Wall Street was destined for where it is now,
with or without Lehman going out of business.
They were on a roller-coaster to nowhere.
It was a bubble that had to burst and it did burst,
and Lehman helped to burst.
I don't tell people I used to work for Lehman Brothers.
I don't tell people I was labelled
the Lehman Brothers whistle-blower.
I can't prove it, but I was blacklisted from Wall Street.
Justice to me is a whole host of things all happening
and I don't think they'll ever happen,
which is why I'm on my bike around the world.
To hell with everyone else.
Lehman had a reputation on Wall Street as being cowboys.
Their business practise was a bit aggressive.
I quickly learned the culture is that you don't tell people
what you're doing, you just make money.
I joined Lehman in 1994.
I was vice president.
You were on your toes.
You were watching your back.
You had to do the best.
There was just a certain vibrancy all the time.
But I enjoyed that.
It's difficult to describe an electric feeling, but...
I'd never felt so...
..intense, all day, as I did at Lehman Brothers.
It sounds crazy, but actually it was good.
I guess it's like a drug.
Another drug we were on.
At the top level of the corporation from Lehman Brothers,
people really believed in what they were doing.
They thought they were going to hit the home run, hit the jackpot.
Money was going to come flowing in.
Below that level, at middle management,
there were a number of people who were greatly concerned
and believed that Lehman
was putting itself at enormous risk, and that it could be a disaster.
My responsibility is to simply find the facts, the truth,
put them into a report
and then let others decide the consequences of that.
So the question was, what was it they were doing
and how did they end up in bankruptcy?
So we had to assemble a team with experts.
But the case was so sophisticated
that those experts ended up hiring professors and other experts
who then advised them so they could advise us.
I had no sense in the beginning of just how significant
the issue of Lehman's failure was
and how incredibly massive it was.
Lehman's bankruptcy involved almost $700 billion worth of assets
and the losses to the creditors, even today,
are in the tens of billions of dollars.
But it wasn't just the size of the bankruptcy -
it was that Lehman's was involved
in all aspects of the financial world across the entire globe.
So, when Lehman went into bankruptcy,
they took a lot of things with them.
And to some extent, they stopped a large part of the financial economy,
at least for a short period of time,
and we're still living with the consequences of that bankruptcy.
I started in late '97.
I had another job as a lawyer at a Wall Street law firm
and decided to leave there.
And, before I knew it, I was a Lehman Brothers lawyer.
They were known as this scrappy, newer bank.
It did have a reputation
as an exciting up-and-coming place to work.
It was known as one of the premier Wall Street banks.
The aim of Lehman Brothers was to make money
any way that we could.
You know, any way that could be done
without an undue risk of being caught or penalised,
we would do.
It was not about right or wrong.
It was about can we or can't we?
And if we could, we did.
Lehman began to get into the mortgage game early on.
They'd wanted to be on that entire chain,
to own an interest in that entire chain.
We did have one of the best real estate teams
and one of the best bond departments on Wall Street.
It was sort of natural
that Lehman would take a leadership role in that area and we did.
I started working in the mortgage industry in 1981...
..as a receptionist.
And I felt that it was really important to know more
about the housing industry,
because I know it's the biggest purchase in one's lifetime.
Being in the mortgage industry is like an addiction -
you never can really get out of it.
My job was to help people to fulfil the American dream...
..to have a home where a family can be happy.
Kids can lounge on the couch.
Being able to travel with them.
Being able to have outrageous birthday parties.
Being able to have a place
the parents could come to, and family.
That's the American dream for me.
So what I liked about the mortgage industry
was the freedom that it offered.
I was able to work the hours that I needed to
to be with my children as well,
so that was very, very important to me, and the income was amazing.
What you put in, your efforts,
you can make hundreds of thousand dollars a month.
It's not a big deal.
What can I do to make the same money
that I'm making in mortgage in another industry?
Where can I go without a degree?
I started somewhere from the bottom and worked myself up,
like I did in the mortgage industry.
So, yes, it was very good money.
I started at BNC in 2003.
My job was to solicit new brokers,
who solicit consumers
and, essentially, we're selling them the money,
and then we get paid from that.
What I remember from BNC is doing my background on them
because I needed to make sure they were stable
and that they were reputable, and I did the research.
I Googled them, of course, and they were owned
by Lehman Brothers, which, at the time,
was one of the largest financial institutions in the world
and so I felt very confident about making the switch.
Hi, my name is Dick Fuld.
Now's a terrific time to be joining Lehman Brothers.
I've been here 30 years and I can't think of a better time
for you to take part in the changes and opportunities
that are going on here.
I can assure you that you'll get more experience, more responsibility
and more opportunities here
more quickly than anywhere on the street.
This is Lehman Brothers and BNC, so I know this is a tight ship.
I was so proud, so tickled.
I worked on getting that job from November of 2003
and I was an underwriter.
When I got into the business,
underwriter's job was to go
into the file and either validate that they are lying
or that they have totally told the truth.
So an underwriter that never underwrites or approves a loan,
no-one is getting paid,
and that's what puts the target on our back.
That's what puts the pressure on us,
when there is a shop that are not
doing all of their deals on top of the table.
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In '01, '02, there was this expansion and development
of new forms of lending,
subprime lending,
and there was a realisation
that this was a market that could really be pushed up,
and Lehman was a big part of that wave.
But coming into the subprime market,
it was just a push,
just to get the loans in, just to get them in.
They targeted everybody who was ever gullible
and sales is sales.
You know, if you've got the gift of gab and you can talk real
good and convince.
Well, back in 2001, so-called subprime loans
made up just 5% of the mortgage market.
Five years later, it was up to 20%.
Tammy has a mortgage for those with low credit or high debt.
It's called a subprime mortgage.
Many of these loans entice borrowers with no money down
and low monthly payments, but can quickly adjust to far higher rates.
The higher the interest rate that they were charging
was more money for the broker to make
and then they would charge an origination fee,
like $2,000 or $3,000.
And then on that back end, with an interest rate that the homeowner
didn't know anything about,
you know, they could make up to nine, ten, 11, $12,000 on a deal.
And once the loan officers
and all of the parties involved administratively,
the company, once those cheques are cut
and everybody gets paid, nothing happens to them.
But you as a homeowner can't sustain your mortgage.
The 2008 crash is still a big open book
that people don't focus on.
I focus on it all the time
because I'm waiting for justice,
which hasn't happened yet.
Since 2008, nobody of importance has been convicted.
How do you make as much money as possible?
By going where no-one's gone before,
and you have to dream up
legal ways of making a lot of money
that to a lot of people, who have ethical or moral standards,
may seem quite illegal.
But if there's no law, it's not illegal,
so do it because you're going to make some money -
and investment banks operate in that fashion.
As that time went on, I kept having
these sort of troubling moments of,
"Wait a second. Is that really what I think it is?"
"Are we really doing what that looks like we're doing?"
And I started raising questions.
One of my bosses just told me,
"Look, these guys are here just to make money.
"Stop being a Boy Scout.
"Stop thinking they want to save the world
"or they want to treat everybody with respect.
"No, they're here to make money."
This is the time when I worked at BNC - I was so cute.
Some good times, till it got crazy.
Management would give us this thing to hang from the wall to tell us
what our office was to accomplish each month
and the goal would go up.
So let's start, like, two billion in volume, three billion.
There's Linda.
She had come out of her office for some loans.
So there's loan files over here and loan files over there,
loan files up here, loan files on her desk.
Files she was working on and who knows what else.
We had files everywhere on the floor.
And in this cabinet, it was just full of loan files.
So much to do.
So the volume picked up and, in order for them to meet their quotas,
they just started bringing in junk.
I always consider myself like an FBI agent
because I think it is my job
to make sure, number one,
that the information that they have indicated
in their documentation,
I verify that that is accurate.
So, no matter what the loan officer may tell you,
it's gotta pass the smell test for the underwriter.
And, unfortunately, a lot of the BNC paperwork
did not pass the smell test
and that was an all-day, every day occurrence.
BNC.
Ooh, this is the loan.
They've whited out the information here
and hand written in what they want me to know,
but they don't realise
that the average balance does not even support it.
If I gave this to Stevie Wonder, he'd pursue it.
And during that time,
it happened to be that I underwrote five files from the same broker.
So I took the five files, I went into my office.
When I got through the first one,
I'm calculating, I'm retaining information,
you know, and now I'm going to do the approval.
So I did the approval, wrote up the conditions on the first one
and then pull out the second one.
And the second one, the W2,
looked identical,
with the exception of the name, the social
and the party's name who it was to.
So then I said, "Hmm, it looked familiar."
So I picked up the file that I had already approved
and I opened it up, and it was the same W2 with the changes.
They didn't change the employer ID number,
so it was a different company with the same ID numbers.
So, now, really, all my senses are up now.
Like, what else is a lie in this file?
Then I picked up the third file.
"I wonder what's wrong with this one?"
Picked up the fourth file,
picked up the fifth file,
all from the same lender.
Oh, my goodness.
All fraud.
It's disgusting.
And I got a phone call from Linda Weekes,
that I needed to come into the office immediately.
So I come in, I sat at her desk and she shows me two files
from my brokers, from my clients, and she says,
"I want you to look through these files.
"Take your time and tell me what you see."
So I'm looking through it, and I go to the other file,
and I flip through it and the tax numbers are the same,
but the companies are different.
My goodness.
And so I said, "OK, that mortgage company is committing fraud."
And so I got another file the following day
from that same office.
I was looking through it
and there was a gentleman who they claim worked
at Kentucky Fried Chicken, which he did,
but that he was earning $7,000.
And so I got in my car with that information,
went to that Kentucky Fried Chicken,
spoke to the owner and said,
I would like to apply for the job that pays $7,000 a month in salary.
And he looked at me from behind the counter, and he said,
"I would like to have $7,000 a month from this business."
It doesn't happen.
What I did not know is that someone in our office had contacted them.
At that time, I got an e-mail sent to me
that was not supposed to come to me.
And what the e-mail said
is that we need to keep this company going,
and so this was a corporate approval of them committing fraud.
I realised that the entire corporation was corrupt...
..and they don't want me to know about it.
Lie after lie after lie.
If we get this right today,
hopefully we'll squeeze some of those shorts.
Squeeze them hard.
AUDIENCE LAUGHS
Not that I want to hurt.
Don't get that, please, cos that's just not who I am.
LAUGHTER
Very few people ever saw Dick Fuld in the flesh.
He was like Big Brother.
Every quarter, he'd give us a speech
and we'd tune in on our computer screens.
And here was Big Brother saying,
"You've done a great job, but it's not good enough.
"Next quarter, we want more."
I am soft, I'm lovable.
But what I really want to do is,
I want to reach in, rip out their heart and eat it before they die.
LAUGHTER AND APPLAUSE
Lehman Brothers was Dick Fuld's life...
..and he was considered one of the most brilliant men on Wall Street.
He was the longest-serving executive
in any investment house on Wall Street.
In that year, he was named one of the top executives
in the United States,
the very same year of the bankruptcy.
And he led Lehman Brothers to record years, record earnings, record
bonuses for its executives.
He was described to me by Secretary Paulson as the eternal optimist.
He said, "If Dick Fuld was fishing and he had a nibble
"on the line, he was already filleting the fish,
"believing he'd already caught it."
He had this reputation of being a ruthless guy,
whatever that means.
Does that mean willing to break the law wherever he would? Maybe.
In my view, apparently.
That's what it looked like to me.
Or maybe it just meant he was very aggressive in trading
and was very good at making money for his employer.
That probably, too. He was known as The Gorilla
and this ripping of the heart out thing
is just another dimension of that reputation.
I want to reach in, rip out their heart
and eat it before they die.
When I saw this video of Mr Fuld giving this speech
about how if anybody gets in your way, anybody says anything,
your job is to kill him, to get rid of them,
the wave of reality that came over me was horrifying.
He was famous for being reclusive, up on the 31st floor, in the end.
He had his own elevator.
And he'd walk in and he'd stand in the corner
and not interact with anyone,
just kind of glare.
"I'm the chairman. Don't look at me. Don't talk to me."
AUDIO OF FULD: And eat it before they die!
See, when you're a public company,
the top five executives of the firm
have to show all of the compensation that they are paid
and you have to disclose the numbers, the value.
And we were basically hiding certain of those awards through a loophole,
a technical interpretation of a law of the rules,
and my bosses said this loophole covers us.
So let's say for the CEO, Dick Fuld,
we would disclose, a year later,
30 million, and he really got 35 million.
And it was just because they wanted more
than they thought the shareholders would approve.
The numbers kept getting bigger and bigger.
It was a source of constant bother
and finally, in 2006, I said, "Enough."
I'd take pride in my job,
so when I started looking at the documentation
and noticing some discrepancies, I would question it.
Then my manager started taking these particular accounts away from me
and passing them on to another account manager.
My volume decreased, slowly but surely.
I started questioning myself
because there was always something changing.
You could just feel the tension,
so it just got to the point
I dreaded.
I decided to call the senior vice president
and it went from bad to unimaginably worse.
One morning I went into the office and I said,
"Hi, so-and-so, do you have my files?"
"No. Haven't seen them. Don't know anything about them."
Went to the next person - there were five processors.
"No, I haven't seen them. Don't know anything about him."
I'm like, "OK, am I losing my mind?"
How is it possible that 30-plus million dollars
in loans are disappeared?
No, nobody's seen them.
The manager of the office came up to me and he said,
"Well, they're not here and you're responsible."
And what they wanted to do to me was to destroy my credibility,
so, if I went to a new job, a new employer, and told
them what happened, there would be no basis
because my credibility is tarnished,
because I lost files, which is impossible to do.
No more. I don't want to look at them.
SYLVIA CRIES
Then we had the new group of people coming into the office.
New management comes in, things start changing.
They walked in our office like the Mafia.
They were like arm-to-arm, marching in, like,
"We're taking over the world."
And so the gentlemen that they brought into the office pool
had no particular job title.
He was a grimy guy, just not professionally dressed,
hair messed up, not groomed.
And he would just walk around the office,
which was a small office.
"Well, what is he doing? Well, what is his job?"
I remember sitting at my desk and he had his chair,
and he kind of had a leg here, close to mine.
And then that's when he's kind of breathing,
giving me the heavy breathing.
I could hear.
And then, again, he was talking about African-American women
and what he heard that they're good about and was I like that?
You know, just being very sexual,
which was just totally out of place.
And it's like, "Urgh!"
You know?
On the particular day I was leaving the office,
I got to the person who would harass me and threaten my life.
I shook hands with him and, when I went to leave,
he wouldn't let go of my hand.
He pulled me towards him and whispered in my ear,
he said, "I know everything about you.
"I know where your daughters go to school.
"I know where they live.
"I own you."
People that are like them, who hire people to come in and do dirty work,
that those people want to see you down.
They're not going to shoot me.
They're not going to run me off the road.
They want to see me be afraid.
I came home and plants were moved around on my porch,
screens were torn.
Things in the garage were moved out.
So people were letting me know, "Hey, we've been at your house."
It's a devastating way to live.
And my children, they said,
"We don't like this new you. We just want our mum back."
My attorney, my trainer, all told me,
"Change your ID and move away.
"Move to another state."
And I looked around and I said,
"You know what? I'm not running from anybody."
I am not going to run.
I've never had a case anywhere near like this.
I've been doing this for 50 years - never seen anything like that.
What's interesting, these women did not know exactly
what was happening to each of them.
They had not sat together and planned this.
All of a sudden, when they realised that the same harassment,
the same problems,
the same complaints about the mortgages were happening,
they came together and said, "This is wrong."
If you talk to these women,
you know how serious this has been for them
and what it's caused them.
Our claims are currently worth $27 million.
I think they're worth every dime of that
because these women's lives have been ruined by this.
And how much money is it worth to have your life ruined?
To stand up for what you believe in and what's right?
The first time that BNC came on my radar
was when I read the papers
about the alleged mortgage fraud in California.
So, as soon as you heard that,
I went to my boss saying, "Did you hear about this?"
And the answer's "yes", and nothing's said.
So you knew that the papers were right,
and don't ask questions.
The total assets of Lehman Brothers
were about $1.5 trillion.
But then they had derivatives,
which work in what's called notional value,
and they had even more trillions.
Through 2005 into 2006, at Lehman, everything was fantastic.
Everything was green, green, green.
And then small things happened,
not so much in Lehman Brothers,
but you knew that the real estate market
and mortgages were too good to be true.
But a lot of homeowners in this country
are under tremendous stress right now.
Foreclosures across the country are up a staggering 87%
over this very same time last year.
Those falling home prices are like an infection
now spreading throughout the US economy.
It's a war out there.
I mean, these people are losing homes every single day.
There is one faucet for the entire camp
of potable water, which is right here.
OK.
Do you run into a lot of traffic down there?
No, well, I mean, not that much.
Traffic, but not that much traffic, though.
The pressure of work, it got to be a very heavy burden on me.
So, when I went to the doctor, my blood pressure
was up a little bit and stuff like that,
and he goes, "I'm just taking you off work,
"so you can just kind of breathe and relax."
I had the opportunity of having an interview
while I was out on break,
which was a good thing, and was offered the position.
And I was like, "Great, yeah" - you know?
So when I came back to work after being off,
I went to another account manager
and as she told me, "Well, I was told not to give you any loans."
It's about 11 o'clock.
I report to work at 8:30.
No work. I'm just sitting there. No phone calls, nothing to do.
And then my regional manager said, "Cheryl, I need to talk to you."
She says, "I have HR on the phone."
I said, "Oh, really?"
And I said, "Oh, great."
And then I handed them my piece of paper.
And so when my regional manager looked at it, she's like,
"You quit?"
"Yes, I quit."
And she said, for some reason, she says,
"I don't think this is it. This is over."
Yes.
The Lord is good, I need God in here.
GOSPEL SINGING
After I left BNC, I remember one day sitting on my couch,
calling the new supervisor at the other job,
trying to find out when I was going to start.
And then they said, "This time we've changed our mind,
"we're not going to hire you."
I was in a panic.
I was in a total panic, like, oh, my gosh.
The bottom fell out.
14.8 million American adults
suffer with depressions.
Right. Amen.
And then I eventually lost my place.
I got evicted because I couldn't pay the rent any more.
I lost my car.
I was four months to paying my car off...
..my very first car that I bought by myself.
The car that repossessed.
And I couldn't send Sean off to school.
And, to this day, he'll say it didn't bother him,
but I know it did because he kind of blamed me
for not being able to pursue his career.
Amen. Amen.
And by 2007, you knew things were going downhill.
And then our financial year was November 30th, 2007,
and we had a record year, the best year ever at Lehman Brothers.
And I couldn't believe it.
I thought, um...
..things should be much worse.
Lehman, in the spring of 2008, issued its very first losses
that they'd ever incurred and they needed to have
something positive to say to the market.
The only way that Lehman could get rid of assets would be to sell them.
The problem was that the assets they had no-one wanted to buy.
So, what they did was they came up with a gimmick.
It was called Repo 105.
Repo 105 was a method of hiding how much you've borrowed
because stockholders didn't want to see Lehman had borrowed
as much as it had actually had, and rating agencies,
for purpose of determining how much Lehman paid on its borrowings,
didn't want to see that it had borrowed too much.
It was a way of returning borrowed money for a few days
and then taking it back again.
It's saying, "We've reduced our balance sheet
"because we sold all these bad mortgages."
But, in fact, they'd sold nothing.
And what it involved was
transferring $50 billion worth of assets off of the balance sheet
at the beginning or end of each quarter,
just before the reporting would be made public,
and, by doing so, reducing the balance sheet
by taking $60 billion off it.
Assets were transferred from the United States subsidiary
to the British subsidiary, engaging in repo transactions there,
where the repos could then be considered as sales
rather than simply loans, as they were in the United States.
And, a few days after the quarter, the moneys were simply reported,
returned back to the United States and put back on a balance sheet.
And every time they did it, commentators, TV personalities
would say, "Well, Lehman is getting better, look.
"They've got rid of all of this these assets" -
and the answer is they never had.
To me, that was illegal. I'm not a lawyer, but that was wrong.
That was not a grey area - it was red, with bells ringing.
Lehman were hiding all kinds of compensation, OK?
Certain stock awards were being hidden
and not being disclosed to the public
because we had found this loophole then.
But then the rules changed.
At the end of 2006, the rules now made it very plain.
All of it must be out there, in front...
..and I couldn't wait to see it.
When finally the booklet, it's called a proxy statement,
containing this compensation information, came out in March 2008,
so I had already been away for two years.
And I opened it up and I'm like,
"Where is it? Where did it go? They didn't put it in there!"
They didn't follow the new rules.
It was stunning. It was amazing to me.
He was holding 409 million and they disclosed 146 million.
They hid $260 million worth of stock awards -
that's how big it had gotten.
And so I brought that to the SEC in April of 2008.
The Securities and Exchange Commission is the regulator.
It's like the police of Wall Street.
So, I gave them all this information that said, "Hey,
"the Lehman executives have been lying
"about their compensation for years.
"Here is the hidden stuff, here is the value today,
"and they completely ignored me."
Just silence.
I'm still waiting.
And I thought, "What can I do? What can I do?"
I didn't really have much faith in the SEC
and then I remembered this code of ethics.
The code of ethics was telling me I've got to write it a letter
because you know something and it is your duty.
So, I sat down on Sunday afternoon with my computer
and I wrote out the letter.
"During my tenure with the firm, I've been a loyal and dedicated
"employee and always have acted in the firm's best interests.
"I have become aware of certain conduct and practises, however,
"that I feel compelled to bring to your attention.
"The firm has tens of billions of dollars of unsubstantiated balances,
"which may or may not be bad or non-performing assets,
"or real liabilities.
"Very truly yours, Matthew Lee."
We had this individual who wrote a letter complaining that, in fact,
Lehman Brothers was making their books look better
than what they were.
So, I sent two young lawyers from general, very young lawyers,
out to interview this person, and they came back
and they said, "We think he's telling the truth."
And I said, "I just don't... I can't believe Lehman would do something
"like he's describing the letter."
And then, finally, they came in with a series of e-mails,
which involved some of the senior people describing this process as,
you know, a gimmick, a drug we are on.
You know, all those sort of things.
And I realised that, in fact, what he had been saying was true.
I was sitting in my office, I had a round table in my office,
and there were about five people and we were on the phone to Brazil,
and my phone went and I saw it was my boss.
So, I swivel my chair and I picked up.
I said, "Look, I'm in a meeting. We're discussing this."
And he said, "Come right away."
So, I had to get up.
And I went down to his office and he just said, "You're fired."
Good evening, everybody.
The worst financial crisis in decades today sent
political and economic shock waves throughout the country.
Lehman Brothers, one of the oldest institutions of its kind,
filed the largest bankruptcy in US history.
New York investment bankers, once called the Masters of the Universe,
were sent packing, humiliated.
I never for a minute thought that Lehman would go bankrupt
and, when it did, I was as amazed as anybody else was.
They may not have been doing the loans like I was in operation,
probably in another aspect of Lehman,
but, because of their actions, these big people of Wall Street,
their actions, you affected so many people's lives.
And, as financial market convulsions raced around the world
like a tsunami...
Markets were sinking around the world, dramatically.
Take a look at this.
Nothing like this has ever happened before.
The United States, Canada, the United Kingdom,
Sweden, Switzerland, European Central Bank, even China.
It made me feel like is that they're just running.
They're just... They've taken all the money they want.
They've drained everything they wanted to drain
out of that company, a handful of people,
and left all the other people there to figure out
what they were going to do with the rest of their lives.
Lehman Brothers' former CEO, Richard Fuld, is living pretty.
A multi-million dollar estate in Florida.
A $21 million apartment on Park Avenue.
Another lavish estate in Greenwich, Connecticut.
But now he's on the hot seat.
If you haven't discovered your role, you're the villain today.
Your company is now bankrupt, our economy is in a state of crisis,
but you get to keep $480 million.
I have a very basic question for you - is this fair?
Did you mislead your investors?
And I remind you, sir, you're under oath.
No, sir, we did not mislead our investors.
When we started interviewing the witnesses,
what surprised me the most was everyone wanted to talk.
And you know what they wanted to say?
They wanted to say, "It wasn't me."
I spoke with Dick Fuld for maybe up to 15, 18 hours
and he answered every question I put to him and volunteered information
every step along the way.
And his position was the position of everybody else
that we interviewed - it wasn't him.
He did not cause the disaster.
I asked him whether or not he was aware of the views
of some individuals within the corporation
that the risks were too concentrated
and that they had exceeded risk limits -
and he made clear he was.
I asked him why he didn't rely on that in making his judgment
and he said, "Do you think I'm foolish?"
I mean, no living, breathing, human being lost more money
than Dick Fuld lost.
And he pointed out to me, quite accurately,
none of those individuals had made billions trading stocks, bonds
and other securities.
None of them had headed major corporations in the financial area
and brought them to the success
that he had brought to Lehman Brothers.
What led to the '08 crisis?
First, was the build up of the US bull market mentality.
Now, I'm going to try to run through these quickly.
It's not just one single thing.
It's all these things taken together.
I refer to it as the perfect storm.
But it starts with the government -
pushed for non-qualified homeownership.
The government clearly had the view they wanted everybody to be able
to fulfil their view of the American dream.
The actual documents we reviewed probably was in the range
of 30 million documents during that period of time.
What we found was that both the Securities and Exchange Commission
and the Federal Reserve Bank had put personnel on premises
with Lehman Brothers.
Lehman Brothers provided every single document
the regulators asked for.
The SEC, as well as the Federal government,
knew that risk exceedances were taking place
as they were occurring.
They saw the documents and the materials, which reflected that,
and yet nothing was done.
Why?
The Securities and Exchange Commission did not understand
what they were looking at.
They did not understand the documents
and the impact of these documents.
And then the very day that one of the SEC lawyers finally looked
at what they had and he wrote an e-mail, which was spectacular,
because what it says is, in essence,
"Oh, my God, look at this. This could be a problem."
And, indeed, it was.
24 hours later, they were in bankruptcy.
The SEC does not work properly and it hasn't in a long time.
The major problem is the top people are brought in
with every new president.
They are not people who have worked their whole lives in this area.
They normally come from Wall Street.
They are defending banks who are accused of bad behaviour one day,
and then a new president is elected and the president picks two friends
and he puts them into the SEC
and other friends into the Department of Justice,
and these become our top cops, the top police.
Well, now, instead of prosperity trickling down,
the pain has trickled up from the struggles of hardworking Americans
on Main Street to the largest firms on Wall Street.
This country cannot afford
four more years of this failed philosophy.
In the beginning of 2009, Obama was elected
and so he brought in his new people at the SEC.
You have a director, the boss, the top boss,
the CEO of the SEC, if you will.
And then there is something called the director of enforcement,
and so he's in charge of doing the investigations.
The guy that they put in was a lawyer from Deutsche Bank
and Deutsche Bank is one of the biggest banks
involved in the crisis, OK?
And, furthermore, Deutsche Bank is one of the banks
that was most involved with Lehman Brothers.
And then we expect him, as the director of enforcement at the SEC,
to now go and investigate Repo 105.
This is never going to happen, never going to happen.
And close the book.
No charges on Repo 105 against Lehman.
No charges on anything against Lehman Brothers.
As time went on and we came out of the recession,
they were beginning to have some money, and so we were contacted
by the lawyers for Lehman Brothers
and they said they wanted to settle our case.
So, we had high expectations, finally,
that we were going to get justice and get a fair settlement for them.
It didn't turn out that way.
We have been fighting this case in bankruptcy
for all these years since 2008
and Lehman keeps saying, "Well, there's another claim out there
"that's going to eat up all your cases."
Wells Fargo, USB and other banks that claimed that
there was mortgage fraud by Lehman, which, of course, there was,
and that they're talking about paying $2 billion
to all these big banks who claim that they lost money
on this mortgage fraud.
They don't want to pay us because it's going to make news.
And, if they are so willing to bale out the banks
and protect all of the crooks that stole so many people,
that they still haven't recovered.
And I see it often that many homeowners were displaced.
Their children were yanked out of the schools
that they had grown accustomed to.
They were in their car or in shelters
while the biggies get their money, got bailed out,
got parachutes, millions of dollars.
What Lehman did here was they looked for an edge
and there are people out there who are still doing that,
and the question is, have we regulated them
so that they're, you know, in their headlong search
for that big profit,
that they don't take the rest of the economy down with them?
These guys, Lehman Brothers, it's right there.
It's right there because they changed who I was.
They didn't get my soul, but they changed who I was.
There is no money that's going to compensate me, ever.
What would compensate me, what would make me feel good,
is if the people from the top were punished...
..and that's never going to happen.
I have no regrets about writing that letter.
Would I do the same thing?
I wish I could have done more,
but I did what I did.
Whistle-blowers get crushed, swept under the rug.
Forget about them.
Let's move on.
I'll never go back to New York.
I'm going to keep going on my motorcycle...
..for as long as I can.
We did not mislead our investors
and, to the best of my ability, at the time,
given the information that I had,
we made disclosures that we fully believed were accurate.
Live from the financial capital of the world...
This is, truly, a great day for America
and a great day for American workers and small businesses
all throughout the nation.
The legislation I'm signing today rolls back the crippling Dodd-Frank
regulations that are crushing community banks
and credit unions nationwide.
They were in such trouble.
They should be regulated the same way,
with proviso for safety,
as in the past, when they were vibrant and strong.
By liberating small banks from excessive bureaucracy,
we are unleashing the economic potential of our people.