[Music] bye [Music] uh [Music] so i'm on 10 acres it's all wooded i could stand in this house and scream and nobody will come i went to work in 2003 of lima brothers completely a normal person [Music] this is where i ended up having to learn to be able to kill somebody with my bare hands [Music] [Music] uh 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 it burst [Music] i don't tell people i used to work for lincoln brothers i don't tell people i was labeled the lehman brothers whistleblower [Music] i can't prove it but i was blacklisted from wall street so what i did was i sold my house i bought a motorcycle and i just travel all the time now justice to me is a whole host of things all happening and i don't think they'll ever have which is why i'm on my bike around the [Music] world the lehman had a reputation on wall street as being cowboys their business practice is a bit aggressive i quickly learned the culture is that you don't tell people what you're doing you just make money [Music] 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 um i'd never felt so uh intense all day as i did at lehman brothers it sounds crazy but actually 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 in 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 that 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 [Music] i had no sense in the beginning it's just how significant the issue of lehman's failure was and how incredibly massive it was [Music] lehman's bankruptcy involved almost 700 billion dollars 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's 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 in 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 uh decided to leave there and before i knew it i was a lehman brothers lawyer did have a reputation as an exciting up-and-coming place to work they were known as the scrappy newer bank it felt good i didn't know anything at that point i thought nothing but the best i had the highest hopes [Music] 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 penalized 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 so why not it was sort of natural that lehman would take a leadership role in that area and we did [Music] i started working in the mortgage industry in 1981 as a receptionist it was very exciting 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 and then in 1985 i became a loan processor a loan processor is the person that meets personally with the bowler and gathers their information about purchasing a home so once they have completed a loan application i'm the one who gets the paperwork at that point so it's my responsibility to make sure that they met all the requirements before submitting it to the underwriter my job was to solicit new brokers who solicit consumers my job was to help people to fulfill the american dream to have a home where family can be happy kids can lounge on the couch being able to have outrageous birthday parties that's the american dream for me [Music] 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 be with my children as well that was very very important to me and the income was amazing there's no other job that you can get walk away with 30 000 in a month 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 when i did the research i googled them of course like everybody else 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 [Music] and unfortunately it didn't they didn't turn out to be so reputable when i got into the business i was told that an underwriter's job was to assume that everybody is lying and that your job is 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 hey i'm coming up close to the causeway where are you straight and i'll flag you down are you in sacramento oh yeah all right well i'm coming through west sac i'm looking for you now because i saw your car pass come here hey nine weeks thank you it's changed a lot huh huh it's changed a lot didn't it yeah i haven't been back here since 2005. down and over here looking at the building yeah never the the nice change about it is that it's no more memories of b and c left i remember my last day yes after i came back off of stress leaves yes you weren't there no i was on stress sleep when i arrived at bnc mortgage the atmosphere in the office was very upbeat last year was a record one for the housing market get on the fast track and zoom credit it's a strong market people still need a place to live do you own a house are you looking for lower mortgage payments let's call cal and refinance our house when you're making the largest investment of your life you're gonna go with somebody that you trust so they're gonna look around for a name they know a home loan refinance new house and new freedom are just around the corner just seconds away what a great place to invest your money call cal today and get a low cal mortgage you owe it to yourself the overall expansion came following the tech bubble the tech bubble burst in 0-102 and that was followed by a real estate bubble interest rates were pushed way down and real estate became the new game to play and at the same time there was this expansion and development of new forms of lending subprime lending and there was a realization that this was a market that could really be pushed up and lehman was a big part of that wave and put one percent realty and loans experts to work for you for outstanding rates and financing it's one percent realty in loans one eight six six four four oh two seven seven five or apply online at one percent realty online dot com where we make the mortgage process easy and understandable home of the zero down home loan it was a very volatile time and it was a crazy frenzy time because subprimes came into play and they targeted people who had these lower credit scores that weren't able to go to the banks because their score wasn't high enough so now they offer subprime 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 back in 2001 so-called subprime loans made up just five percent of the mortgage market five years later it was up to 20 percent it targeted everybody who was ever gullible sales sales you know if you got the gift to gab and you can talk real good and convince a person they were taking the bite and going for it [Music] somebody sold them a dream that was not true that practice led people buying homes that they could not afford because they got it at a low interest rate and nobody explained to them in two years your payment is going to triple and so if you go from a 1200 payment to a 3 300 or 3600 payment you can't make it there's no way you can do that 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 two or three thousand dollars and then on that back end with an interest rate that the homeowner didn't know anything about you know they can make up to nine ten eleven twelve thousand dollars on a deal and once the loan officers and all of the parties involved administratively the company once those checks are cut and everybody gets paid nothing happens to them but you as a homeowner can't sustain your mortgage [Music] you would take a thousand subprime mortgages put them into one bond then you would sell that bond with a higher rating because the rating agencies believe that if all of these mortgages were together they would have less likelihood of failing and the second belief was that the value of real estate would never go down so when the lehman brothers of the world packaged these cdos they sold them as a rated investments but all the mortgages within the cdl were b rated and ultimately when they started to fail they all failed in a crescendo and the house came tumbling down [Applause] 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 it's an email i get called compliance exchange which is a daily newsletter that lists all the financial wrongdoings he says barclays information security is facing an internal whistleblowing probe apparently he wanted to find out who whistleblowers were barclays bought some of lehman brothers business in europe and the us [Music] 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 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 investment banks operate in that fashion we were pushing hard on legal questions and on accounting questions to do things that to most reasonable people would seem illegal but we would find a way to tell ourselves it was legal but as 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 it's not 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 until i 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 2 billion in volume 3 billion slowly but surely the loan officers are out in the field hustling just bringing in loan because linda she had come out of her office loans there's loan files over here and loan files will be there on 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 then this cabinet was just full of loan files so much to do the volume picked up and in order for them to meet their quotas and they just started bringing in junk [Music] 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 i also verify that it is legitimate by looking at the documentation to make sure that they have not been doctored or information changed and i look to see if it's a different type set of printing anything that looks suspicious [Music] this is the lawn i see that all that's whited out i can tell it now like i could tell it then good for me i kept some falsified information they've whited out the information here and hand written in what they want me to know but they don't realize that the average balance does not even support it [Music] if i gave this to stevie wonder he could send it during that time it happened to be that i underwrote five files from the same broker 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 pulled the second one the second one i started going through it the w-2 looked identical with the exception of the name the social and the party's name who it was to so then i said it looked familiar so i picked up the file that i had already approved and i opened it up and it was the same w-2 with the changes they didn't change the employer id number so it was a different company with the same id number so now i'm really my all my sensors are up now like well what else is is a lie in this file [Music] 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 weeks that i needed to come into the office immediately so i come in i sit 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 okay that mortgage company is committing fraud and so i got another file the following day from that same office and i was looking through it and there was a gentleman who they claimed worked at kentucky fried chicken which he did but that he was earning seven thousand dollars 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 seven thousand dollars a month in salary not hourly wages but salary and he looked at me from behind the counter he said i would like to have seven thousand dollars a month from this business it doesn't happen and so i went back went to that mortgage company as a courtesy to let them know that they needed to have quality control what i did not know is that someone in our office had contacted them and said all you need to do is change the broker i thought you know i'm not going to allow this to happen because this man clearly knows he's come they're committing fraud and he thinks he can just put paint over the top and get re-approved and be doing the same thing so at that time i got an email sent to me that was not supposed to come to me and what the email said is that we need to keep this company going because i have all these loans that need to fund and so this was a corporate approval of them committing fraud wow i realized that the entire corporation was corrupt and they don't want me to know about it if we get this right today hopefully we'll squeeze some of those shorts squeeze them hard not that i want to hurt him don't get that please cause that's just not who i am very few people ever saw dick feld in the flesh he was like big brother every quarter he'd give us a speech and we tune in on our computer screens and he 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 [Music] lehman brothers was dick fult'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 this every very same year of the bankruptcy [Music] 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 fultz 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 may be 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 he was famous for being reclusive up on the 31st floor in the end he had his own elevator in my first years i've saw him in the lift the elevator in the building 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 reach in rip out their heart and eat it before they die when i saw this video of mr fold giving the speech about how if anybody gets in your way anybody says anything your job is to kill him to get rid of him the wave of reality that came over me was horrifying 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 that we said no we can twist that this way and find a way where we can leave off hundreds of millions of dollars worth of pay we don't have to tell the public about that but this was very troubling to me and my bosses said this loophole [Music] covers us [Music] the reason that they wanted to hide these additional stock awards was that they were already paying themselves quite generously so let's say for the ceo dick fold you know we would disclose that he would get paid 25 million but really he got 30 million 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 finally it got to me the numbers kept getting bigger and bigger it was a source of constant bother and finally in 2006 i said enough you created me to worship you created me to fear help me say yes you helped me say yes i 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 um am i not doing my job right but i wasn't doing anything different get coffee and then not knowing every day when you walk up in that office what's going to happen today because it was always something changing the attitudes accounts being away management calling me on the phone you could just feel the tension so it just got to the point i dread it and going to work every day is a email sent to the acting branch manager [Music] i am insulted that i would be placed under a microscope for discovering fraud and files i underwrite and brought to the attention of corporates i felt singled out and attempts have been made to force me out of the company because i wasn't a team player one morning i went into the office and i said hi so-and-so do you have my files nope haven't seen them don't know anything about them went to the next person there were five processors nope haven't seen them don't know anything about them i'm like okay am i losing my mind how's it possible that 30 plus million dollars in loans are disappeared and then the manager of the office came up to me i'm standing by the front door because i'm asking the receptionist have you seen these loans because she's the one that logs them in nope i haven't seen them and the manager suggests that i came in and took them 58 files it's a huge amount of files and i said i started laughing i was giggling i said you think that i came in here and got him and he said well they're not here and you're responsible [Music] what a joke what they wanted to do to me was to destroy my credibility i decided to call the senior vice president and it went from bad to unimaginably worse and within a week they had hired a new manager when they walked into our office they walked in our office like the mafia they were like arm to arm marching in like we're taking over the world the gentleman that they brought into the office who had no particular job title he was a grimy guy and he would just walk around the office which was a small office what is he doing what is his job and then there was one particular time that he was 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 and just being very sexual which was just totally out of place and i was like you know and then what he would like to do with me i pop in i open the final drawer and next thing i know i felt a hand on my shoulder at the same time breath on my neck and before i could even gasp at it he pushed himself up against my backside and i lost it on the particular day i was leaving the office 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 everyone was making the complaints about how we were being treated and nobody was listening to us nobody oh [Music] [Music] so people that are like them who hire people to come in and do dirty work that those people want to see you down they want to see me be afraid i came home and plants were moved around on my porch screens were torn so people were letting me know that hey we've been at your house [Music] 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 [Music] and my children at one point came to me we just want our mom back we don't like this new you let life the way it was [Music] they could have fired me at any moment in time but they chose not to they chose to torture me they chose to ruin my credibility they chose to make me look like a loon which they successfully did it was a long time ago that i was contacted on this case and i got a call from someone that said that there were some women at a mortgage office that had been harassed what's interesting is that these women did not know exactly what was happening to each of them they had not set together and planned this although they worked in the same office they each had their own individual experiences and so all of a sudden when they realized that the same harassment the same problems the same complaints about the mortgages were happening they came together and said this is wrong so they have a claim for wrongful termination it's based upon the fact that they were whistleblowers that they were protected by law because they were complaining about illegal behavior in the workplace as a part of this they were also sexually harassed and threatened if you've talked to these women you know how serious this has been for them and what's it's caused them [Music] our claims are currently worth 27 million dollars 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 [Music] the first time that uh 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 do you hear about this and the answer is yes and nothing said so you knew that the papers were right and don't ask questions so i wanted to go and check them out but i i'm told no you can't do that somebody else is going so i knew things must be really bad because they don't even want me to go i was in charge of the balance sheet which is everything you own and everything you owe and the difference lehman had well over a thousand companies worldwide so what you have to do is add up all those thousands of companies come up with the balance sheet number [Music] yeah that's what we showed the public total assets of lehman brothers were about one and a half 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 a lot of homeowners in this country are under tremendous stress right now it doesn't matter how hard you work you're still going to lose your home the signs dotting stockton neighborhoods are as familiar as flags flying on the 4th so many homes in this california community have been vacated foreclosures across the country are up a staggering 87 percent over this very same time last year they call the dead lawns foreclosure brand those falling home prices are like an infection now spreading throughout the u.s 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 okay do you run into a lot of traffic down there no i mean not that much but traffic but not that much traffic though you could just feel the tension in the office you're going to have your good days and your bad days it feels bad that he's became more and more and more and it was depressing it just got to the point where it was i just said i needed a break so i took off for two weeks during that time that i took off i was inquiring about other employment with some girlfriends that worked at some other companies and i went and interviewed and was offered the position and i was like great [Music] that is what the environment at bnc was i just wanted to get out of there [Music] forever [Music] [Music] after i left bnc my regional manager licked it and she said for some reason she says i don't think this is it this is over she said just dodge your eyes and cross your t's you know [Applause] i remember one day sitting on my couch calling the new supervisor at the other job one trying to find out when um i was gonna start and then they said this time we've changed our mind we're not gonna hire you [Music] i was in a panic i was like oh my gosh the bottom fell out 14.8 million american adults suffer with depressions what is depression because some people may not know you may be in it but you don't know depression is and then i started having to work some temporary jobs going through an employment agency and the rate of pay was a lot less than i was you know accustomed to making you know and not knowing if the assignment was going to be two weeks or three weeks or whatever so it was just a very rocky and tight situation at that time [Music] and then i eventually lost my place i got evicted because i couldn't pay the rent anymore um i lost my car i was four months to pay my car off my very first car that i bought by myself you know the car got repossessed and um i couldn't send sean off to school and you know 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 you know and um that's what that industry did to me and the fraud and bnc amen i left bnc and i did go to work for countrywide the same issues were present at countrywide that i had just gotten out of with bnc and then i got a job with another company and within six months they closed their doors so that three years you had companies here today gone tomorrow during that time i was turned down left and right i could not get any job in the mortgage industry [Music] by 2007 you knew things were going downhill [Music] and then our financial year was november the 30th 2007. and we had a record year the best year ever at lehman brothers and i couldn't believe it i thought [Music] things should be much worse [Music] 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 [Music] a repo is a sale with an agreement to buy back later repo 105 repo 105 was a method of hiding how much you borrowed and what it involved essentially was transferring 50 billion dollars worth of assets off of the balance sheet at the beginning or end of each quarter just before the reporting would be made public 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 at the end of a few days after the quarter the monies were simply returned back to the united states and put back on the balance sheet the whole purpose of this is to be able to bring your balance sheet down so that shareholders think you haven't borrowed as much as you actually have and you're allowed to say that you've been reducing bad assets where you haven't and every time they did it commentators tv personalities would say well lehman's getting better look at they've gotten rid of all of this these assets and the answers they never had it was illegal to tell the public we have these assets we have these borrowings when i knew the numbers were different yeah to me that was illegal i'm not a lawyer but that was wrong that was not a gray area it was red with bells ringing when lehman started raising money in 2008 using all these numbers and repo 105 that's when i thought this is the end you can't raise billions and it was but by the time they went bankrupt they'd raised almost 12 billion the population of the planet's 7 billion so a lot of money and whoever invested they lost everything in eight months and that's where i drew a line the fact that they were raising money through lying that was that was it i had quit in 2006. i mentioned that they were hiding all kinds of compensation okay certain stock awards were being hidden and not being disclosed to the public because we had found this loot hole but then the rules changed the rules now made it very plain all of it must be out there in front and so this meant that for the ceo he was going to have to show 100 million or more of new compensation that just came out of nowhere this was going to be very embarrassing and i couldn't wait to see it when finally the booklet it's called the proxy statement containing this compensation information came out in march of 2008 so i had already been away for two years i got the book 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 by then mr full the ceo and the other guys had been collecting these secret payments for many years and so on this new table that said tell us everything all the restricted stock you're holding he was holding 409 million and they disclosed 146 million they hid 260 million dollars worth of stock awards that's how big it had gotten over a quarter billion dollars worth of stock that should have been shown under these new rules was hidden gone now it was black and white and i knew that they were breaking the law and so i brought that to the sec in april of 2008. the securities and exchange commission is the regulator for the public stock and bond markets in america it's like the police of wall street you submit the material through an email like a whistleblower submission 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 it was easy enough for a reporter any member of the public anybody could have followed it and i sent it in and i got an automatic email back saying thank you we have it we're looking at it and they completely ignored me just silence i'm still waiting [Music] i didn't really have much face in the sec and i thought what can i do what can i do and then i remembered this code of ethics which i'd read when it first came out and i remember how i thought it was funny because what they were saying in the code of ethics was like completely the opposite of way they ran their business and it said that it is your duty so it's telling me the code of ethics is telling me i've got to write 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 have been a loyal and dedicated employee and always have acted in the firm's best interests i have become aware of certain conduct and practices 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 in any event the firm's senior management may not be in a position to know whether all of these accounts are in fact described in a quotes full fair accurate and timely end quotes manner as required by the code but i felt compelled both morally and legally to bring these issues to your attention very truly yours matthew lee i wanted to hand deliver it because if i just put it in internal mail i'd never know that it had arrived part of the reason i sent it to four people was one of them surely is going to read it and actually out of the four only one of them was in their office and he was on the phone and i just walked into the room thrust it in his face he took it and kept on going and i went by i felt relief and i walked into the office of somebody i could kind of convided in and i just said i've done the craziest thing i ever did in my life we had this individual who wrote a letter complaining that in fact lehman brothers was making their looks books look better than what they were so i sent two young lawyers out to interview this person they came back and they said we think he's telling the truth and i said i 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 emails which involved some of the senior people describing this process as um you know a gimmick a drug we are on you know all those sort of things and i realized that in fact what he had been saying was true [Music] you know there's always strange things going on uh in all industries and you can i live with it can i live with it and you can usually live with most things because in the long run it'll be okay but in 2008 it wasn't that way i remember the moment i was fired 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 swiveled 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 lehman it was already in the abyss it just hadn't hit the bottom yet we found that lehmann their approach was we believe that we are right in what we're doing and even though we have set these risk limits they continue to exceed those risk limits believing that they were going to ultimately be successful so it's like you're running in a direction and you're not going to stop even though you're going through stop signs one after another and they just kept going [Music] 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 u.s history new york investment bank once called the masters of the universe were scent packing humiliated just tell us how you're feeling it's awful i know but it sucks i never for a minute thought that lehman would go bankrupt and when it did i was as amazed as anybody else was this 158 year old company its rise and its performance has mirrored the performance of the united states of america becoming the superpower in the world if lehman can go down people are saying what does that mean about the health of the american financial system right now and this financial market convulsions raced around the world like a tsunami 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 i never imagined that the bad behavior that i saw at lehman and similar behavior at these other banks would take the world down the way that it did you're watching video right here of the greek riot police pushing back protesters in athens tonight lehman brothers former ceo richard fuld is living pretty a multi-million dollar estate in florida a 21 million dollar apartment on park avenue another lavish estate in greenwich connecticut 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 the 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 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 dollars i i have a very basic question for you is this fair okay the actual documents we reviewed probably was in the range of 30 million documents and we did over 250 interviews in conducting the investigation when we started interviewing the witnesses what surprised me the most was everyone wanted to talk and you know what what they wanted to say they wanted to say it wasn't me i spoke with dick vol for maybe up to 15 18 hours and he answered every question i put to him 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 fultz lost as a result of the bankruptcy he lost over a billion dollars [Music] and he pointed out to me quite accurately none of those individuals had made billions trading stocks none of them had headed major corporations in the financial area and brought them to the success that he brought to lehman brothers and he was in a position of having to rely on his judgment did you mislead your investors and i remind you sir you're under oath no sir 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 [Music] if everything had been properly exposed wall street as we know it would be gone and most everybody who's down here who was here during the crisis would be in jail right now the crimes were committed up and down the street and everyone knows that both the securities and exchange commission and the federal reserve bank had put personnel on premises with lehman brother lehman brothers provided every single document the regulators asked for so the sec as well the retinas 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 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 email 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 the top people at the sec are at the department of justice well they were making millions of dollars defending wall street banks or working inside of wall street banks before they became the so-called police okay why on earth would we expect them to go against their friends and they almost always then go back and work for wall street when they're done well now instead of prosperity trickling down the pain has trickled up from the struggles of hard-working americans on main street to the largest firms on wall street this country cannot afford four more years of this failed philosophy within the beginning of 2009 obama was elected and so he brought in his new people at the sec you have a a director the 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 okay 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 [Music] the terrible thing happened which is the lehman brothers declared bankruptcy and as soon as they declared bankruptcy our case got shut down you can't do anything more in the state court until the bankruptcy bankruptcy's resolved check it out oh wow lehman brothers holdings bankruptcy estate will pay 2.38 billion to compensate for its role in the previous decades mortgage crisis a federal judge decided far less than the 11.4 billion some hedge funds had sought people usually when they get bankruptcy get very small settlements but we call it pennies on the dollar so we had very low expectations but 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 brother 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 him didn't turn out that way we have been fighting this case in bankruptcy for all these years since 2008. and lingman keeps saying well there's another claim out there that's going to eat up all your cases they're talking about paying 2 billion dollars to all these big banks who claim that they lost money on this mortgage fraud what they want to do is they want to take the money that they owe you and put it back into equity funds they call it so that the leaders of lehman brothers are still there are going to profit off this at your expense it's an outrage i'm not going to let it happen we're not going to let it happen we're not going to do it they don't want to pay us because it's going to make news do you think just because we are surviving it does not mean it was okay and if they are so willing to bail out the banks and protect all of the crooks that stole from so many people they still haven't recovered and i say it often that many homeowners were displaced their children's were yanked out of the schools that they had grown accustomed to they were in their car or in shelters while the biggies kept their money got bailed out got parachutes millions of dollars and so i really think my drive my concern is to find a way to rectify what happened to the american dream [Music] the world still waits for justice and we could fill this courtroom and several more with the management committees of the big banks the boards of directors and i would add in the accounting firms the rating firms the law firms everybody is culpable in the crisis and really no one has been held accountable [Music] [Music] 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 and that's a question that i don't know that we've necessarily answered so i don't know that we've changed enough [Music] these guys leon brothers i didn't get my soul but they changed who i was though 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 if i had mr fold in front of me i would tell him that destroying lives is not a good way to make money once you fail on your mortgage you can't rent a home you go to get a job oh you're not credit worthy you're not going to get that position that's what he destroyed he destroyed my life he destroyed their lives he destroyed their children's lives because now they're from a broken home and they know what it feels like to be homeless when he's got three or four homes and yachts and helicopters no that's not okay but it is okay because guess what he got away with it 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 it's very peaceful by oneself one's peaceful norm is activity whistleblowers 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 [Music] [Music] so [Music] [Music] [Music] 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 [Music] this is truly a great day for america and a great day for american workers and small businesses all throughout the nation 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 one size fits all those rules just don't work and community banks and credit unions should be regulated the same way and you have to really look at they should be regulated the same way with proviso for safety as in the past when they were vibrant and strong they shouldn't be regulated the same way as the large complex financial institutions [Music] by liberating small banks from excessive bureaucracy and that's what it was bureaucracy we are unleashing the economic potential of our people you