Terminated CBO Whistleblower Shares Her Full Story With Zero Hedge, Exposes Deep Conflicts At "Impartial" Budget Office

Tyler Durden's picture

Earlier today, we suggested that in the aftermath of the Greg "Muppets" Smith NYT OpEd, contrary to assumptions by Jim Cramer, a bevy of potential whistleblowers would step up to tell their tale of fraud and corruption across all walks of life - from Wall Street to, far more importantly, Washington, consequences be damned. This was paralleled by an alleged JPM whisteblower describing to the CFTC the firm's supposedly illegal activities in the precious metals space, which while we initially dismissed, we now admit there may be more to the story (stay tuned), even though we still have our doubts. What we are 100% certain of, however, is that yet another whistleblower has stepped up, this time one already known to the general public, and one that Zero Hedge covered just over a month ago: we refer to the case of former CBO worker, Lan T. Pham, who, as the WSJ described in early February, "alleges she was terminated [by the CBO] after 2½ months for sharing pessimistic outlooks for the banking and housing sectors in 2010" and who "alleges supervisors stifled opinions that contradicted economic fixes endorsed by some on Wall Street, including research from a Morgan Stanley economist who served as a CBO adviser. As part of the review, Sen. Grassley's staff is examining whether Wall Street firms or others exert influence that compromises the office's independence." As we observed in February, "what is most troubling is if indeed the CBO is nothing but merely another front for Wall Street to work its propaganda magic on the administration. Because at the core of every policy are numbers, usually with dollar signs in front of them, numbers which have to make sense and have to be projected into the future, no matter how grossly laughable the resultant hockeystick." As it turns out, somewhat expectedly, the WSJ version of events was incomplete. There is much more to this very important story, one which has major implications over "impartial" policy decisionmaking, and as a result, Ms. Pham has approached Zero Hedge to share her full story with the public.

As we stated earlier, we will present any and every whistleblower's statement in its entirety, and without editing, and so we will, however we want to bring our readers' attention to several key aspects of Ms. Pham's termination from the CBO, because it may have substantial implications over the enacted $25 billion robosigning settlement. The reason for this is that Ms. Pham was fired because of her work voicing skepticism over precisely the same 'chain of title' validity issues that snarled foreclosure to a halt for much of 2011, which as Adam Levitin has said present a "potential systemic risk to the US economy" and which have necessitated the recently enacted Robosettlement to avoid massive losses for the banks (and in the process yet another shadow taxpayer bailout for the Too Big To Fail banks).

The bottom line is that the CBO was warned at least by Ms. Pham (and possibly others) over the dangers of precisely the issue that Attorneys General are scrambling to shove under the rug in exchange for a wristslap to all mortgage originators (i.e., the same banks that somehow are now getting bailed out by taxpayers and the GSEs on an annual basis). And just like every other issue that merely gets a cosmetic and very transitory liquidity facelift, nothing ever is actually fixed. As Ms. Pham says: "It is unclear how the recent State attorney generals’ agreement to a proposed yet unpublished terms of the $25 billion robo-signing settlement would repair the chain of title issues that continue to mutate. In January 2011, the Massachusetts Supreme Judicial Court reversed the foreclosure actions of two banks for lacking proof of clear title, followed by a decision in October 2011 that a buyer who purchased a house that was improperly foreclosed upon does not make the buyer the new owner of the house; the sale does not transfer the property."

While we are confident that even more contract laws will be terminally bent and broken simply to avoid some more balance sheet impairments for America's already insolvent financial system, the message here is clear: the CBO, and arguably other "impartial" policy advisors, will only focus on the established institutional opinion, preferably that set by Wall Street itself, and retaliate (in some cases with physical force) over anyone who provides a dissenting opinion.

Such as Ms. Pham.

Below is her full story (pdf).


Following the Wall Street Journal story, “Congress’s Number Cruncher Comes under Fire,” I realized that the true nature of the issues would not come out. Therefore, I am making public the letter that I wrote to Senator Grassley (Feb. 23, 2011) regarding circumstances that led to my firing after 2.5 months by the Congressional Budget Office (CBO), particularly my writing about mortgage fraud and its roots in mortgage securitization that CBO sought to deny was a problem.

For clarification, the WSJ did not give proper recognition to some individuals. My “supervisors” was Dr. Deborah Lucas, who was CBO chief economist and assistant director, and is currently tenured professor of finance and economics at the Massachusetts Institute of Technology (MIT). MIT Professor Lucas was called by the President to serve in a leadership role at CBO. Morgan Stanley economist and CBO advisor, is the Vice President of Economics Research at Morgan Stanley, Richard “Dick” Berner, whose policy framework for refinancing stimulus was to be incorporated into my writing. Dr. Lucas also shared with me analyses from Goldman Sachs, also on the CBO’s distinguish panel of economic advisors, on the housing market such as the banks’ limited risks on mortgage buy-backs.

As a Congressional senior staffer, financial economist, my initial responsibilities were to write a brief (paper) to Congress on the state of the foreclosure crisis and the alternative policy options, as well as cover banking and housing. Almost to the exclusion of other policy options, CBO Assistant Director Lucas and senior management worked around Morgan Stanley’s policy framework and related ideas to present to Congress as the policy choice (One would be correct to point out that CBO does not make policy). Below are excerpts from my letter to Senator Grassley:

I was repeatedly pressured by the CBO Assistant Director, Deborah Lucas… to not write nor discuss issues in the banking sector and mortgage markets that might suggest weakness in these sectors and their consequences on the economy and households...

CBO: Robo-signing, foreclosure fraud as “hype in the press”

When I wrote about the emerging foreclosure problems in September 2010, CBO Chief Economist Lucas maintained that robo-signing was media “sensationalism,” “the kind of event of the moment where we should be adding skepticism, not just repeating the hype in the press”; CBO wrote that my writing about it “lacks judgment about what is important.” Exploring this further in the letter,

…Issues at the heart of the foreclosure problems pertain to securitization….and the Mortgage Electronic Registration System (MERS), which purports to have legal standing on electronic records of ownership on about 65 million…mortgages… MERS…facilitated Wall Street’s ability to expedite the pooling of subprime mortgages into MBSs by bypassing standard ownership transfer procedures as the housing bubble escalated…


The implications have profound financial and economic consequences that would be of compelling interest to Congress and the public, but the CBO sought to silence a discussion of such risks, that in reality have been materializing. These risks put into question the ability of investors or bondholders to make claims on the collateral (the homes) that underlies trillions of dollars in MBSs, the bulk of which are now guaranteed by …Fannie Mae and Freddie Mac. This affects $10 trillion in residential mortgage debt outstanding, of which $7 trillion in mortgage-backed securities (MBSs)…

The CBO dismissing such issues prevents an analysis of the risks, so that the public may be forced again to shoulder the consequences for which they have not been a given a voice or a choice.

A month later after being told by CBO Chief Economist Lucas to not repeat this media hype, Georgetown University Law Professor Adam Levitin, Special Counsel to the Congressional Oversight Panel and scholar at the American Bankruptcy Institute, raised essentially the same issues in his testimony before the House Financial Services Committee:

“The chain of title problems are highly technical issues, but they pose a potential systemic risk to the US economy. If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever….


These problems are very serious. At best they present problems of fraud on the court, clouded title to properties coming out of foreclosure, and delay in foreclosures that will increase the shadow housing inventory and drive down home prices. At worst, they represent a systemic risk that would bring the US financial system back to the dark days of the fall of 2008.” [Executive Summary, first page]

Essentially, the chain of title on securitized mortgages appears broken, whether or not there is a foreclosure. This would pertain to most homebuyers in the past 10 years as most mortgages were securitized by Fannie Mae and Freddie Mac providing the guarantees, and the largest banks (“The $7 Trillion MBS Problem – Foreclosure Problems and Buybacks”). Recall that these same entities founded MERS, which expedited securitization and purported to have foreclosure authority from its electronic records of ownership on about 65 million mortgages. “Robo-signing” emerged as fraudulent or defective documents were used or created to establish the legal authority to foreclose as MERS faced legal challenges; as of July 22, 2011, foreclosures could no longer be initiated in MERS’ name. At last year’s pace, some figures suggest it could take lenders in New York 62 years to clear their foreclosure inventory, 49 years in New Jersey and a decade in Florida, Massachusetts, and Illinois.

It is unclear how the recent State attorney generals’ agreement to a proposed yet unpublished terms of the $25 billion robo-signing settlement would repair the chain of title issues that continue to mutate. In January 2011, the Massachusetts Supreme Judicial Court reversed the foreclosure actions of two banks for lacking proof of clear title, followed by a decision in October 2011 that a buyer who purchased a house that was improperly foreclosed upon does not make the buyer the new owner of the house; the sale does not transfer the property.

A striking little mention fact of the Massachusetts foreclosure case was that the lenders could not show that the two mortgages were part of the securitization pool. Let’s consider a thought exercise. Others have the raised the question: if the entity that has been taking the homeowners’ mortgage payments is not the real owner, what happens when the true owner(s) of

the mortgage shows up? Are homeowners on the hook again for those ‘missed’ mortgage payments? It was not uncommon for mortgages to be sold multiple times, and it is my understanding that loans were intentionally not given unique identifiers as it moved from origination or purchase through to securitization.
In response to the WSJ story, Director Elmendorf issued a public statement maintaining the integrity of CBO’s work, an excerpt which reads:

“…We have the utmost confidence in the objectivity of our work and devote considerable time and energy to explaining the basis of our findings as clearly as we can to help Members of Congress understand the work that we do.” (Bolded emphasis is CBO Director Elmendorf’s)

In early November 2010, a stunning example was CBO Director Elmendorf’s, a Harvard Ph.D. economist, view that employment growth in housing construction would spur economic growth, in his discussion of inputs into CBO’s macroeconomic forecast model. A question about the assumption was met with Director Elmendorf asking why they were “pessimistic” about such assumptions.

After my termination, Director Elmendorf stated that I should have followed directions from the more knowledgeable and experienced Chief Economist Lucas, taken the opportunity to learn from her. Director Elmendorf saw no ethical issues in her direction, but shifted to perhaps we had a difference of professional opinion. As I understand, Director Elmendorf and MIT Professor Lucas first claimed to Senator Grassley’s office that they could not speak about my termination due to personnel privacy protections, when none exists for Congressional employees. When given full immunity to speak freely to Senator Grassley’s office regarding my termination, they refused to speak.

It has been suggested to not mention these things in polite conversation, but I admit there were oddities following CBO’s termination. After CBO fired me at the end of the day saying “we do not know whether or what you know about economics, economic theory or finance,” I returned to my office to make a phone call. Everyone had left, but there was a silhouette of a man standing in the dark in an office across the courtyard watching me during the 15-20 minute phone call. Later, I came home to find some papers had been moved and could no longer find some important documents pertaining to this case. I attempted to retrieve these documents from my office at CBO, but the power to my office was shut down precisely as the documents from my computer were about to be e-mailed to me; the entire floor and building were unaffected. At about 3 a.m. during a week day, there was sudden a loud crash into my front door followed by complete silence. Perhaps it was just a complimentary early wake-up call.

The truth is still what it is.

As I have come to learn, the issue of foreclosure fraud ‘robo-signing’ seems to be spoken in hushed tones near the powers of Washington D.C. CBO has the ear of Congress and can make or break policies that affect the nation with its analyses.

Who is the CBO serving?

Lan T. Pham, Ph.D.



And her full letter to Chuck Grassley can be found here - pdf.

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urbanelf's picture

Congratulations, ZH

Unprepared's picture

You don't congratulate a person who points to a pile of shit.

kito's picture

If they help you avoid stepping in it, they shirley do deserve kudos......

Buckaroo Banzai's picture

Agree...and stop calling me "Shirley".

i-dog's picture

ruh-roh ... time to save ZH's IP address before they wipe ZH from DNS servers!

PS. Just noticed recently that I can no longer use google to search for my old posts on ZH. It seems that all (or selected) topics are being totally filtered out of their results ... in addition to prefacing each result that points to ZH with: "Do NOT follow this link or you will be banned from the site!"

Doña K's picture

Yes! Same with me. Nowhere to be found on google unless the search was exact and several words long. I used Gibiru.com and they were right there.

john39's picture

google, facebook, microsoft, apple....  all these corporations are in bed together with the fascists that control the government.  they can't shut the internet down all at once, but they can take it over and slowly strangle it, and only a few will notice...

(edit) here is just another example:


sure it all looks basically clean, protecting copyrights etc... but in practice it means that they will erase anything that fascists don't like, and bar anyone who actually tells a little truth


Janice's picture

I asked the same questions to my local Clerk of the Court two years ago. He said that he didn't understand why I was so concerned, no one else had ever brought up the issue of chain of title. I wonder if he's caught up to the rest of the herd.

jeff montanye's picture

doubt it, but time is on our side, except for that option premium decay. 

p.s. unprepared: you do if the pile is unacknowledged.  not original i know but still important.


nope-1004's picture

Well done Lan.  Thank you for speaking, and thanks Ty for posting this.

The corruption runs deep.  The debts and the burdens are obviously terribly toxic and contagious, otherwise there would be no need to be hushed.


Spirit Of Truth's picture

“During times of universal deceit, telling the truth becomes a revolutionary act”

spiral_eyes's picture

Well this is a nice new phenomenon. Whistleblowers have stopped giving a fuck, and have started sharing info. Here's to morality.

The Big Ching-aso's picture



Pham's done a phamously good job here.   I hope her 15 minutes gets extended to an hour or more. 

GetZeeGold's picture




Oh good......confirmation that the BS......was indeed BS.


Whew.......I was starting to second guess myself for a second there.


economics1996's picture

Economics taught at all levels of education is complete horse shit.  This makes me fucking sick. 

chumbawamba's picture

Fucking sycophants.  Do I always have to be the one to come in here and point out that they are apparently graduating PhD's with fucking horrible grammar?


And fuck you, Conrad Murray, you douche.

I am Chumbawamba.

Conrad Murray's picture

Nice to see you too, chumbawamba. I see that religious awakening is really working out for you. Cheers.

Whalley World's picture

what a nice refreshing breeze, like revolution in the air, can't stop it

covsire's picture

Her story sounds plausible and everything, but I watched a few episodes of the X-Files and the shadow figure watching her, documents missing and power going out just as she was going to email some things sounded like something right out of Mulder's life story, down to the timing of the events. 

Still I know the CBO is a corrupt institution, for the simple fact they completely lied about Obamacare alone from the very beginning.

Bananamerican's picture

The CBO?

At this point I believe the entire State is shot through with corruption.

GetZeeGold's picture




Gosh.....do you really think so chief?



uraniuman's picture

Having been a township supervisor for too long - I can confirm witnessing greed and corruption, even at the lowest levels of government. Term limits would cure many ills.

TheGardener's picture

It`s understandable that she feels vulnerable and scared and becomes a bit paranoid after suddenly finding herself being an outcast. The "Moscow Rule" should give some guidance :
if something strange happens once, ignore. Twice : coincidence. Three times : no coincidence !

disabledvet's picture

You should thank Senator Grassley. "There is no claim unless the claim says something meaningful to someone in power." Not that i'm allowed to say this stuff in these here parts but i've always thought of Senator Grassley as one of the true "good government guys" in...well..."Government." Anywho...carry on!

The Big Ching-aso's picture



I have not been corruptedly bought out by anyone.  Hence still living as middle-class surrounded by upper-class. 

"I am The Big Ching-aso and I endorse this stupid non-sequitor message."


Xkwisetly Paneful's picture

I love all of these victims who came into the game with nothing and left with something.

Doug Elmendorf is beyond a joke, the guy is never, ever right and he has Obama's ear.

I would have a record of these-he really must be trying to be wrong in order to be wrong systematically-predictions but wiki keeps editting them out.

Think the best one was unemployment would be back to "normal" 6% by 1q 2012 he said this in late 2010.

The Big Ching-aso's picture



I can't imagine internet life without ZH.    It would be like dying by a 1,000 tiny bytes.

monoloco's picture

If we commit financial fraud the DOJ comes after us, prosecutes us and throws us in jail, when the TBTF banksters commit financial fraud they just pass a law after the fact legalizing the fraud.

GetZeeGold's picture



It's Phamtastic!!!


It's like Linsanity squared.


It appears a chink has been found in the CBOs armour......good thing I don't work for ESPN.....I'd be pretty screwed right about now.


azzhatter's picture

How many times have we witnessed Eric Schmidt slobbering on Obama's dick? Google just an arm of the fascists

JohnKozac's picture

DuckDuckGo.com and Startpage.com are not bad search engines also.

DormRoom's picture

If more whistleblowers contact ZH, they'll go after the servers, for evidence.  DNS ip backup wont' help us, unless ZH has distributive database backups around the world, like piratebay.



CrazyCooter's picture

What you describe is a binary event; either they go after (and shut down) news sources or they don't.

Is it a good idea to keep IPs handy? Yes. But, the larger issue is whether TPTB are really brassy enough to shut down legitimate traffic on the interenet. Look to China to see the most oppressive policies play out.

If the US pulled this, the backlash would be epic.

Quite a conundrum if you think about it for the elites ... perhaps Mr. Kreiger is right after all.



EDIT: I just got my copy of "The Forgotten Man". I will chat ya'll in a few days. Later!

jeff montanye's picture

cooter: love you and your posts for a long time (or so it seems).  i would have said you were right all through the bush rule (it seemed there was an opposition).  but since obama, i'm not so sure. 

blindfaith's picture



Dear Cooter,


You say "If the US pulled this, the backlash would be epic.".  Why? we have sat on our collective asses and watched our neighborhood be destroyed with forclosurers when we knew it was the corruption.  We sat on our asses when we saw more and more freedoms and rights removed from the Consitution using the back door.  And, the beat goes on and on demonstrating who easy it is to take over the nation by a band of street thugs, elected and non elected.

Americans will do nothing, same as always

EverythingEviL's picture

I agree.  It's usually one of a few things.  They don't care, they are scared, they don't want to admit that our government is complicit in all the crimes taking place, or they feel there is nothing they can do about it so why bother?   I have many friends that always seemed like intelligent people but when I tell them about things and show them the evidence a glazed look starts to come over there eyes like it's just instant denial or they think I am the crazy one.  Tell me you guys have all experienced this, I know you have.  Even my wife thinks I'm crazy lol.  It's a sad state of affairs.

The Big Ching-aso's picture



Are you saying this latest whistleblower suspiciously entering ZH's gate is like some sort of Trojan Condom?

kito's picture

@john...I can't seem to search by the category of news on either of those search engines.......

The Big Ching-aso's picture



Whisteblowers are coming out of the woodwork like termites. 

iDealMeat's picture

I logged in to +1 you because the visitors don't see the junks and +'s..

Good form..  wish I could + another for the "butt" pun...



The Big Ching-aso's picture



I have to be judicious with my "butt" puns.   Some are punny, some are not.

cnsteph's picture

I use Duck, but I haven't found an email service that doesn't keep all your info.  I wouldn't even mind paying as long as its private and they don't sell my info or keywords.  I'd prefer completely annonomys but I don't know enough to do that.

StychoKiller's picture

Have you considered the benefits of encryption?  Your emails might be totally mundane, but once encrypted, they could function as honeypots for the NSA and other alphabet agencies...

I only kill chickens and wheat's picture

yea i switched to duck, seriously thinking about setting up my own email server. Just get a domain name from one of the providers. There are some private email services for $, hushmail and others.