We keep trying to figure out just what caused the mortgage meltdown and credit crisis, and one might very well ask, “Didn’t anyone know what was going on? Did anyone ask? Did anyone care?”
The truth is – many did. Richard Bowen, now a Senior Lecturer at the University of Texas- Dallas, the Jindal School of Management, was one who did. Richard was the Business, Chief underwriter at Citi Financial, a subsidiary of Citigroup. His job was to oversee the credit quality of $90 billion of mortgage loans, which had been purchased by Citi from mortgage companies and banks. Some of these loans were sold to Freddy Mac and Fannie Mae – which are now in conservatorship with the Government.
Richard Bowen noticed that over 60% of these loans did not meet accredited guidelines. He attempted to warn everyone in his business unit that Citi Financial had a serious problem with these mortgage loans. That problem eventually escalated from 60% to 89% of these loans not meeting quality standards — yet he was still ignored. Richard Bowen again warned all of the key parties at Citi Financial.
After attending a UT-Dallas, Institute for Corporate Governance seminar, and listening to Michael Oxley, one of the key writers of Sarbanes- Oxley, he realized he had no ethical choice but to take action regarding Citi Financial’s ignoring his warning signals. So he did. Yet, while investigations proceeded, little to nothing was done. His complaint was relegated to almost non-existence and given little to no attention.
Richard Bowen took further action. He became a whistleblower. Today he is no longer with Citi Financial. In this episode we learn more about Bowen’s story and the role he played.
We hear from Dr. Wayne Shaw, Helmut Sohmen Distinguished Professor of Corporate Governance; KPMG Institute for Corporate Governance at Southern Methodist University, about the other side of whistleblowing and what an individual may encounter in the process. Dr. Shaw talks about what whistleblowing is, how it works, and the risks to the person who blows the whistle. According to Wayne Shaw; people who take this step often lose their jobs and are shunned; often not getting a job in their industry again.
Ultimately, becoming a whistleblower is a choice- and one with, perhaps, heavy consequences. Yet, the ultimate question may be one of personal integrity. If something is wrong, do you keep quiet so as to protect yourself? Or stand up and take the risks?
Thanks for joining us:
Niki Nicastro McCuistion
Executive Producer/ Producer
Business consultant on transformational change…
02.12.2012 – 1923