Recently, the Center for Public Integrity published a series of three stories marking the five-year anniversary of the bankruptcy of Lehman Brothers Holdings Inc., which was followed by a $700 billion government bailout of the banking industry and the worst recession since the 1930s. In “After the Meltdown — Where are they now?” the Center revisited three primary drivers behind the economic collapse — the subprime lenders who fed the bubble, the Wall Street bankers who funded it and the government regulators who failed to keep disaster from occurring. The investigation revealed that few if any of these key players have been held accountable.
Senior reporter, Alison Fitzgerald was an integral force in this investigation, so we wanted to catch up with her for a behind-the-scenes look at this follow-up investigation.
Alison Fitzgerald joined the Center in April 2013 to help lead its financial reporting project and campaign finance coverage. Her coverage of the 2008 financial crisis and ensuing government bailout won her several awards, including the 2009 George Polk Award, the Sidney Hillman Prize for social justice reporting, and the "Best of the Best" from the Society of American Business Editors and Writers.
What surprised you during the investigation?
Two things: In part two, I was stunned to see that the very people who lead the mortgage industry, and therefore the whole financial system, down a path of utter recklessness, were able to simply dust off their pants and get back in the game. There is no body — like a bar association — to impart standards and dole out discipline. And they appeared to see this as just another economic cycle to survive.
I was also surprised to find that none of [the former CEOs] had to fork over any of their money, even in civil lawsuits. This became more shocking to me when I read the lawsuits and officials reports that showed what appeared to be a flagrant disregard for their managerial and fiduciary duties.
What was the biggest challenge you faced in obtaining or analyzing the data?
There is so much information out there now about the financial crisis that requires sifting through and careful choosing of relevant documents. This was especially true of legal issues. The sheer volume of lawsuits is staggering.
When I searched through federal court databases for “Richard Fuld” literally thousands of cases would come up, and then in those records there would be hundreds of documents. Trying to find those that were relevant, and determine with certainty that they had or had not been found liable was difficult — especially because they and most of their attorneys did not respond to my questions.
What outcome do you hope this investigation will result in?
One thing that happens in news a lot is that we move on and forget to go back and find out what happened later, after the urgent breaking story faded. I wanted to go back and look at what happened to these individuals who had dominated the financial news for so long — whom I had written about extensively in 2007-2009 — and use their stories to point out some disturbing truths. One of those truths is that we rarely find justice in financial crime, or financial wrongdoing. The laws are written differently for white collar criminals and the burden of proof is much higher.
Given all that I hope that this series will spur a review of these systems and perhaps inspire some changes that make it so people in business and finance are forced to take responsibility for their actions, and the actions of the people whom they manage and direct.
What type of reaction has it sparked so far?
There has been enormous interest and outrage. I’ve been delightfully surprised by that really because I feared that people would see the stories and say, “Well, we already knew that.” But the detail we were able gather has really captured readers and made them angry.
Any plans for a follow up report in the future?
We have a lot of follows planned. These include looking at whether the new laws and regulations are actually responsive to the problems that were revealed five years ago. And we plan to look at new vulnerabilities in our financial system coming from many areas, including how it marginalizes low-income people and how much more invulnerable the big banks have become.