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November 6, 2014 By Richard Bowen

Whistleblowers: Inside the Mortgage Meltdown

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 of us did. And were ignored.

When I say here we go again, it’s because it doesn’t seem we’ve learned. Allowing Fannie and Freddie to go down that path yet again – by loosening credit standards and mortgage restrictions may well cause another credit avalanche.

Perhaps you’ve heard my story before. I was the Business Chief underwriter at Citimortgage, a subsidiary of Citigroup. My job was to oversee the credit quality of $90 billion of mortgage loans, which had been purchased by Citi from mortgage companies and banks. Many of these loans were sold to Freddie Mac and Fannie Mae – which were ultimately put into conservatorship with the Government.

Richard Bowen, Dennis McCuistion, Wayne Shaw
Richard Bowen, Dennis McCuistion, Dr. Wayne Shaw

I noticed that over 60% of these loans did not meet accredited guidelines. I attempted to warn everyone in my business unit that Citi had a serious problem with these mortgage loans. That problem eventually escalated from 60% to 80% of these loans not meeting quality standards, and thus they were defective. Yet, I was ignored.

After attending a UT-Dallas Institute for Corporate Governance seminar, and listening to Michael Oxley, one of the key writers of Sarbanes-Oxley, I realized I had no ethical choice but to take further action regarding the continued ignoring of the warnings I kept sending about the extreme shareholder risk. Yet, while investigations proceeded, little to nothing was done. My complaints were given little to no attention.

Well you know the rest of the story.

I took further action and blew the whistle on Citi, warning the board of directors of the potential losses and even asking for an outside investigation. The outcome? I was relieved of my responsibilities – and today I’m no longer with Citi.

The McCuistion Program, featured a story on whistleblowing and I was honored to be a guest, along with Dr. Wayne Shaw, Helmut Sohmen Distinguished Professor of Corporate Governance; KPMG Institute for Corporate Governance at Southern Methodist University.

Wayne Shaw was not surprised by my story. According to Wayne, most people who take this step usually lose their jobs and are shunned. They are often not able to get work in their former industry again.

Dennis McCuistion prepares to interview whistleblower Richard Bowen and Dr. Wayne Shaw on McCuisition TV, PBS Dallas.

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 risk – knowing you are doing the right thing?

How about you? What would you do? Please leave your thoughts in the comments below.

See the video at:

McCuistion TV:  Whistleblowers:  Inside the Mortgage Meldown

Pictures courtesy of Niki McCuistion.  Used with permission.

Whistleblowing Has a Price - Is It Worth It?
It’s Déjà Vu All Over Again! Is the Financial Crisis Restarting?!

Tagged With: Financial Crisis, Mortgage Lending, Mortgage Meltdown

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Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.

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What People Are Saying About Richard M. Bowen

William D. Cohan"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst."

~ William D. Cohan, NY Times Best Selling Author
2017-06-30T10:08:59-05:00
"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst." ~ William D. Cohan, NY Times Best Selling Author
https://richardmbowen.com/testimonials/2556/

Eileen McDonnell"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger."

~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual
2015-02-13T19:51:19-06:00
"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger." ~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual
https://richardmbowen.com/testimonials/711/

Ben Stein"Richard Bowen, you are a star and a hero."

~ Ben Stein, Economist and Political Commentator
2015-02-13T19:50:26-06:00
"Richard Bowen, you are a star and a hero." ~ Ben Stein, Economist and Political Commentator
https://richardmbowen.com/testimonials/712/

Jim Farrell"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership."

~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
2014-12-28T19:48:17-06:00
"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership." ~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
https://richardmbowen.com/testimonials/532/

Dennis McCuistion"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years."

~ Dennis McCuistion, Host of the McCuistion TV program
2014-12-28T19:48:06-06:00
"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years." ~ Dennis McCuistion, Host of the McCuistion TV program
https://richardmbowen.com/testimonials/533/

Betty Garrett"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!"

~ Betty Garrett, Garrett Speakers International
2014-12-28T19:47:50-06:00
"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!" ~ Betty Garrett, Garrett Speakers International
https://richardmbowen.com/testimonials/531/

fred-timmons"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences."

~ Fred Timmons, Chairman of The Texas Society of CPA's
2014-12-28T19:47:22-06:00
"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences." ~ Fred Timmons, Chairman of The Texas Society of CPA's
https://richardmbowen.com/testimonials/530/

Presentation Topics

Playing for High Stakes: The Principles and Practice of Ethical Leadership

Dark Citi: The Story of a Whistleblower

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Now an ethical leadership speaker, Richard Bowen was Citigroup's Business Chief Underwriter during the housing bubble.

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