Testifying recently before a Senate panel, the U.S. Treasury Secretary Timothy Geithner hailed progress in “repairing and reforming” the financial sector since the passage of the Wall Street reform act two years ago. Geithner’s sunny take sits awkwardly with the recent news that large international banks conspired to “fix” the LIBOR, the interbank loan rate, and that a leading American bank, J.P. Morgan Chase, lost almost $6 billion of dollars on botched trades – revelations that, as former Sen. Chris Dodd (of Dodd-Frank fame) wrote last month, “makes the strongest case … for strong oversight of Wall Street.”
But why, four years after large banks brought our economy to the brink of disaster, are we still reading about fraud, deceit, and reckless gambling by leading banks? The answer is partly that Wall Street has done everything in its considerable power to shred financial reform. But another big reason is that the Department of Justice has failed, inexplicably, to tap into the intelligence that financial whistleblowers like myself have tried to offer them.
As a Countrywide Home Loans executive in 2007, I supervised fraud investigators and reported to federal regulators and the company’s Board of Directors. That year, our investigations showed that commission-hungry Countrywide loan officers routinely forged borrowers’ signatures and doctored income and asset statements.
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