This is the audio clip of an interview I did for The Breakdown this weekend with journalist and author Michael Hudson, who did a terrific piece on GE Capital's mortgage crisis called Fraud and Folly: The Untold Story of General Electric's Subprime Debacle:
Hudson's a thorough and sober-minded journalist, so it's striking to find a paragraph like this in his reporting:
"What GE got in the bargain, former WMC employees say, was a place where erstwhile shoe salesmen, ex-strippers and even a former porn actress could sign on as sales reps and make big money pushing home loans. WMC's top salespeople earned a million dollars a year or more and lived fast, swigging $1,000 bottles of Cristal and wheeling around in $100,000 Ferraris and Bentleys."
Makes you wonder who did the due diligence for GE: Larry Flynt? Things don't get better once GE takes over.
The activity described in this interview and in Hudson's article includes retaliations against internal auditors who attempted to do their jobs, a culture of punishing whistelblowers,and reports of fraud which are now reportedly being investigated by the FBI. There are seven important facts to bear in mind as you listen:
- They took place in a corporation headed by Jeffrey Immelt, who also leads President Obama's Jobs Council - that is, we're discussing events that occurred after the acquisition and which involved GE executives and employees;
- Immelt's GE paid $50 million to settle charges that it made "materially false and misleading" statements four times, which is fraud;
- Immelt's GE settled charges of defrauding investors over Jack Welch's retirement package in 2004;
- Robert Khuzami, who now co-chairs that fraud task force with Eric Schneiderman, allowed GE to settle fraud charges after saying GE "broke accounting rules to the breaking point," which is another way of saying it broke those rules, which is another way of saying "fraud";
- investigators felt strongly they had identified specific individuals in the accounting department who had committed fraud, and were reportedly astounded when the Justice Department failed to prosecute;
- GE stands accused of participating in the Iraqi oil-for-food bribery scandal;
- and that officials in Washinton bent the rules so that GE, which is not a bank, could receive at least $75 billion in aid from the US taxpayer.
See "GE Capital: In the Dark" for more information.
My commentary on the interview is here:
Michael Hudson is a staff writer for The Center for Public Integrity and author of The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America—and Spawned a Global Crisis.