Greg Bales

The $9 Billion Witness: Meet JPMorgan Chase's Worst Nightmare

[Fleischmann] sent a long letter to another managing director, William Buell. In the letter, she warned Buell of the consequences of reselling these bad loans as securities and gave detailed descriptions of breakdowns in Chase’s diligence process.

Fleischmann assumed this letter, which Chase lawyers would later jokingly nickname “The Howler” after the screaming missive from the Harry Potter books, would be enough to force the bank to stop selling the bad loans. “It used to be if you wrote a memo, they had to stop, because now there’s proof that they knew what they were doing,” she says. “But when the Justice Department doesn’t do anything, that stops being a deterrent. I just didn’t know that at the time.”

Taibbi introduces Alayne Fleischmann, who claims to have evidence that would allow the Justice Department to prosecute executives at JP Morgan Chase for securities fraud—something the Department has to date been reluctant to do, despite having interviewed her several times already in regulatory and criminal investigations. Taibbi clearly believes Fleischmann’s evidence solid and the Justice Department toothless—and he may very well be the correct on both counts.

“The $9 Billion Witness: Meet JPMorgan Chase's Worst Nightmare” by Matt Taibbi for Rolling Stone