As Whistleblowing Becomes The Most Profitable Financial 'Industry', Many More 'Greg Smiths' Are Coming

Tyler Durden's picture

Minutes ago on CNBC, Jim Cramer announced that Greg Smith will never get a job on Wall Street again as "one never goes to the press. Ever." Naturally, the assumption is that the secrets of Wall Street's dirty clothing are supposed to stay inside the family, or else one may wake up with a horsehead in their bed. There is one small problem with that. Now that compensations on Wall Street have plunged, and terminations are set for the biggest spike since the Lehman collapse, the opportunity cost to defect from the club has also collapsed. And if anything, Greg Smith's NYT OpEd has shown that it is not only ok to go to the press, but is in fact cool. So what happens next? Well, as the following Reuters article reports, 'whistleblowing' over corrupt and criminal practices on Wall Street is suddenly becoming the next growth industry. Yes - people may get 'priced out' of the industry, but since the industry will likely fire you regardless in the "New Normal" where fundamentals don't matter, and where the only thing that does matter is the H.4.1 statement (as Zero Hedge incidentally pointed out back in early 2010), why not expose some of the dirt that has been shovelled deep under the coach, and get paid some serious cash while doing it?

Here is Reuters on why we are about to get a deluge of Greg Smiths exposing the muppet army, only this time they will not cast merely ethical aspersions about their employers, but will provide solid, hard evidence of criminality.

Whistleblowers who were instrumental in revealing epidemic mortgage abuses, some of whom risked their careers to do so, are getting multi-million-dollar payouts, court documents show.


Victor Bibby and Brian Donnelly, two Georgia mortgage brokers, are among the handful of whistleblowers whose stories are coming into focus.


Bibby and Donnelly said they started noticing in 2005 that lenders were charging veterans hidden fees on mortgage refinancing - a violation of the government's Interest Rate Reduction Refinancing Loans program.


The pair, who worked for U.S. Financial Services Inc, a mortgage brokerage firm in Alpharetta, Georgia, said they became suspicious when lenders told them not to show an amount charged for attorneys fees on loan documents, but instead add the sum to the charge shown for "title examination fee."


After lenders ignored their concerns, Bibby and Donnelly hired an attorney and filed a whistleblower suit.

The payoff to rat out criminal behavior?

The wait paid off in the form of a $45 million government settlement with JPMorgan Chase & Co that became public this week. Bibby and Donnelly and their attorneys will receive 26 percent, or $11.7 million.

And many more are coming:

The case is one of five whistleblower suits settled for a total of $227 million as part of the broader $25 billion deal with five lenders over foreclosure abuses, according to court documents filed this week.


Details of the cases are emerging slowly as suits are unsealed and prosecutors disclose settlements.


U.S. Attorneys in North Carolina and South Carolina said on Monday that five banks - Bank of America Corp, JPMorgan Chase, Wells Fargo & Co, Citigroup Inc and Ally Financial - agreed to pay the amount to address allegations they participated in a nationwide practice of failing to obtain the required mortgage assignments, documents used to transfer ownership of loans.


The lenders also used false assignments to submit Federal Housing Administration insurance claims, prosecutors said.


The whistleblower in the case, Florida homeowner Lynn Szymoniak, will receive $18 million.

But wait, there's more. While Wall Street will hate these newly turned "rats", America's taxpayers, tired of being raped on a daily basis by Wall Street will embrace the "whistleblowers", especially since there is money finally coming back from Wall Street to the "rest of America."

Two of the other settlements outlined this week - for $75 million and $6.5 million - appear to be related to an investigation into whether Bank of America and its Countrywide Financial unit knowingly made FHA-insured loans to unqualified borrowers.


Prosecutors in New York said in February they had reached a $1 billion settlement with the bank over these practices, but have not yet filed court documents.


Court documents have not been filed in the fifth case, which resulted in a $6.2 million settlement.


Legal releases in the $25 billion mortgage settlement indicated other whistleblower cases are still in the works.

Sure, these people are terminally gone from the industry...

Bibby, who is 46 and married with three children, and Donnelly, who is 56 and married, said they don't have plans for their portion of the settlement. They will have to pay taxes and attorney fees out of the $11.7 million sum.


U.S. Financial Services at one time had about 50 employees, but is now basically out of business. They are not sure what they will do next.


"I think we're kind of dead in this industry, to say the least," Bibby added.

But so what? If the opportunity cost of staying is offset by millions in whistleblower payoffs, it makes the return on loss of career not only tolerable but largely desired.

Sorry Cramer, Greg Smith is just the beginning- with his Op-Ed he has unleashed an avalanche of similar disclosures, many of which will expose the true dirt that you and yours would do everything in your power to cover up.

Incidentally, and as a reminder, Zero Hedge will always gladly publish without editing any of our readers' reports of criminal or less than legal activity witnessed at their financial employers.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Manthong's picture

Hey, you disaffected Wall Streeters remember:

He who outs first, outs best..

                   and gets the best book deals!

jcaz's picture

Maybe true he won't find another job,  but I doubt he worked for free the past 10 yrs...

Oh, and I doubt that he blew up HIS hedge fund, and has to go begging to CNBC for a job as a "reporter".......

trav7777's picture

bbbbut....bbbbbut....."see something, say something"????  WTF?

The DHS is telling us to snitch, no? 

john39's picture

yeah but they mean brown people... or crazy white guys with guns who buy gold....   not our saviors (gag) the bankers...

The Big Ching-aso's picture



"Man who blow whistle must be ready to take it on chin."



whstlblwr's picture

Fucking Cramer, news for you, money isn't everything, and you're not a 'journalist.' You're paid hack and everyone knows it.

“A man has honor if he holds himself to an ideal of conduct though it is inconvenient, unprofitable, or dangerous to do so.” -Walter Lippmann (American journalist)

jus_lite_reading's picture

There are few Americans with that honor... sorry to say. This is not the America I once knew!! If America had followed the constitution to a T from day ONE, the world would not be in the situation it finds itself in!! The constitution does not allow for fiat money!!

tarsubil's picture

Rats leaving the ship means the ship is sinking.

King_of_simpletons's picture

Wall Street + Fed = Mafia.

What's surprising ?

Son of Loki's picture

Movie rights!....I hope they make a movie out of this staring "doing God's work" himself.....and the other Creatures from Wall Street.....

WonderDawg's picture

Doing God's Work would make a great title.

Executioner's picture

And here we have MSM trying to make a lemonade out of this event... Hey you wallstreeters remember the rume of silence otherwise no jobs for you.

Well, the right way should be: No one in that or that firm industry will ever get a fkng client again, because one should never go AGAINST their clients.


Cramer will never get audience again since one should never use tv to downplay those who are telling what's going (even if it's a former gs) instead of focusing on the real issue, the real villainy.

jus_lite_reading's picture

"Doctor, I think we have a pandemic on our hands! Retreat to the bunker!"

I think I need to buy a gun's picture

did you guys see the video? Cramer sounded like the psycho that he is

Votewithabullet's picture

Cramers adopted the street creedo...snitches  get stiches? Or was it" bitches get stiches, snitches get put in gator holes"?

battle axe's picture

Only problem is when you are fired from an Investment Bank they make you sign a confidentiality agreement that says that you can not say anything about the firm. If you don't sign it you do not get your severance package. Now would be the time when more of these stories come out because the Bonuses have already cleared to your bank account so if you are going to leave your position do it now and then talk. Only problem is the firm might hit you with lawsuits to drain money from the whistleblower to set an example that they will cause pain to anyone else who is thinking of opening their mouth... 

john39's picture

not everyone signs.  This woman was not an investment banker, but the situation is comparable:

battle axe's picture

True, but I would say 90% do, because they want the money to buy time to find another job. 

MeelionDollerBogus's picture

The complaint describes a broken mortgage-processing system. In one instance, employees erased records of about 1,000 loans that Hunt’s quality-control team identified as possibly fraudulent, according to the complaint. Defects identified by the quality-control team didn’t make it into reports, a violation of HUD requirements, it said

Once again showing it's not just the articles but the comments that are the best reason to keep reading zerohedge. Thanks

SheepDog-One's picture

What Cramer was really saying is Greg Smith wont ever get a job with any criminal Wall St firm ever again....probably can walk on to a top job in an honest bank though.


Hopefully Mr. Smith does not fall victim to any horrific "accidents". 

zenbones's picture

I'd stay clear of hot tubs.  And make sure to have some aspirin on hand.

MeelionDollerBogus's picture

oopsies, looks like someone tripped & fell into a totally natural heart-attack.

DaveyJones's picture

the unwritten premise of RICO is that those enforcing it can not be members

Nothing To See Here's picture

Goldman to Greg Smith : "I find your lack of faith disturbing"

Pasadena Phil's picture

This is the Wikileaks phenomena spreading. I'm still undecided about how I feel about Wikileaks considering but most of the info they have relesased reveals that our halls of power are populated by the slimiest among us, It helps to get that out in the open. The truth is more of a threat to the corruptocrats than to national security.


We need an airing out in this country. The corruption has festered for so long that the stink is unbearable.

Nothing To See Here's picture

Why are you still undecided about Wikileaks? These guys are heroes and Asange will go down a martyr imo.

zenbones's picture

Yes, I heard the Mossad is planning a BBQ in his honor for all the great work he does for them.

DaveyJones's picture

I figure he must have pissed off someone if they're trying to extradite him for not wearing a condom.

zapdude's picture

I am skeptical of Wikilieaks as well -- how many times have they signalled they're going to drop a bombshell on the corruption in the financial services, yet failed to do so? 

The fact they won't even touch 9/11 Truth evidence makes me think they're controlled by TPTB and are allowed to only publish sanctioned secrets / dirt, but never blow the cover on the really important cover ups and show the world where all the bodies are buried.

It may sound paranoid, but if they really had the FUBM mentality, were the 'heroes against the elitist oppressors', and wanted to expose all the dirt, what's keeping them from doing it?  Their reputation?  Just seems too controlled and convenient for Wikileaks not delve too deep into the real underlying problems...

GeneMarchbanks's picture

Hopefully 'Whistleblowing' becomes a bigger bubble than Apple.

jus_lite_reading's picture

God bless the internet!

OH and why do think the wall street connected and funded politicans RUSHED to push through 5 internet "red pill" bills in such short time and UNDER THE FU&&ING RADAR OF THE PUBLIC?


THEY KNEW the shit was about to hit the fan!!!

WillyGroper's picture

holy frijole! it's getting fun now.

Mercury's picture

Well he's right.

Monika Lewinski was cool for 15 minutes too....and then she never got another job, anywhere, ever.

Gushers of government reward money will dry up as soon a whistleblower uncovers dirty government hands engaged in previously unadvertised mega-bank activity.

In 15 minutes most likely...

Scary's picture

But that wasn't a whistle she was blowing...

Xinu's picture

Yeah, but she sucked.

tiwimon's picture

and did not swallow..


/as shown by the, uh, stain on an article of clothing

DaveyJones's picture

I don't know, think there's a large underdeveloped market for men's custom handbags

Mercury's picture

A bearish, macro leading indicator if ever there was one.

DaveyJones's picture

bearskin macrame handbag - brilliant

SheepDog-One's picture

What are you talking about Mercury? Monica Lewinski never got a job anywhere? I beg to disagree, she got a huge gig at Revlon I think it was, 6 figure salary. 

Mercury's picture

She had a lot of "jobs"...for 15 minutes. But I doubt she'd tell you now that revenues have exceeded the expenses of the whole enterprise.

Besides, she's an economist now.  Perfect.

BorisTheBlade's picture

Exactly, they will blow the whistle in increasing numbers and walk away with immunity, well, some of them.