Subprime Execs From 2008 Are Alive and Well at Wall Street's Big Banks
Friday, 02 Aug 2013 07:54 AM
Bears Stearns failed in 2008 under the weight of billions of dollars in mortgage-backed securities that its customers and creditors concluded were not worth what the bank maintained.
Today those executives hold senior roles at JPMorgan Chase, Goldman Sachs, Bank of America and Deutsche Bank.
"The fact they were able to emerge unscathed from a financial crisis that wiped out $19.2 trillion of household wealth in the U.S. and as many as 8.8 million jobs has become part of the legacy of the financial meltdown," The Center for Public Integrity stated.
Four of the executives — Thomas Marano, Jeffrey Verschleiser, Michael Neirenberg and Jeffrey Mayer — have been accused of making false statements to federal regulators in a lawsuit by the Federal Housing Finance Agency (FHFA), the news organization said. All four denied the allegations in their response.
Two other of Bear Stearns' mortgage division leaders, Mary Haggery and Baron Silverstein, were not named in the FHFA lawsuit.
Separately, AMBAC Assurance Corp., which went bankrupt after guaranteeing some of Bear Stearns' mortgage bonds, accused the firm of fraud in a lawsuit that described alleged actions by all six executives.
"How is it that we could say that we learned something from the last crisis when we still have the same people running our companies for the future?" asked Jordan Thomas, a former attorney for the Securities and Exchange Commission who now runs the whistleblower practice at a private New York law firm.
Marano has earned more than $29 million in the past four years as head of Residential Capital LLC, the mortgage subsidiary of the former General Motors Acceptance Corp., which obtained a huge federal bailout, The Center reported. Residential Capital itself filed for bankruptcy last year.
Verschleiser jumped to Goldman Sachs in 2008 as a managing director and was promoted to global head of mortgage trading last year, according to the news agency.
Nierenberg and Silverstein now work together at Bank of America's divisions that issue mortgage-backed securities and collateralized debt obligations — two instruments that figured prominently in the financial crisis.
Meanwhile, Haggerty works in an executive role at JPMorgan and Mayer has a senior role at Deutsche Bank.
The news service concluded that as of today, there have been "few meaningful prosecutions or regulatory actions against any individuals who were in positions of power during the financial crisis."
On Wednesday, a federal jury in New York found former Goldman Sachs trader Fabrice Tourre liable for misleading investors in a crisis-era deal that cost them $1 billion, The Wall Street Journal reported.
Tourre was a mid-level figure at Goldman, and not regarded one of Wall Street leaders who helped play a prominent role in the 2008 meltdown.