Inside Lehman Brothers

I'm on ten acres, it's all wooded.

I could stand in this house and scream

and nobody would come.

I went to work in 2003 with Lehman Brothers

completely a normal person.

This is where I ended up having to learn

to be able to kill somebody with my bare hands.

Wall Street was destined for where it is now...

with or without Lehman going out of business.

That they were on roller-coaster to nowhere.

It was a bubble that had to burst and it did burst,

and Lehman helped it burst.

I don't tell people I used to work for Lehman Brothers.

I don't tell people I was labeled

the Lehman Brothers whistle-blower.

I can't prove it but I was blacklisted from Wall Street.

So what I did was I sold my house,

I bought a motorcycle and I just travel all the time now.

Justice, to me, is a whole host of things all happening,

and I don't think they'll ever happen,

which is why I'm on the bike around the world.

Lehman had a reputation on Wall Street as being cowboys.

Their business practice a bit aggressive.

I quickly learned the culture is that

you don't tell people what you're doing,

you just make money.

I joined Lehman in 1994.

I was vice president.

You were on your toes, you were watching your back,

you had to do the best.

There was just a certain vibrancy all the time.

But I enjoyed that.

It's difficult to describe an electric feeling, but, um...

I had never felt so, uh,

intense all day as I did at Lehman Brothers.

It sounds crazy but actually was good.

I guess it's like a drug.

Another drug we were on.

At the top level of the corporation for Lehman Brothers,

people really believed in what they were doing.

They thought they were going to hit the home run,

hit the jackpot, money was going to come flowing in.

Below that level, at middle-management,

there were a number of people who were greatly concerned

and believed that Lehman was putting itself at enormous risk

and that it could be a disaster.

My responsibility is to simply find the facts, the truth,

put them into a report and then let others

decide the consequences of that.

So the question was, what was it they were doing

and how did they end up in bankruptcy?

So we had to assemble a team with experts.

But the case was so sophisticated that those experts

ended up hiring professors and other experts

who then advised them so they could advise us.

I had no sense in the beginning

of just how significant the issue of Lehman's failure was

and how incredibly massive it was.

Lehman's bankruptcy involved

almost 700 billion dollars worth of assets

and the losses to the creditors, even today,

are in the tens of billions of dollars.

But it wasn't just the size of the bankruptcy,

it's that Lehman's was involved in all aspects

of the financial world across the entire globe.

So when Lehman went into bankruptcy,

they took a lot of things with them and, to some extent,

they stopped a large part of the financial economy,

at least for a short period of time.

And we're still living with the consequences

of that bankruptcy.

I started in late '97.

I had another job as a lawyer at a Wall Street law firm

and decided to leave there and, before I knew it,

I was a Lehman Brothers lawyer.

It did have a reputation as an exciting,

up-and-coming place to work.

They were known as the scrappy newer bank.

It felt good, I didn't know anything at that point,

I thought nothing but the best, I had the highest hopes.

The aim of Lehman Brothers was to make money

any way that we could.

You know, any way that could be done without an undue risk

of being caught or penalized, we would do.

It was not about right or wrong,

it was about can we or can't we.

And if we could, we did.

Lehman began to get into the mortgage game early on.

They had wanted to be on that entire chain,

to own an interest on that entire chain.

We did have one of the best real estate teams

and one of the best bond departments on Wall Street,

so why not? It was sort of natural that Lehman

would take a leadership role in that area.

And we did.

- -

I started working in the mortgage industry in 1981

as a receptionist.

It was very exciting, and I felt that it was really important

to know more about the housing industry

because I know it's the biggest purchase in one's lifetime.

And then, in 1985,

I became a loan processor.

A loan processor is the person

that meets personally with the borrower

and gathers their information about purchasing a home.

So once they have completed a loan application,

I'm the one who gets the paperwork at that point.

So it's my responsibility to make sure

that they met all the requirements

before submitting it to the underwriter.

My job was to solicit

new brokers who solicit consumers.

My job was to help people to fulfill the American Dream.

To have a home where a family can be happy.

Kids can lounge on the couch.

Being able to have outrageous birthday parties.

That's the American Dream for me.

So what I liked about the mortgage industry

was the freedom that it offered.

I was able to work the hours that I needed to

to be with my children as well.

That was very, very important to me.

And the income was amazing.

There's no other job that you can get

and walk away with

30,000 dollars in a month.

What I remember from BNC is doing my background on them

because I needed to make sure they were stable

and that they were reputable.

And when I did the research, I googled them,

of course, like everybody else,

and they were owned by Lehman Brothers

which, at the time, was one of the largest

financial institutions in the world.

And so I felt very confident about making the switch.

And, unfortunately, they didn't turn out to be so reputable.

When I got into the business,

I was told that an underwriter's job was

to assume that everybody is lying,

and that your job is to go into the file

and either validate that they are lying

or that they have totally told the truth.

So, an underwriter that never underwrites

or approves a loan, no one is getting paid.

And that's what puts the target on our back,

that's what puts the pressure on us

when there is a shop that are not doing

all of their deals on top of the table.

- Hello? - I'm coming up close

to the causeway, where are you?

Keep straight and I'll flag you down.

Are you in Sacramento?

- Oh, yeah. - All right, well,

I'm coming through West Sac.

I'm looking for you now

'cause I saw your car pass.

Come here!

Hey, honey, I'm parked.

- It's changed a lot, huh? - Huh?

- It changed a lot, didn't it? - Yeah.

I haven't been back here since 2005.

Standing over here and looking at the building.

Yeah, never.

The nice change about it is that

it's no more memories of being, say, left.

I remember my last day,

after I came back off of stress leave.

- Yes. - You weren't there

'cause you were on stress leave!

- God. - When I arrived at BNC Mortgage,

the atmosphere in the office was very upbeat.

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The overall expansion came following the tech bubble.

The tech bubble burst in '01, '02

and that was followed by a real estate bubble.

Interest rates were pushed way down

and real estate became the new game to play.

And at the same time, there was this expansion

and development of new forms of lending, subprime lending

and there was a realization that this was a market

that could really be pushed up.

And Lehman was a big part of that wave.

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