deal with, JPM? You come off sounding rather daft, with whatever respect you might be due.

      1. Xelcho

        To be clear I consider all of these big banks corrupt as hell and the regulators captured, hell NC posts great articles on this at least weekly (The PE stuff is dynamite). All I am saying is that remaining skeptical is important. The inner workings of these places is always shrouded in secrecy and I am all for any sort of peek behind the curtain. Therefore, I am careful of motivations and omissions/redirection/misdirection.

        Regarding the lay-off, it is unclear to me how high up the food-chain she was, perhaps not at all and it was simply a pink-slip issue… once again information would be helpful.

        Please note I made zero assertions, as a troll I am totally sucking at it.

        1. psychohistorian

          See my comment above about agnotology, the manufacturing of ignorance and other methods of misdirection, wasting effort and missed focus…..all of what your skepticism seems to me as a long time reader/commenter here.

          If I were to see you contribute some more “balanced” (smirk) skepticism I guess I wouldn’t jump to the conclusions I did. Please come back to this or other postings and show us with some depth what you really think. Join us in our pathetic textual white noise and searching for ways to bring truth and justice back to our world.

  13. susan the other

    “Keep in mind that the JPMorgan criminal case was never officially closed.” Can’t JPM move to have the case removed for non-prosecution? Or would that attract too much attention?

    1. Susan the other

      And then too: this latest round of QE bought up 45bn in MBS every month for 2+ years and should have relieved the pressure on the whole securitization fraud outrage because even tho’ the Fed made a big PR thing about not buying any MBS that wasn’t grade-A-guaranteed by the banksters/trusts, chances are it just took anything and everything as fast as it could – paying full price – in what looked like an effort to put a stop to criminal complaints by buying out the complainants at premium prices. And the Fed now plans to just let these mortgages “run off the books” and will not attempt to sell them. That still leaves the housing industry in a mess because homeowners were unable to get out of the mess and are stuck with deep debt in a non-functioning market and losing their jobs too. The Fed should buy up those properties – at a premium.

  14. wbgonne

    It’s really a damn shame that the statute of limitations has run of just about everything the banksters did to cause the Great Crash because I am absofuckinglutely positive that Obama’s new AG nominee, Loretta Lynch, would be all over those miscreants like nobody’s business. They even say the GOP will ok her nomination. Can you believe it? Well, there may be a reason for that. Check out Ms. Lynch’s bio:

    Lynch, who grew up in North Carolina and attended Harvard University for college and law school, has chaired the attorney general’s advisory committee since the beginning of 2013. She served previously at the Justice Department, starting as a drug and violent crime prosecutor at the U.S. Attorney’s office in 1990. She also previously headed the office in Brooklyn between 1999 and 2001, when she left for private practice at the law firm Hogan & Hartson (now Hogan Lovells) and then served as a board member of the Federal Reserve Bank of New York.


    Curiously, the New York Times misses the highlighted portion of Ms. Lynch’s resume.


    An inadvertent omission, no doubt.

    1. John Puma

      Thanks for Ms Lynch’s bio.

      However, these 2 statements cannot both be true:
      1) Loretta Lynch, would be all over those miscreants like nobody’s business.
      2) They even say the GOP will ok her nomination.

      Can you at least explain why you claim #1?

  15. JustAnObserver

    Since an article like this takes significant time to put together could it possibly be that word of it somehow leaked in advance (0 prizes for guessing how) to the AG and, effectively, forced his resignation ?


    Is that the USAG’s scalp I see hanging from Matt Taibbi’s belt ?

    1. flora

      “takes a significant time to put together”.
      you are so right.
      I want to add that, in my own case, it’s taking a significant time to digest the magnitude of what Taibbi has reported. It’s one thing to describe the predations of Goldman Sachs, or Wall St. in general. I expected that once the information was out that our U.S. govt. would act to halt, or at least rein in the worst abuses, if only for appearance’s sake. To now know beyond doubt that the U.S. govt is actively enabling predation on its own citizens is… I don’t have words for it yet.
      The easy cheap shot response like, “gives a whole new meaning to DoJ Criminal Division” , while true, is not adequate response to the enormity of this cancerous corruption at the top of both parties.

      1. flora

        p.s. my use of the phrase “cheap shot” was in no way directed at your comment or anyone’s comment. I had thought of using another quick response about Holder et. al. and realized such comment was inadequate. My “cheap shot” comment was directed at myself.

  16. Jess

    Great to see Matt back at Rolling Stone and doing what he does best. However, I had to be struck by the irony of seeing the print version cover on the magazine racks at the supermarket with a picture of Zero and the headline, In Defense Of Obama.

  17. wbgonne

    Indeed. And the cover of the paper issue that just arrived is a full page image of neoliberal front-group U2, Inc., with the caption, “U2 Takes on the World,” followed by a blathering hagiography (lovingly recounting chats with Bono as his driver winds the Maserati through hills to Bono’s Mediterranean villa and Bono the Regular Guy drinks beer at a genuine pub). I love Taibbi but it’s too bad he isn’t here at NC where he belongs. BTW: Obama is no longer the neoliberal golden boy du jour, he is instead the (well-deserved) fall-guy for neoliberalism’s latest round of abominations. Queen Hillary is now the Democratic neoliberal powerhouse. How RS treats HerTurn means more than whether it gets some kicks in now at lameduck Obama. Nobody from Wall Street is going to be prosecuted for 2007. Period. Of course, if the purpose is to thwart Obama’s final predations like the Grand Bargain and the trade-deal surrenders of national sovereignty to multinational corporations then go for it.

  18. Ed Walker

    The kinds of things Taibbi got from Alayne Fleischmann are described in detail in the Final Report of the Financial Crisis Inquiry Commission, in the information provided by Clayton Holdings, some of which is attached as an Exhibit to the Final Report. I read that report, and it was perfectly clear that this was a straight path to indictments, and I’m quite sure that the staff intended that outcome. I wrote about it here.

  19. Ray Phenicie

    Now is maybe a late point in gathering information about the bank frauds of the past eight years but the history of this whole page in American history needs to be kept alive. We have now two administrations that ignored the thieving of American homes by the financial industry. We can blame all of the banks because they were all intertwined via the securitization process. Any pension fund that was placed on the negative side of the balance should be reimbursed by the Federal Reserve just the way the banks were. It is possible for this to be done.

    Finally the likes of Jamie Dimon, who has a net worth of $400 million and annual salary of $27.5 million, should by now, be in the middle of five to seven year jail term in a maximum security prison. He and about 500 high ranking members of the the banking echelon. That Mr. Dimon is not an ex-con shows how rotten our whole system is. The parallels with late 18th century France and Russia during the last years of the Romanovs are striking. Peasants live in hovels while wealthy property owners live in high rises affordable by the pillorying of the peasants in the hovels.

    The fact that the Obama administration did not pursue criminal prosecution of anyone in the Financial sector is itself a crime of the highest nature.

    1. steadymon

      So what is next? I propose that the Rico Act must be applied now. I hope and advocate for the next phase… A Foreclosure recall, give us back our fraudulent foreclosed homes now, with the damages associated with loss of credit, emotional duress and demise of neighborhoods that our now overrun by hedge fund rentals.
      If you buy a defected car it is recalled and corrected or replaced. We bought a loan that was knowingly designed to be defected and to fail. So it’s time to make good to the consumers, remember the banks defense, “the consumer should of known not to get a loan they couldn’t pay back”, of course blame the consumer for trusting our banks and our trusted advisors for receiving a loan, that the government, the banks knowingly marketed blessed and sold as fraudulent designed product, yes we drank the Kool-Aid, we did not know it was poisoned. Now we do, and all we have left for checks and balances for justice is Rolling stone magazine. Matt and Alayne….thank you. You are the true warriors and heroes of America.

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