By William K. Black
Quito: March 20, 2015
This is the first of three columns prompted by Richard Bowen’s interview this morning on Bloomberg. Richard Bowen, a Citi SVP, blew the whistle within Citi on Citi’s massive fraudulent sales of fraudulently originated mortgages, primarily to Fannie and Freddie. Even Attorney General Eric Holder now repeatedly labels these mortgages “toxic.” Had Citi’s leadership been honest, Bowen’s warnings could have substantially reduced the three fraud epidemics driving the financial crisis and Bowen would be one of Citi’s most senior leaders. No spoiler alert is required because even my readers who know anything about Bowen know how the story actually ended. Citi’s senior managers did not ignore Bowen’s warnings – they actively made the frauds he documented worse and they destroyed Bowen’s distinguished career in banking. Citi, Fannie and Freddie, and Treasury lost billions of dollars and Citi’s senior officers were made wealthy by the “sure thing” of the accounting control fraud “recipe.”
