Wall Street Fraud

So who were some of the key figures behind the greed and deception that led to the government bailout of Wall Street and the $700 billion price tag that was hung on American taxpayers in the process and where are they now? Here’s a hint; you won’t find any of them in prison.

John Thain – Former COO of Goldman Sachs, former CEO of the New York Stock Exchange, and the CEO of Merrill Lynch when it was sold to Bank of America on Jan 1, 2009 for over 70% above the market value. That sale led to the near collapse of Bank of America when Merrill Lynch announced a quarterly loss of $21.5 billion just two weeks after the deal was closed and was a key contributor to the government decision to loan the bank $45 billion to keep it afloat. Thain is infamous for paying Merrill Lynch employees over $4 billion in bonuses just prior to that sale and for spending over $1 million renovating his Merrill Lynch office a year prior including a $31,000 toilet and a $1,100 trashcan.  So where is he now? Although threatened with investigation in 2009, Thain was named CEO of CIT Group in early 2010 and remains a free man that no doubt enjoys the hundreds of millions of dollars he “earned” during his time at Merrill Lynch.

Angelo Mozilo – Former CEO of Countrywide Financial until its sale to Bank of America in 2008. Mozilo was the driving force behind the subprime lending trend that allowed U.S. homebuyers to purchase property they generally wouldn’t have been able to afford based on ignoring the buyer’s income and foregoing down payments. It’s estimated Mozilo’s personal income from that business during the housing bubble of 2001-2006 was nearly $500 million. Mozilo was investigated for fraud and during that investigation it was learned that his “VIP loans” program that offered unheard of rates to influential political and banking figures included the CEO of Fannie Mae, Frankin Raines, the son of former Speaker of the House, Nancy Pelosi, and former Senator and chairman of the Banking Committee, Christopher Dodd. Mozilo eventually paid $67.5 million in fines and agreed to a lifetime ban from serving as an officer or director of a public company, but all criminal charges were dropped in early 2011.

Charles “Chuck” Prince – Former CEO of Citigroup before retiring in 2007 due to the huge losses the firm suffered under his leadership as he invested in mortgage backed securities and collateralized default obligations (CDOs). His mismanagement led to a government bailout of $45 billion the following year yet Prince still walked away from the job with $150 million in stock options and salary. When asked by the Financial Crisis Inquiries Commission (FCIC) why he green-lighted such obviously risky investments, he responded “as long as the music is playing, you’ve got to get up and dance. We’re still dancing.” Prince still serves as a consultant for Citigroup even to this day.

Joseph Cassano – Former AIG officer who spearheaded the development and sales of credit default swaps. This new method of “creating wealth” through insuring derivatives without putting up any real collateral netted Cassano $315 million in personal income during his 21 years with the company despite the devastating repercussions to the investment industry and American economy when the bubble burst in 2008. Although threatened with investigation, Cassano has yet to be charged with a crime and is living quite comfortably outside London, England.

Raymond McDaniel – CEO of the credit ratings giant, Moody’s. The massive sales of the subprime mortgage-backed securities that brought down companies like Lehman Brothers and Bear Sterns wouldn’t have possible without the favorable credit ratings given by the big three ratings agencies including Moody’s. Paid for by the fraudulent firms that were selling them, McDaniel and his company provided these ratings despite the obvious risk of subprime defaults and grew their own revenue from $600 million in 2000 to over $2 billion in 2007 as a result. Although questioned by the government’s FCIC, McDaniel retains his position as CEO and his 2010 estimated compensation package was over $9 million.

Dishonorable Mention:

Alan Greenspan – Former chairman of the Federal Reserve

Hank Paulson – Former CEO of Goldman Sachs and Secretary of the Treasury

Deven Sharma – Former President of Standard & Poor’s

Stephen W. Joynt – President and CEO of Fitch Ratings

Christopher Dodd – Former Connecticut Senator and chairman of the Congressional Banking Committee

Phil Gramm – Former Texas Senator and one of the major contributors toward bank deregulation

Maurice “Hank” Greenberg – Former CEO of AIG