This son of a Bronx butcher earned over $500 million by inflating the subprime mortgage bubble to the bursting point. An equal opportunity exploiter, Mozilo made homes available to every American who could not afford them, regardless of racial, social, or economic background.
Mozilo pioneered the subtle, bribery-based "Friends of Angelo" list, which included Senators who pushed both legislation to keep Countrywide afloat and the company's eventual fire sale. He also earned $140 million selling Countrywide stock while the company collapsed, because he secretly changed company rules and lied to investors, regulators, and employees. Shrewd:Sharing information would have ruined his income.
This February, Federal prosecutors dropped their only case against Mozilo. Angelo Mozilo is not now, nor will he ever be, in prison.
Joseph Cassano, Head of Financial Products at AIG
Cassano began his career at Drexel Burnam Lambert, under the tutelage of the junk bond king, Michael "A decade later and he'd have gotten away with it" Milken. AIG made billions underwriting and insuring complex multi-layer derivatives and securities…all of which, of course, were based upon nothing but the dreams of the ignorant and poor. Cassano told a few white lies, publicly stating he didn't think there'd be any loss, even though he did: "It is hard for us, without being flippant, to even see a scenario…that would see us losing one dollar." To his credit, they lost much more than one dollar, so there really was no reason to be flippant.
Cassano also routinely blocked internal and external audits of his unit, because, as all Unjailed Americans know, truth is the enemy of profit.
While taxpayers got the bill for bailing out AIG, Cassano walked away with over $300 million, plus a modest multi-million dollar severance package. Oh, and Cassano, he's not in jail.
Franklin Raines and Daniel Mudd of Fannie Mae
Fannie Mae and Freddie Mac are the nation’s largest mortgage buyers: Between them, they own about half of the nations $12 trillion in mortgages. Until their recent U.S. takeover, they enjoyed quasi-government status and support, so, of course, Raines and Mudd made sure to enrich shareholders and executives at the public's expense, all while steering the nation on a course of ruin.
Under Raines ('99-'04), Fannie began pushing subprime mortgages onto those who couldn't afford them. Under Mudd ('05-'08), Fannie began purchasing securities backed by those same subprime mortgages. These were the securities whose inevitable collapsed ruined the world. They made the loans that made up the securities that made up the made up earnings that made up their very real pay.
How real? Mudd earned about $80 million working at Fannie. Raines got a $148 million severance and a mortgage from the "Friends of Angelo" list. He also oversaw an accounting scandal that forced Fannie to restate three years of false earnings reports. Raines paid a small fine and Mudd is now CEO of Fortress Investment Group. Neither Fortress nor a fine, our astute readers will note, is jail.
Timothy Geithner, Secretary of the Treasury
As head of the New York branch of the Federal Reserve in 2008, Geithner oversaw the juiciest parts of the AIG bailout-slash-boondoggle. He's one of the most subtle Un-Jailed Americans working today.
After taxpayers gave AIG $170-plus billion, it overpaid banks like Goldman Sachs and Deutsche Bank $62 billion for derivative products which were, not coincidentally, insured by AIG. These derivates were worth so little that the payment saved-slash-earned those banks at least $13 billion. It was, essentially, a backdoor bailout.
Seems like a standard stupid-slash-self-serving move, until you realize that Timmy's New York Fed forced-slash-pressured AIG to keep details of the transaction hidden from the public… The public that paid for them. The NY Fed thought disclosing AIG's bad business might harm AIG's ability to do business - bad business - much like disclosing an affair harms a man's ability to get some on the side.
The NY Fed's veil of secrecy kept AIG's questionable move hidden long enough to take root. So, while Geithner didn't personally steal public money, he enabled powerful financial forces to do so with neither disclosure nor repercussion. For that, he remains, not in jail.
Moody's Chairman Ray McDaniel and Standard & Poor's President Deven Sharma
The derivates market collapse was amplified by these rating agencies which rated complex subprime vehicles like CDOs and SIVs very highly… Just like they gave Thailand an investment grade rating until 5 months after the Asian financial crisis… Just like they gave Enron investment grades until days before its bankruptcy … Just like … Heck, S&P thinks the Alan Keyes/Mike Gravel '08 ticket will win the White House.
How common were their poor ratings? Over 90% of the AAA ratings given to subprime securities in 2006 and 2007 were later downgraded to junk status. These rapid, last-minute downgrades shattered investor confidence and triggered the market collapse.
Moody's and S&P knew these products didn't deserve high ratings and that providing them was something between negligence and fraud, but, apparently money calms the conscience. Moody's and S&P were paid to rate products by the very firms who would profit from their ratings. No high ratings, no business. This "conflict of interest" became a "confluence of opportunity" as most conversations between the issuers and the raters went like this:
"I want to sell this pile of turds. I'll give you a million dollars to decide what it's worth."
"Hey everybody! Hurry up and buy this lumpy brown gold!"
It's just like when Arthur Andersen was paid by Enron to audit and approve Enron's accounting scams. Two differences: Arthur Andersen was dissolved for being an accomplice to fraud and when Enron eventually collapsed, it only ruined Houston.
Ironically, S&P recently threatened to downgrade the United States government rating because of the effects of the financial crisis…a crisis largely caused by S&P and Moody's, whose leaders are not in jail.
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