The Bank Whistleblowers United – Who are We, and Why are We Trying to Help Implement Real Banking Reform?

[revised – Michael Winston’s bio added]

At this time (January 29, 2016), we consist of four founding members:

Gary Aguirre
William Black
Richard Bowen
Michael Winston

Our bios are listed at the end of this post.  We share a number of common experiences.  They explain why we came together to try to implement real reform. 

  • We are whistleblowers
  • We proved correct in our warnings when we blew the whistle
  • Our warnings were not heeded
  • We persevered when our warnings were ignored, knowing that retaliation was likely
  • The failure to heed our warnings caused great harm to the public and our firms/agencies
  • We experienced retaliation because we proved correct and refused to be intimidated
  • We have substantial expertise in finance and related subjects, including (collectively), accounting, auditing, and internal control, law, economics, criminology and corruption, ethics, management, underwriting, securities, markets, appraisals, regulation, deposit insurance, investigations, enforcement, litigation, rule-making, and the criminal justice system
  • Most of us were senior managers, each of us has decades of relevant experience
  • We are intensely practical – our careers demonstrate high achievement
  • We are well grounded in theory. We all have post-graduate degrees and three of us are academics.  Understanding theory, and its weaknesses, is practical.  Collectively, we have substantial expertise in comparative international finance and regulation.
  • We put a high premium on integrity and service to the Nation
  • We are out to save, not destroy, finance as a means of saving the Nation and its people
  • We believe that fundamental change is urgently needed to allow honest bankers to prosper
  • We act and make constructive proposals rather than simply complain
  • We will aid any President of any Party or philosophy who wishes to implement real change to finance and to restore the rule of law to Wall Street

We also have many differences as to the parties and candidates and policies that we, as individuals, support.  As a group, we will not endorse any candidate.  We are not financially supported or covertly organized by anyone.  We came together to (again) “speak truth to power.”

Bio: Gary Aguirre

Gary Aguirre is best known as the SEC attorney who, while heading an insider trading investigation, resisted his supervisor’s demands to give preferential treatment to a Wall Street banker. Fired for his so-called insubordination, Mr. Aguirre would prove to the satisfaction of two Senate Committees, a federal court, and three federal agencies that the SEC had acted unlawfully.  These events became the focus of three Senate hearings and 108 page report by the Senate Finance and Judiciary Committees. The evolving story has been told in a dozen books, national and international television, and hundreds of news articles, including one on the front page of the New York Times. He was also one of 100 Most Influential People in Business Ethics (Ethisphere) in 2010.

After a very successful 27-year career as a trial lawyer in California, Mr. Aguirre left the law in 1995 to pursue other personal interests. Inspired by the lawyers in Bush v. Gore, Mr. Aguirre returned to law school in 2001 to retool for a new law career, this time in public service. He graduated with distinction from Georgetown Law Center in October 2003 with an LL.M. combining securities regulation and international law. His thesis won second prize in national competition sponsored by the SEC Alumni Association for the best paper on securities law.

After joining the SEC in 2004, Mr. Aguirre soon headed an insider trading investigation of Pequot Capital Management, formerly the world’s largest hedge fund. After his firing, he sued the SEC under FOIA to get the Pequot investigative files and won.  Forbes discussed what happened next: “After a scathing 2007 report by the Senate criticized the SEC’s handling of Aguirre’s Pequot investigation, and after Aguirre dredged up the smoking gun e-mails and passed them along to the Senate, the FBI and the SEC in late 2008, the SEC reopened the case in January 2009.” Pequot closed its doors a few months later. In May 2010, Pequot and its CEO settled with the SEC for $28 million. In private practice, Mr. Aguirre represents whistleblowers and victims of securities fraud and market abuse. Mr. Aguirre has law degrees from U.C. Berkeley and Georgetown Law Center (LL.M.) and a master in Fine Arts (Film) from UCLA.

He is a founding member of the Bank Whistleblowers United.

Bio: William K. Black

Bill Black is an Associate Professor of Economics and Law at the University of Missouri – Kansas City (UMKC) and the Distinguished Scholar in Residence for Financial Regulation at the University of Minnesota Law School.  He is a white-collar criminologist.  He was, after a national search, recruited by the Association of Certified Fraud Examiners and the American Institute of Certified Public Accountants to serve as the Executive Director of the Institute for Fraud Prevention from 2005-2007.  He taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics.

He was recruited to become litigation director of the Federal Home Loan Bank Board, recruited to be the deputy director of the FSLIC, SVP and General Counsel of the Federal Home Loan Bank of San Francisco, and recruited to serve as the Senior Deputy Chief Counsel, Office of Thrift Supervision.  He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement.

At the staff level, he led the reregulation and resupervison of the S&L industry and was instrumental in creating and training agency, FBI agents, and AUSAs on sophisticated financial fraud techniques, particularly “accounting control fraud.”  Black developed the concept of “control fraud” – frauds in which the leader uses the entity as a “weapon.”  Control frauds cause greater financial losses than all other forms of property crime combined and kill and maim thousands.  In finance, accounting is the “weapon of choice.”  Black developed the concept by serving like the chief coroner of the agency.  He and his staff “autopsied” every failures and looked for patterns to understand the rapidly evolving nature of the debacle.  The patterns they discovered allowed them to confirm that the crisis had become an epidemic of control fraud.  The patterns also allowed the regulators to target for closure the worst frauds while they still reporting record (albeit fictional) profits.  The autopsies also revealed the frauds’ Achilles’ “heel” – the need to grow extremely rapidly.  The agency adopted rules restricting growth to target that “heel” of the frauds.

The academic public administration literature uses Black’s work as a regulator as the exemplar of effectiveness and integrity.  Black’s regulatory career is profiled in Chapter 2 of Professor Riccucci’s book Unsung Heroes (Georgetown U. Press: 1995), Chapter 4 (“The Consummate Professional: Creating Leadership”) of Professor Bowman, et al’s book The Professional Edge (M.E. Sharpe 2004), and Joseph M. Tonon’s article:  “The Costs of Speaking Truth to Power: How Professionalism Facilitates Credible Communication” Journal of Public Administration Research and Theory 2008 18(2):275-295.

George Akerlof called Black’s book, The Best Way to Rob a Bank is to Own One (University of Texas Press 2005), “a classic.”  Paul Volcker praised its analysis of the critical role of Bank Board Chairman Gray’s leadership in reregulating and resupervising the industry:

Bill Black has detailed an alarming story about financial – and political – corruption.  The … lessons are as fresh as the morning newspaper.  One of those lessons really sticks out: one brave man with a conscience could stand up for us all.

Robert Kuttner, in his Business Week column, proclaimed:

Black’s book is partly the definitive history of the savings-and-loan industry scandals of the early 1980s. More important, it is a general theory of how dishonest CEOs, crony directors, and corrupt middlemen can systematically defeat market discipline and conceal deliberate fraud for a long time — enough to create massive damage.

The book was translated into French with an updated chapter on the global crisis and then published in an even more updated version in English.  The following unsolicited comment may be the most candid.  Dr. Kaminski, the brilliant and honest, but failed, former top risk officer at Enron wrote:

There is one particular book I wish I had read in the early days of my business career, which would have saved me and the firms I worked for a lot of money.

Many companies that have eventually gone bankrupt have been very successful at projecting the image of unstoppable success for a long time.

The book, entitled The best way to rob a bank is to own one: how corporate executives and politicians looted the S&L industry, was written by William Black, associate professor of economics and law at the University of Missouri-Kansas City. It is based on his experience as a regulator of savings and loans (S&L) institutions during the S&L crisis of the 1980s and early 1990s.

Within its pages, Black introduces the concept of ‘control fraud’ – effectively, a very simple recipe for great riches and limited civil and criminal liability.

Black is a serial whistleblower.  He blew the whistle on a presidential appointee, Federal Home Loan Bank Board Member Lee Henkel who served as Charles Keating’s “mole” at the agency.  Henkel resigned in disgrace.  Black took the detailed notes of the “Keating Five” meeting with Senators Cranston, DeConcini, Glenn, McCain, and Riegle at which the Senators unsuccessfully sought to intimidate the regulators into withdrawing their recommendation that Keating’s Lincoln Savings be taken over and Keating removed.  Black’s notes, virtually a transcript, led to the Senate ethics investigation of the “Keating Five.”  Black blew the whistle on Speaker of the House “Jim” Wright’s similar efforts to intimidate the agency not to act against several Texas CEOs leading control frauds.  This led to a House ethics investigation.  The independent counsel leading that investigation formally recommended that the House ethics committee charge Wright with an ethics violation for repeatedly attempting to get Black fired (the Committee declined).  Black’s blowing of the whistle and his testimony, however, is credited by even the author most hostile to Black with playing a material role in Speaker Wright’s decision to resign in disgrace.

After Keating’s efforts to intimidate the four regional regulators (which included Black) failed, he used Senator Glenn to arrange a luncheon meeting with Glenn, Keating and Speaker Wright and used Senator Cranston to arrange an afternoon meeting the same day with the head of the regulatory agency, “Danny” Wall.  At the luncheon meeting, Speaker Wright fulminated against Black and Gray (Wall’s predecessor who took on the S&L fraudsters).  At the Speaker’s invitation, Keating and his team then met immediately after the lunch with Wright’s top aides to develop a strategy to get Black fired and to bankrupt Gray and Black through civil suits.  Keating twice hired private detectives to investigate Black.  He sued Black and Gray for $400 million in their individual capacities.

Shortly after the Speaker’s aides and Keating and his team had this conference aimed at removing and crushing Black, Keating met with Black’s ultimate boss, Danny Wall.  Keating began the meeting by emphasizing that he had just met with the Speaker and that the Speaker would be far more favorably disposed toward Wall if he were to get rid of the “red-bearded lawyer in San Francisco” (Black).  At the end of that meeting with Keating, the cowed Wall ordered Mr. Dochow, the national head of supervision at the agency, to reach “an amicable resolution with Keating.”  That, of course, was only possible if the agency surrendered.  At Dochow’s formal recommendation, pursuant to Wall’s order, the regulatory agency took the unprecedented action of removing its regional regulator’s jurisdiction (Black and his colleagues) over Lincoln Savings and entered an agreement that was, effectively, a cease and desist order against the agency.  This surrender allowed Keating to stay in control of Lincoln Savings and greatly increase its losses to $3.4 billion – the most expensive bank failure in U.S. history until the current crisis.  Black and his colleagues’ testimony before Henry B. Gonzalez, the new, reformist chair of the House Financial Services Committee was instrumental in Wall’s decision to resign in disgrace and Dochow’s decision to resign his senior position.

Keating’s infamous order, in writing, to his chief political hit man was that his “HIGHEST PRIORITY” was to “GET BLACK … KILL HIM DEAD.”  (The original is in all caps.)

Black has helped the World Bank develop anti-corruption initiatives (and implement them in India), served as an expert for OFHEO (now FHFA) in its enforcement action against Fannie Mae’s CEO, assisted Icelandic and French leaders responding to their financial crises, and addressed members of the UN General Assembly on policies needed to reduce the risk of future financial crises.  Black has testified to Congress five times about the most recent financial crisis – on the subjects of financial derivatives, executive and professional compensation, Lehman’s failure and related regulatory failures, and the role of control fraud in the bubble and crisis.  He testified before the Financial Crisis Inquiry Commission about the epidemics of accounting control fraud that drove the crisis.

In 2015, he testified before the Irish parliamentary inquiry commission investigating the cause of Ireland’s banking crisis and assisted Ecuador in efforts against procurement fraud, money laundering and sanction violations, and cartels and other forms of anti-trust enforcement.

Black’s pro bono efforts to get the Department of Justice to prosecute the elite bank frauds that led the three great epidemics of “accounting control fraud” that drove the most recent financial crisis have been profiled in many publications.  The most recent is the February 2016 edition of the American Bar Association Journal.  His Ted Talk on the fraud epidemics that drove the crisis has over 1.3 million views.

Black appears regularly in “Bill Black’s Finance and Fraud Report” on the Real News Network.  His blogs can be found primarily on New Economic Perspectives (the blog of the UMKC economics department) where he is the editor-in-chief.

He is a regular at Kilkenomics – the annual festival of economics and comedy in Kilkenny, Ireland because he says that the Irish have decided that it (slightly) less painful to laugh than to cry.

His spouse of 36 years is June Carbone, the inaugural holder of the Robina Chair in Law, Science and Technology at the University of Minnesota’s law school.  This is why Black lives in Kansas City in the Fall semesters where he teaches at UMKC and then gets to spend winters in balmy Minnesota.  Yes, brilliant planning, and yes, June is the smart one.  They have three children.

Black is a founding member of the newly formed Bank Whistleblowers United that proposes practical steps to restore accountability to Wall Street elites and restore effective financial regulation.

Black continues to simulate being a soccer player.

He can be contacted at [email protected]
650.743-8835 and @WilliamKBlack

Bio: Richard Bowen Background   [email protected]

Richard Bowen has been described in the news media, including the Wall Street Journal, CBS Evening News, and 60 Minutes, as the Citigroup whistleblower who repeatedly warned Citi executive management, beginning in 2006, about risky business practices and potential losses related to mortgage lending.

His warnings included a November 3, 2007, email to Robert Rubin, Chairman of the Citigroup Board of Directors, the Chief Risk Officer, Chief Financial Officer and Chief Auditor. In this email, which was disclosed in public testimony, Mr. Bowen attempted to warn executive management and the board of directors about the extreme risks and potential losses to shareholders existing in his business unit. In this email Mr. Bowen also requested an outside investigation of his business unit.

Mr. Bowen testified before the SEC in July of 2008 and gave them 1,000 pages of documents. He also provided nationally-televised testimony on April 7, 2010, before the Financial Crisis Inquiry Commission about his experiences as Business Chief Underwriter for the Consumer Lending Group of Citigroup. In this position he had credit quality control responsibility over a business that involved the purchase and sale of $90 billion annually of residential mortgage loans. Mr. Bowen’s story has been widely reported in the news media and is also included in The Financial Crisis Inquiry Report, the congressional commission’s official report to Congress, the President of the United States and the American people.

Mr. Bowen’s experiences are also highlighted in the 60 Minutes story, Prosecuting Wall Street. “I started raising those warnings in June of 2006. The volumes increased through 2007 and the rate of defective mortgages increased to in excess of 80 percent,” Bowen told Steve Kroft in the interview that originally aired with 12 million viewers on December 4, 2011, and has since been re-aired eight times on CBS and CNBC. Additionally, details of the government cover-ups of Mr. Bowen’s testimony occurring at the SEC and FCIC were revealed in the September 22, 2013 New York Times op-ed Was This Whistle-Blower Muzzled? , and in a March 2015 Bloomberg TV interview Was there Wrongdoing in the Financial Crisis Mr. Bowen called for a Congressional investigation of the cover-ups.

Mr. Bowen has thirty-five years banking experience and has held executive positions in credit, finance, and information technology. Prior to Citigroup Mr. Bowen was Senior Vice President with Associates First Capital Corporation and Bank One Corporation and Executive Vice President and Chief Financial Officer of First National Bank of Oklahoma City.

Mr. Bowen is currently a professor of accounting at the University of Texas at Dallas and is a popular speaker in the field of business ethics. He has a BS in Mechanical Engineering from Texas Tech University and a Master of Business Administration from the University of Texas at Austin. He is also a Certified Public Accountant in the state of Texas, and was named 2012 CPA of the Year by the Dallas Society of CPA’s.

Mr. Bowen was also recognized in the May/June 2012 issue of D CEO magazine as the recipient of its 2012 Financial Executives Award for Excellence in Corporate Governance. And he was also featured in the cover story of the May/June 2012 issue of Workforce Management magazine.

Mr. Bowen is a founding member of the Bank Whistleblowers United.

Bio: Michael G. Winston

     Pulitzer Prize winning journalist Gretchen Morgenson of the NY Times profiled Michael Winston’s courage and integrity in an article entitled, “How A Whistleblower Conquered Countrywide” and Salon Magazine’s David Dayen profiled Winston’s story in a piece called “Wall-Street’s Greatest Enemy: The Man Who Knows Too Much.”

Michael tried to stop the fraud, corruption and deception he observed at Countrywide.  His warnings were dismissed or ignored by management. Instead of being rewarded for doing the right thing, he was punished, isolated, tormented, financially harmed and ultimately dismissed.

He took Countrywide and Bank of America to court for their unlawful business practices as well as retaliation. Over two years after winning a jury verdict described as “overwhelming” by the trial judge, the jury verdict was “tossed out” by an Appeals Court. There was no new evidence. It was a “cold case.” His winning jury verdict was reversed after a twelve-minute review in his absence.  He is a founding member of the Bank Whistleblowers United.

Before becoming a whistleblower, Michael Winston served with distinction in executive positions for over three decades in five Fortune 100 companies across three industries working closely with C-Suite Officers to develop business models, craft strategies and structure, create cultures and develop leaders.

     Serving in executive positions for Motorola, Merrill Lynch, McDonnell Douglas, Lockheed and Countrywide, Michael was hailed by Leadership Excellence as one of the “100 Most Influential Thinkers on Leadership in the World” for eight consecutive years. During his twelve-year career at Motorola he was known as the “Ambassador of Change.”

Winston is the author of the recently published book World-Class Performance.  He has extensive experience appraising and developing leadership, managing large-scale change and creating succession plans that ensure the vitality of a business. He has also provided strategic guidance to the CEO, Board of Directors and executive team on business planning, execution and human capital issues in all regions across the globe.

Serving as Distinguished Adjunct Professor at Stichting deBaak (The Netherlands) for 16 years, Michael has delivered many presentations on organizational ethics and principled performance.  Michael G. Winston was named “Best Instructor” at the University of Illinois and Pepperdine University.

Michael Winston holds a Ph.D. from the University of Illinois, a Master’s Degree from the University of Notre Dame and attended Executive Programs from Stanford University and the University of Pennsylvania’s Wharton School.

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