Ivry the seven sins of wall street; big banks, their washington lackeys, and the next financial crisis (2014)

THE SEVEN SINS OF WALL STREET Copyright © 2014 by Bob Ivry Published in the United States by PublicAffairs™, a Member of the Perseus Books Group All rights reserved No part of this book may be reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews For information, address PublicAffairs, 250 West 57th Street, 15th Floor, New York, NY 10107 PublicAffairs books are available at special discounts for bulk purchases in the U.S by corporations, institutions, and other organizations For more information, please contact the Special Markets Department at the Perseus Books Group, 2300 Chestnut Street, Suite 200, Philadelphia, PA 19103, call (800) 810-4145, ext 5000, or e-mail special.markets@perseusbooks.com Book design by Linda Mark Library of Congress Cataloging-in-Publication Data Ivry, Bob The seven sins of Wall Street : big banks, their Washington lackeys, and the next financial crisis / Bob Ivry pages cm Includes bibliographical references and index ISBN 978-1-61039-366-9 (e-book) Finance—United States Banks and banking—United States Financial crises—United States United States—Economic policy I Title HG181.I97 2014 332.0973—dc23 2013048863 First Edition 10 For Janelle CONTENTS Scorecard Cast of Characters INTRODUCTION The Cost of Doing Business ONE Gluttony Size: Sherry Hunt and the Champions of Responsible Finance TWO Wrath Secrecy: Mark Pittman and the Patron Saint of Goldman Sachs THREE Envy Capture: Jamie Dimon and Going Long Risk Some Belly Tranches (Especially Where Default May Realize) FOUR Pride The Myth of Competence: Deniz Anginer and Conjectural Government Guarantees FIVE Lust Complexity: Saule T Omarova and the Phantom Waiver SIX Sloth Impunity: Walter Lacey, Marianne Miller-Lacey, and Slapstick Tragedy SEVEN Greed Class War: Rebecca Black and the Pneumatic Tube Conclusions Acknowledgments Notes Index SCORECARD Ladies and gentlemen, the six largest American banks, listed in alphabetical order: Bank of America Home: Charlotte, North Carolina Scouting report: Hits below its weight Kryptonite: mortgage servicing TARP borrowing: $45 billion Peak Federal Reserve borrowing: $91.4 billion on February 26, 2009 Total assets, 2006: $1.36 trillion Total assets, 2013: $2.17 trillion Percentage change: +60 Citigroup Home: New York Scouting report: Can’t get out of its own way TARP borrowing: $45 billion Peak Federal Reserve borrowing: $99.5 billion on January 20, 2009 Total assets, 2006: $1.59 trillion Total assets, 2013: $1.88 trillion Percentage change: +18 Goldman Sachs Home: New York Scouting report: Biological imperative: money TARP borrowing: $10 billion Peak Federal Reserve borrowing: $69 billion on December 31, 2008 Total assets, 2006: $759 billion Total assets, 2013: $959 billion Percentage change: +26 JPMorgan Chase Home: New York Scouting report: Performance-enhancing drugs suspected TARP borrowing: $25 billion Peak Federal Reserve borrowing: $68.6 billion on October 1, 2008 Total assets, 2006: $1.34 trillion Total assets, 2013: $2.39 trillion Percentage change: +78 Morgan Stanley Home: New York Scouting report: Smallest of the six and getting smaller TARP borrowing: $10 billion Peak Federal Reserve borrowing: $107 billion on September 29, 2008 Total assets, 2006: $960 billion Total assets, 2013: $801 billion Percentage change: –16 Wells Fargo Home: San Francisco Scouting report: Quietly eating its competitors’ lunch TARP borrowing: $25 billion Peak Federal Reserve borrowing: $45 billion on February 26, 2009 Total assets, 2006: $492 billion Total assets, 2013: $1.44 trillion Percentage change: +193 INTRODUCTION THE COST OF DOING BUSINESS My daughter called me from school one day and said, “Dad, what’s a financial crisis?” And without trying to be funny, I said, “It’s something that happens every five to seven years.” —Jamie Dimon, chief executive officer of JPMorgan Chase, January 13, 2010 W REBECCA BLACK BOUGHT THE THREE-BEDROOM house at 698 Hazelwood Road in southwest Memphis in May 2005 and moved in with her two teenage sons, it was a quiet community Children played in the street, and neighbors tended their yards She could afford the $57,000 mortgage if she skipped oil changes for the car and served the boys store-brand groceries Then trouble came Her next-door neighbor died, and his family lost the house Across the street, there were two foreclosures One morning, the abandoned house three doors down had gang graffiti spray-painted on the side A girl in the neighborhood pulled a gun on her son In 2010, it was Black’s turn to go She’d gotten one of those 2–28 mortgages that slowly strangled so many borrowers—two years of a low, fixed interest rate followed by twenty-eight years of rising payments—and she’d reached her limit “I was crazy about that house, and so proud of it,” said Black, a US Army veteran “I just didn’t have enough money.” She got a letter from her mortgage company saying it was starting the foreclosure process, and rather than hear a knock on the door one morning from a sheriff’s deputy ordering her to get out, Black packed whatever she could fit into her Chevy Astro and left the home she loved so well By 2011, the property two doors down had sold for $3,000, and Black was in bankruptcy If homes are living things, sustaining their inhabitants and contributing to the vitality of their communities, then Hazelwood Road is dying On nine of the fifteen parcels on Black’s side of the street, houses sit empty or have been bulldozed flat, or the lots have reverted to a tangle of sumac and poison ivy I visited Hazelwood Road in the hottest part of 2012, four years after bad mortgages triggered a meltdown in the world’s most resilient economy The biggest banks were reporting record profits, and government agencies were trumpeting statistics showing that a robust recovery from the worst hard times since Dorothea Lange’s “Migrant Mother” was just around the corner And though Hazelwood Road was never a paradise—a place where Black could buy a three-bedroom house for $57,000 couldn’t be described as anybody’s ideal of “location, location, location”—conditions there indicated that something essential about America had shifted in the aftermath of the 2008 financial crisis An economic and political apartheid had emerged Perhaps fairness had been an illusion and upward mobility just a dream before things went to hell Still, hope for advancement was that much HEN JPMorgan Chase/Bear Stearns acquisition, 26 lawsuit filed against, 46–49, 54–55 legislation to require audits, 55–56, 64 mandated foreclosure reviews, 146–152 mortgage settlement programs, 146 overnight emergency loans, 19, 60–61, 93 permissive attitude of, 154 savings accounts for banks, 72 secrecy of, 41–49 subprime mortgage crisis, 33–39 transparency requirements, 55–57, 64 FedEx, 172 Feinberg, Stephen, 167 FHA See Federal Housing Administration (FHA) Fidelity Investments, 57 Financial Industry Regulatory Authority, 156–157 Financial instruments, 41–42 Financial Services Committee (US Congress), 86, 89 Financial Services Modernization Act (1999), 81 Financial services supermarket, 14–15 Financial Times (newspaper), 120 Fitch Ratings, 35, 38, 102 Florida Public Employees Fund, 92 Foreclosure roulette, 179 Foreclosure stories, 139–140, 144–145, 152–153, 159–160 Foreclosure walkaways, 178 Foreign banks See specific banks Foreign countries, sanction violations, 92 Frank, Barney, 64 Fraud indication of, percentage of loans, Fraud Prevention and Investigation Group, CitiMortgage, 14 Frayser Community Development Corporation, 171, 173, 184 Freddie Mac, 3, 35, 63 Freedom of Information Act of 1996 (FOIA) enactment of, 45–46 process of, 49–52 transparency in, 52–54 Friedman, Robert, 60 Fuld, Richard, 123 Gang activity, in foreclosed areas, 179–180 Garrett, Scott, 56 Geithner, Timothy, 5, 38, 42, 58, 90 Getty, J Paul, Ghadafi, Muammar, 59 Gibbs, Finley, 22–23 Gibbs, Marcus Lenier, 163–164 Glasser, Charles, 47 Glass-Steagall Act (1933) changes in, 15 opinions on repeal of, 20, 31 passage of, 12 provision of, 81 repealing of, 187 Glencore Xstrata (Switzerland), 119 Global Finance Services, 163–164 Globally systemically important banks (G-SIBs), 105 GMAC, 145, 167, 175 Goldberg, Deborah, 151 Golden, Thomas, 54 Goldman, Emma, 47 Goldman Sachs appeal of FOIA lawsuit, 54–55 borrowing from Federal Reserve, 37 Buffett, rescue of, 12, 19 commodities market, 114, 115 derivatives under FDIC protection, 83 Federal Reserve loans, 59 metal warehousing, 116–120 notional derivatives exposure, 84 overnight emergency loans, 61 Paulson as CEO, 38 personality of, 165 Section 23A exemption, 82 too-big-to-fail discount, 103–105 Gordon, Simone, 142 Government guarantees, 102, 187 Government proof of fraudulent loans, Gramm, Phil, 20 Gramm-Leach-Bliley Act (1999) consequences of, 17–20, 30–32 creation of, 15, 81 Grayson, Alan, 55–56 Greenspan, Alan, 10, 64 Greer, Katie, 179, 181 Griffin, Donal, 25, 27 Groban, Josh, Guardian (newspaper), 130 Gunning Frequency of Gobbledygook Readability Test (FOG), 147 Guynn, Randall, 125 Haims, Joel, C., 175, 182 Hayek, Friedrich, 56 Hedges, 76 Heidmar Inc., 119 Henry Bath & Son, 112–113, 127 Hiltzik, Michael, 128 Himes, Cattrice Renee (Slim Goody), 180 Holder, Eric, Jr., 133, 155 Home Affordable Modification Program (HAMP), 140–143 Home loans, as derivative product, 77 Hope 6, government initiative, 177 House Financial Services Committee (US Congress), 86, 89 Housing and Urban Development Department (HUD), 4, 145 HSH Nordbank (Germany), 163, 165 Hudson, Frances, 126 Hunt, Sherry background of, 7–8 CitiMortgage false claims lawsuit, 22 Das’s defense on lawsuit, 28 demotion of, 13 fraud findings, 8–9, 13–14 as mortgage underwriters supervisor, 8–9 reporting fraud to Bowen, 9–11 as whistle-blower, 20–24 Iksil, Bruno Michel, 79–81 See also London Whale Implied subsidies, 103–105 Implied subsidy discounts, 101–102, 106, 186 Independent Foreclosure Review, 145, 146 Independent mortgage companies, 137 Independent System Operator (ISO), 127, 128, 131–132, 149–150 IndyMac Savings and Loan, 19, 43 Inflation rate, 73 Insurance companies, 101 Interest rates aluminum markets and, 117 as derivative product, 76 zero interest rate policy, 69–70, 73–74, 86 International Monetary Fund (IMF), 104, 105 Investment banks, 78 Investors, Federal Reserve Bank and, 36 Janikowski, Richard, 180 Japan, loss of private-banking charter in, 13 Jefferson, Buck, 180 Jefferson, Calvin DeWayne (aka Mack Kane), 179–181 Johanns, Mike, 88 Johnson, Jennifer J., 51 JPMorgan Chase appeal of FOIA lawsuit, 54–55 Bank One acquisition, 87 Bear Stearns acquisition, 26, 166 on Chairmanship position, 92–93 Chief Investment Office, 79 commodities markets, entry into, 111–115, 124 derivatives under FDIC protection, 83 electricity price manipulation, 92, 126–129 EMC Mortgage, 162–165, 183 executive compensation, 91 Federal Reserve loans, 37, 59, 61, 93 foreclosures review auditors, 149 globally systemically important banks, 104–105 Henry Bath & Son acquisition, 112 Manhattan headquarters, 25–26 metal warehousing business, 112–113, 117, 127 mortgage settlement programs, 145 notional derivatives exposure, 84 political campaign contributions, 89 RBS Sempra acquisition, 126 Section 23A exemption, 82 settlement costs, 92 shareholders meeting, 91 Synthetic Credit Portfolio, 85–94 too-big-to-fail discount, 103–105 as a top four US retail bank, 17–20 Washington Mutual acquisition, 19 JPMorgan Chase Foundation, 88 JPMorgan Ventures Energy, 127, 131–132 Justice Department foreclosures resolution, 24, 27 joined in false claims lawsuit, 23 mortgage settlement programs, 145 Kafka, Franz, 136 Kahn Chaka, Kane, Mack (aka Calvin DeWayne Jefferson), 179–181 Karesh, Billy, 66 Karp, Brad S., 10 Kaufman, Ted, 57–58, 62, 109 Keoun, Bradley, 59–60 King, Martin Luther, Jr., 172 Kowalski, Jim, 138–139 Kuntz, Phil, 59–60 Kwak, James, 90 Lacey, Walter, 133–135, 144–145, 153 Lacey, Zelma, 133–134 Lacey’s foreclosure timeline, 139–140, 144–145, 152–153 Larson, John, 56 Last Man Standing (McDonald), 87 Lazio, Rick, 89 Lehman Brothers bankruptcy of, 49, 108 declaration of bank’s solvency, 18 derivatives deals, 78 failure of, 19 Manhattan headquarters, 25 maturity mismatch, 102 Paulson and, 123 personality of, 165 Valukas Report, 53 Lewis, Kenneth, 61 Lincoln, Abraham, 95 LinkedIn, 95 Living wills, for banks, 18, 98 Loan categories, 16 Loan guarantors, 166 Loans Federal Reserve overnight emergency loans, 19, 60–61, 93 packaging into securities, quality checks, 27 TARP loans, 44, 58–59, 100 2–20 mortgage loans, 163–164 Lockwood, Steve, 170–172, 173, 181, 184 Logan, Kioni, 180 London Metal Exchange, 117, 118, 120 London Whale, 81, 85–86, 92–95, 106 See also Iksil, Bruno Michel Los Angeles Times (newspaper), 128 Lost-note affidavit, 138 Ludwig, Eugene, 155–156 Mack, John, 60 Madoff, Bernie, 92 Main Street vs Wall Street, 71–74 Marano, Tom, 162, 165–167, 181–183 Martin, William McChesney, Jr., 69 Martinez, Mel, 89 Marx, Karl, 122 Masters, Blythe, 129–130, 189 Mattingly, Phil, 121 Maturity mismatch, 102 Mayo, Mike, 12 McCullough, Robert, 128 McDonald, Duff, 87 McLaughlin Simplified Measure of Gobbledygook Formula (SMOG), 147 Medley, William M., Jr., 163–165 “Merchants of Wall Street” (Omarova), 124, 125 Merkley, Jeff, 152 Merrill Lynch acquired by Bank of America, 19 personality of, 165 Merton, Robert, 102 Metal warehousing business, 117–121 Metro International Trade Services, 117 MF Global, 92 Milan, Italy (bank fraud settlement), 92 MillerCoors, 118, 126 Miller-Lacey, Marianne, 134–135, 136, 140, 144, 152–153 Mills, Rachel, 55 Mitchell, Charles “Billion-Dollar Charlie,” 12, 15 Mobley, Alexandra, 177 Modernization of banking industry, 15, 81 Money, velocity of, 70–71 Money supply, effects of, 44 Moody’s Investors Service, 35, 38, 101 Morgan Stanley belief in bank’s solvency, 19 borrowing from Federal Reserve, 37 commodities market, 115, 119, 120 help from Federal Reserve, 19 Manhattan headquarters, 25 overnight emergency loans, 60 personality of, 165 Section 23A exemption, 82 speaking fee for Clinton, 89 too-big-to-fail discount, 103–105 Morrison Cohen Law Firm, 182 Mortgage brokers, 34, 163–165 Mortgage crisis foreclosures, 133–135, 139–145 timeline of lenders’ behavior, 135–137 Mortgage Electronic Registration System, 137 Mortgage Lender Implode-o-Meter (blog), 34 Mortgage rates, 73 Mortgage servicing functioning of, 137–139, 178–179 mandated foreclosure reviews, 146–152 settlement programs, 145–146 Mortgage settlement programs, 145–146 Mortgage underwriters, 8, 9, 165, 176 Mortgage-backed securities, 8, 62–64 Mortgages character of, 16–17 securitization of, 137 subprime, 33–39, 175–176 traditional performance of, 2–3 Muir, Jim, 169 Municipal-bond market, 92 Murdoch, Rupert, 92 Naked Capitalism (blog), 150 NASDAQ stock exchange, 157 National City Bank of New York (later City Bank), 12, 15 National Fair Housing Alliance, 151 National Mortgage Settlement, 24, 145–146, 152–153 Negotiable certificates of deposit, 13 Negroponte, John, 113 Neighborhood Stabilization Program, 171 New York Bar Association, 155 New York Fed, 26, 43, 63, 90, 166 New York Stock Exchange, 11 New York Times Magazine, 87 New York Times (newspaper), 30, 86, 129, 156 Niko, Bobby, 179–180 Norinchukin Bank (Japan), 59 Notional derivatives exposure, 84–85 Obama, Barack, Columbia University, 166 Obama Administration bureaucracy in, 107 economic stimulus, 75 favored CitiBank shutdown, HAMP program, 140 mortgage settlement programs, 145–146 opposition to SAFE bill, 58 taxpayer bailouts, 98 transparency in government, 53–54 O’Fallon, Missouri, CitiMortgage headquarters, 1–7 Office of the Comptroller of the Currency (OCC) commodities market exemption, 112 derivatives trading, 123 JPMorgan Chase investigation, 81, 86 London Whale awareness, 106 mandated foreclosure reviews, 146–152 mortgage settlement programs, 146 notional amount of derivatives, 84 permissive attitude of, 154 Section 23A exemptions, Oldpike Associates, LLC, 181–182 Omarova, Saule T., 121–126, 132 O’Neill, Michael, 32 Open market operations, 62–64 Orderly Liquidation Authority, 98 Orphan homes, 178 Orwell, George, 185 Overnight emergency loans from Federal Reserve, 19, 60–61, 93 Packaging loans into securities, Pacorini (Swiss warehouse company), 119 Pandit, Vikram on bailout, 5–6 creating new loan categories, 16 on financial responsibility, 6–7 on overnight emergency loans, 60–61 reform promises, 25 stepped down as CEO, 32 visit to O’Fallon site, 1–2 Paperwork, improper handling of, 3–4 Parsons, Dick, 30, 32 Partnoy, Frank, 42 Paul, Ron, 55–56, 64, 98 Paulson, Henry “Hank,” 37, 38, 122–123 Pecora, Ferdinand, 12, 15 Pension funds, 101 Peregrine Financial Group, 92 Pittman, Laura, 45, 65, 67 Pittman, Maggie, 67–68 Pittman, Mark background of, 44–45 congressional support for transparency, 55 death of, 65–68 freedom of information request, 45–46 health problems, 65–66 questioning lending at Federal Reserve, 36–39 suing Federal Reserve, 33–34 PNC Bank, 149 Political campaign contributions, 87–88, 89 Predatory lending, 162–165, 172–174, 189 Premiums (commodity price), 118 Preska, Loretta, 54 Presley, Elvis, 172, 177 PricewaterhouseCoopers, 147, 149, 150 Prince, Chuck, 13, 32 Private-banking charter, in Japan, 13 Promontory Financial Group, 147, 150, 153–158 Property values, after foreclosures, 141, 161, 170–172, 178–179 Proprietary trading (prop trading), 76 Public Citizen, 128 Public housing, 177 Quality Rebuttal team, 15–17, 29 Quality-control reports, Quantitative easing (QE), 69–70, 74–75 Qui tam (false claims lawsuit), 22–23 Quick Loan Funding, 164 RBS Sempra, 126 Reagan Administration, 122, 157 Reed, John S breaking up largest banks, 30, 188 executive office, 26 Glass-Steagall Act and, 15 retirement office, 26 Weill, and, 13, 14 Residential Capital (ResCap), 175–176 Responsible finance principles, 25 Retention bonuses, 30, 32 Revolving door, 89 Richie, Lionel, Robo-perjury, 139, 146–147 Robo-signing, 138–139 Rosner, Joshua, 92, 126 Rothbard, Murray, 56 Royal Bank of Scotland, 126 Rubin, Robert, 10, 15 Ruhle, Stephanie, 81 Sadek, Daniel, 164 SAFE Act (proposal), 57–59, 62, 109 Salazar, Ken, 88 Samsa, Gregor, 136 Sanchez, George, 74 Sanction violations, 92 Santelli, Rick, 141–142 Savings accounts commercial banks, 73–74 Federal Reserve Bank, 71 JPMorgan Chase, 92 Schapiro, Mary, 156–157 Scharf, Y David, 182 Secret operations for national security, 113 Securities and Exchange Commission Act (1934), 113 Securities and Exchange Commission (SEC) commodities market exemptions, 120 creation of, 12 criminal prosecutions, 188–189 Hunt writing to, 21–22 permissive attitude of, 154 Securitization, of mortgages, 137 Senate Committee on Banking, Housing, and Urban Affairs, 86, 125–126 Senate hearings on foreclosure reviews, 149–150, 151 Senate Permanent Subcommittee on Investigations, 85 Shareholder balloting, 93 Shorting stocks, 188 SIFIs (systemically important financial institutions), 20, 99, 107 Single point of contact (SPOC), 146 Single-tranche open market operations (ST OMO), 62–64 Sloan, Timothy, 98 Slocum, Tyson, 128–129, 130 Snow, John, 122 Solomon Smith Barney, 14–15 Son, Hugh, 148 Speaking fees, 89–90 Speculation, 188 SPOC (single point of contact), 146 ST OMO (single-tranche open market operations), 62–64 Standard & Poor’s (S&P), 35, 38 Standard Life Investments (Edinburgh, Scotland), 126 Stock analysts, 13 Stock exchanges, 11, 38, 157 Stock prices, as derivative product, 76 Stocks, shorting, 188 Stoller, Matthew, 89, 90 Stumpf, John, 61 Subprime mortgages, 33–39, 175–176 Subsidiary companies, 116 Subsidies, 103–105 Summers, Lawrence, 58, 106, 131 Sundance Film Festival, 182 SunTrust Bank, 149 Superstorm Sandy, 182–183 Supreme Court, ruling on lawsuit appeal, 59–60 Suskind, Ron, Swap contracts, 131–132 Synthetic Credit Portfolio, 79, 80, 85, 94 Systemically important financial institutions (SIFIs), 20, 99, 107 Taleb, Nassim Nicholas, 157 TARP (Troubled Asset Relief Program), 44, 58–59, 100 Taxpayers Federal Reserve and, 36 role in financial crisis, See also Bailouts Tea Party, 142 Terrelonge, Theresa, 143 Time (magazine), 10 Too big to fail, 17–20, 97–99, 103–107, 185–190 Tourre, Fabrice, 188 Trafigura (Dutch warehouse company), 119 TransMontaigne, 119 Transparency in Federal Reserve, 55–57, 64 in Freedom of Information Act, 52–54 in investment banks, 78 in Obama Administration, 53–54 Travelers Group, 14–15, 86–87 Treasury Department global competitiveness, 123 reevaluation of oversight, 122 support for Citigroup, TARP loans, 44, 58–59, 100 Troubled Asset Relief Program (TARP), 44, 58–59, 100 Turley, Henry, 167–170, 184 Turley, Lynne, 168 2–20 mortgage loans, 163–164, 166 UBS (Swiss bank), 20, 26 Ullrich, Amy, 182 Underwriters, mortgage, 8, 9, 165, 176 Urban blight, 170–171, 178–181 Urban development, 167–172, 177 US Bank, 149 Valukas, Anton, 53 Valukas Report, 53 van Mises, Ludwig, 56 Vanderlip, Frank A., 12 Velocity of money, 70–71 Vitter, David, 109–110, 125 Volcker, Paul, 187 Voskuhl, John, 59–60 Wachovia Bank, 19, 43 Wall Street firms, monitoring of, 43 Wall Street vs Main street, 71–74 “Wall Street’s Faustian Bargain” (Ivry), 38 Warburton, Joseph, 100 Warren, Elizabeth, 105, 149–150 Washington Mutual Savings and Loan, 19, 43 Weather, as derivative product, 76 Weil, Jonathan, 165 Weill, Sanford I “Sandy” on breaking up largest banks, 187–188 Dimon and, 87 on Gramm-Leach-Bailey Act, 31–32 retirement office, 26 Solomon Smith Barney/Travelers Group deal, 14–15, 31 Weiner, Timothy, 118, 126 Welch, Jack, 92 Wells Fargo Bank appeal of FOIA lawsuit, 54–55 borrowing from Federal Reserve, 37 foreclosures review auditors, 149 mortgage settlement programs, 145 overnight emergency loans, 61 predatory lending lawsuit, 173 too-big-to-fail discount, 103–105 as a top four US retail bank, 17–20 urban development project, 169, 171 Wachovia acquisition, 19 Wharton, A C., Jr., 174–175 Whistle-blower, Sherry Hunt, 20–24 Whitehouse, Mark, 105, 106 Willkie, Farr & Gallagher (law firm), 54 Wilshire Credit, 140 Wilson, William E., Jr., 143 Winkler, Matthew, 47 WorldCom, 13 Wriston, Walter, 13 Yield-spread premiums, 163 Young, Willie Mae, 159, 163 Zero Hedge (website), 67 Zero interest rate policy (ZIRP), 69–70, 73–74, 86 DAVE CROSS B OB IVRY is a reporter for Bloomberg News whose awards include the 2009 George Polk Award, a 2008 Gerald Loeb Award, a 2012 special citation from the Goldsmith Investigative Reporting Award jury at Harvard’s Kennedy School, the Society of Professional Journalists 2012 Public Service in Online Journalism Award, the 2012 Investigative Reporters and Editors Freedom of Information Prize, the 2010 Hillman Prize, three New York Press Club Awards, two National Headliner Awards, and three awards from the Society of American Business Editors and Writers He’s written for Esquire, Maxim, Popular Science, and Washington Post Book World ; and his short fiction has appeared in Esquire and Ploughshares Before joining Bloomberg News, Ivry worked for the Record, the San Francisco Examiner, and the San Francisco Bay Guardian In 2012, BusinessInsider.com named @bobivry one of “The 101 Finance People You Have to Follow on Twitter.” PublicAffairs is a publishing house founded in 1997 It is a tribute to the standards, values, and flair of three persons who have served as mentors to countless reporters, writers, editors, and book people of all kinds, including me I F STONE, proprietor of I F Stone’s Weekly, combined a commitment to the First Amendment with entrepreneurial zeal and reporting skill and became one of the great independent journalists in American history At the age of eighty, Izzy published The Trial of Socrates, which was a national bestseller He wrote the book after he taught himself ancient Greek BENJAM IN C BRADLEE was for nearly thirty years the charismatic editorial leader of The Washington Post It was Ben who gave the Post the range and courage to pursue such historic issues as Watergate He supported his reporters with a tenacity that made them fearless and it is no accident that so many became authors of influential, best-selling books ROBERT L BERNSTEIN, the chief executive of Random House for more than a quarter century, guided one of the nation’s premier publishing houses Bob was personally responsible for many books of political dissent and argument that challenged tyranny around the globe He is also the founder and longtime chair of Human Rights Watch, one of the most respected human rights organizations in the world • • • For fifty years, the banner of Public Affairs Press was carried by its owner Morris B Schnapper, who published Gandhi, Nasser, Toynbee, Truman, and about 1,500 other authors In 1983, Schnapper was described by The Washington Post as “a redoubtable gadfly.” His legacy will endure in the books to come Peter Osnos, Founder and Editor-at-Large ... Linda Mark Library of Congress Cataloging-in-Publication Data Ivry, Bob The seven sins of Wall Street : big banks, their Washington lackeys, and the next financial crisis / Bob Ivry pages cm Includes... what they were doing and gather outside They filed out of the fluorescent light of the building and into the sun, where they lined up on the sidewalk at the edge of the vast parking area of the. .. the form of the federal government and the Federal Reserve, the country’s bank for banks, had sacrificed the common good for the profit of the few By coddling the biggest banks—by rewarding their