It was just 9 years ago that our economy began to tank. There was no magic cataclysmic event such as the Black Tuesday stock market crash of 1929. That day is widely believed to have ushered in the Great Depression.
If the Great Depression started with a tsunami, the 2007 – 2008 crisis was more like a rising red tide. It took several months to unfold. Unfortunately, it took years for that crisis to recede. Unfortunately, many families still bear scars from the loss of their home or career or both.
Many say today that Wall Street has learned its lesson. Congress passed the Wall Street Reform and Consumer Protection Act of 2010 (“Dodd Frank”). We were promised that the government would clean up Wall Street once and for all.
The White House issued a statement saying,
“The financial crisis was the result of a fundamental failure from Wall Street to Washington. Some on Wall Street took irresponsible risks that they didn’t fully understand and Washington did not have the authority to properly monitor or constrain risk-taking at the largest firms. When the crisis hit, they did not have the tools to break apart or wind down a failing financial firm without putting the American taxpayer and the entire financial system at risk. Financial reform includes a number of provisions that will curb excessive risk taking and hold Wall Street accountable.”
The banks were making their own promises too. In 2010, new Bank of America CEO Brian Moynihan said the bank had turned the corner from the “excesses of the economic crisis.”
So what happened?
The Justice Department got off to a slow start but ultimately hammered Wall Street and collected tens of billions of dollars in civil fines and penalties. (Our Bank of America case netted taxpayers $16.65 billion.) No one in a position of power went to prison, however.
For awhile, we thought the big fines were working. Shareholders don’t like these fines since they are paid out of profits thus reducing dividends and stock prices. We hoped that internal pressure from shareholders and outside pressure from the Justice Department and regulators would change the thinking on Wall Street. It may have worked for a while.
Unfortunately, it looks like whatever lesson was learned may soon be forgotten. A study earlier this year by Labaton Sucharow says that approximately one-third of senior Wall Street managers are still aware of workplace wrongdoing. [The study, titled The Street, The Bull, and The Crisis can be found here.]
Is this study correct? Unfortunately, it is.
The big whistleblower cases of the crisis years are mostly behind us now. There is a 6 year statute of limitations under the False Claims Act meaning it is probably too late to file a claim for misbehavior in the run-up years to the crisis. (A separate whistleblower statute, FIRREA, has a 10 year statute but limits whistleblower awards to $1.6 million.)
Our phones are again ringing, this time with a new crop of whistleblowers. Banks and mortgage companies have found new ways to commit appraisal fraud. Lenders are routinely violating the Loan Originator Compensation rules and underwriters are turning a blind eye to bad mortgage applications.
The next crash will be different from the last but there will be a crash. How severe the crash depends on you. Congress expanded the protections and reach of the False Claims Act. It is easier than ever to file a lawsuit and help stop greed and corruption.
Why would anyone want to file such a lawsuit? Believe it or not, most people file because it is the right thing to do. That is why we say whistleblowers are heroes. There are also strong anti-retaliation provisions and cash awards available to whistleblowers. Up to 30% of what the government collects from wrongdoers. (Our financial sector whistleblowers have received over $100 million in award monies.)
It’s time to rein in the new round of greed on Wall Street before it gets out of control. Call us. We can work with you confidentially to see if there is a case. We will only file a lawsuit if we think there is a claim and you are 100% comfortable in the decision.
America needs more heroes. Let’s nip this next crisis in the bud. We can do it but only with your help.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct).
MahanyLaw – Proudly Representing Whistleblowers