Thursday, March 21, 2013

Yet Another Whistleblower - This Time at the FDIC

Commentary by Roger Erickson



Following is a forwarded email from the - still semi-anonymous - author (don't have his name yet):

"I became a whistleblower at the FDIC once I realized the government was a partner in enabling patterns of defective loans which sparked the recession. In 2006, I noticed that Washington Mutual was selling its nonperforming loans to a non-bank affiliated company owned by Citigroup. The sales transactions were structured so that no "reps or warranties" were provided by WaMu to Citigroup. This was to protect both entities from any legal liability once downstream third party investors (state retirement funds and the like) were sold investment securities that were backed by pure junk (nonperforming credit card loans, and mortgage loans).

I reported this to top officials at the FDIC. They decided to bury the evidence because they did not want to destroy any working relationship the FDIC still had with the Office of Thrift Supervision. The two agencies were fighting like children. The OTS only allowed two FDIC staff to go to Wash Mutual in 2006 to join them on the examination. I was one of the two. I became a whistleblower once I saw my supervisor as well as our inspector general go before the Financial Crisis Inquiry Commission, and then the Senate Banking Committee where they denied everything I had informed them about was I observed at Washington Mutual.

This is merely on example of many. Since I headed up the Large Bank program, there is no other individual who had the bird's eye of seeing everything that the regulators did wrong, enabling the financial crisis to go unabated until it was much too late.

Eighteen months before TARP, I prepared an analysis showing the top 5 banks were deficient by $30 billion in loss reserves. My analysis and findings were buried under the rug.
"


Sound familiar? How many whistleblowers are being threatened and their claims suppressed?


2 comments:

Ryan Harris said...

Nice Post. We can't credibly go after the criminals until we have legislators, regulators and policy makers willing and able to enforce the law.
These effort will take time as the corruptions goes all the way to the president's office and capitol hill.
In government especially, those who rock the boat do not get rewarded, ever, don't envy this guy. He will almost certainly meet an untimely death.

Matt Franko said...

Right Ryan,

how can someone who would say: "We're out of money!" or "We're borrowing from the Chinese!" be able to see their own authority in general? To include law enforcement here...

If someone were to say "We're out of money" it is a tip-off that person is very corrupted to the core...

rsp,