The Place Where Ludington Talks
Rural Michigan Girl Reports Corruption in the Big Citi
Sherry Hunt grew up fishing and hunting mushrooms in the backwoods of Michigan. She started out small, processing loans in Alaska back in 1975. She joined Citigroup in 2004, rose to be a senior manager and last August she won a lawsuit against her boss, accusing Citi of violating US mortgage regulations years after.
The company was asking her to sign off on faulty, incomplete mortgages, just a couple years after Citigroup took $45 billion in bailouts from the U.S. government and billions more from the Federal Reserve -- more in total than any other U.S. bank. A couple years after post-crisis mortgage regulation clearly meant to red flag the kind of practices Citi was asking Sherry Hunt to hide.
What happened in a nutshell was that in March 2011, her boss asked her and colleague to stay behind after a meeting. He told them that they needed to reduce the number of mortgages considered defective. He told them that if they didn't, their "asses would be on the line." Sherry reasoned: "All a dishonest person had to do was change the reports to make things look better than they were. I wouldn’t play along.”
For her honestly, Hunt was awarded $31 million of the settlement money in a lawsuit she brought against Citi on Thursday, May 31, 2012.
Not to say that Hunt had that as an incentive to blow the whistle from the start. Quite the contrary.
In 2007, she brought concerns about incomplete mortgages to her boss, Richard Bowen III. She estimated that 60% of the mortgages her unit was processing were incomplete. Bowen e-mailed that information to his superiors, and months later, Hunt was being questioned by lawyers. Both she and Bowen were then demoted.
The practices that Bowen complained about years ago didn't stop. Hunt clawed her way back to top of her unit though, and started studying new federal whistle-blower laws around 2010. She'd had enough.
After the meeting where she was told her "ass was on the line," she reported what was going on in her division to her human resources department and to the SEC. The complete story was related by Bloomberg recently, which goes further in depth to the problems she had to overcome as a whistleblower, and her background. The following graphic shows a simple overview of the complex process that resulted in Citigroup's Mortagage factory:
It can be so easy to follow orders, and justify that you are just following orders. But if you know the orders you're following are wrong, and that the widespread revelation of this evil would be for the common good or because you know it's the right thing to do, you should come forward. There may be a fair chance it could work out bad for you, at least on paper, but it is very cleansing for the soul and the world would be a much better place if more people would do so.
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