Tuesday, 21 August 2012

The word "billion" gets thrown around today like it's some small number.  Is a billion cars a lot of cars?  Is a billion people a large crowd?  What about a billion dollars? 

Some perspective:

A billion seconds ago it was 1980. 

A billion minutes ago was the time of Jesus.

A billion hours ago was the stone age.

A billion days ago no one walked upright.

Yet a billion dollars ago was 8 hours and 20 minutes at the present clip that Ben hyper-depresses the world.

Monday, 20 August 2012

Next thing you know,  you’ll start connecting the dots between the nation’s skyrocketing public debt and the private fortunes amassed by a select few.

Friday, 10 August 2012

Where Are They Now?

Financial crisis: 25 people at the heart of the meltdown – where are they now?

In 2009 the Guardian identified 25 people – bankers, economists, central bankers and politicians – whose actions had led the world into the worst economic turmoil since the Great Depression. On the fifth anniversary of the credit crunch, what are they doing?
Alan Greenspan
Former Federal Reserve chairman Alan Greenspan testifying before the US Financial Crisis Inquiry Commission in 2010. Photograph: J Scott Applewhite/AP

Central bankers

Alan Greenspan, chairman US Federal Reserve 1987-2006
A disciple of libertarian icon Ayn Rand, Greenspan became chairman of the Fed just in time to save the global economy from the 1987 stock market crash from becoming a full-blown disaster. He went on preside over the boom years of the 90s and lead the US economy through the aftermath of the September 11 attacks and was widely referred to as an "oracle" and "the maestro".
But Greenspan's super-low interest rates and consistent opposition to regulation of the multitrillion-dollar derivatives market are now widely blamed for causing the credit crisis. Under Greenspan's tenure the derivatives market went from barely registering to a $500 trillion industry, despite billionaire investor Warren Buffett warning that they were "financial weapons of mass destruction".
His rock-bottom rates encouraged Americans to load up on debt to buy homes, even when they had no savings, no income and no job prospects.
These so-called sub-prime borrowers were the cannon fodder for the biggest boom-bust in US history. The housing collapse brought the global economy to its knees.
He was given an honorary knighthood in 2002 for his "contribution to global economic stability", but in 2008, at a Congressional hearing investigating the causes of the financial crisis, Greenspan finally admitted he "made a mistake in presuming" that financial firms could regulate themselves.
"You found that your view of the world, your ideology was not right, it was not working?" Henry Waxman, the committee chairman, said.
"Absolutely, precisely," Greenspan replied. "You know, that's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."
After he quit the Fed, in 2006, Greenspan joined Pimco, the world's largest bond investor, as a special consultant. Pimco's co-founder Bill Gross said Greenspan had helped make the firm "billions of dollars'' in his role as a consultant.
Gross said Greenspan's "brilliance" was a "big money saver for us''. "He's made and saved billions of dollars for Pimco already,'' Gross said in 2008.He has also advised Deutsche Bank and hedge fund billionaire John Paulson.
Greenspan has also found time to criticise current Fed chairman Ben Bernanke's programme of quantitative easing. "I've stayed away from commenting on Fed policy," he said on US TV earlier this month. "I will say this, however, that the data do show that the expansion of assets has had very little impact on the economy, for an important reason, that we've created a major increase in the asset side of the Fed balance sheet and a very large trillion and a half increase in excess reserves."
Mervyn King Mervyn King, governor of the Bank of England
At his first meeting chairing the Bank's monetary policy committee (MPC) interest rates were cut to an historic postwar low of 3.5%. King's ambition as governor was to make the Bank "boring". If only that had been the case.
He was slow to react to the crisis and initially refused to follow Greenspan in pumping cash into the system. The Treasury select committee (TSC) said he should have noticed that the housing bubble was becoming unstable and should have been "more pro-active" to damp it down.
Just the other week King finally admitted that the financial crisis was the result of "major mistakes" by policymakers and not just the fault of greedy bankers.
At the government's Global Investment Conference in London in the buildup to the Olympics he said: "We saw this going into the crisis, we kept meeting at the International Monetary Fund (IMF), but we did nothing to solve it collectively, and I don't think that this was a problem that could have been solved individually."
More recently, King had to face the TSC to explain why the Bank failed to spot the Libor interest rate-fixing scandal that pre-dated the credit crunch and last month Bob Diamond stepped down as chief executive of Barclays after King let it be known Diamond no longer had the confidence of the Bank.
In the shake-up of regulation that followed the financial meltdown, the governor of the Bank of England has emerged with more power than ever. However, King is due to stand down next summer, with former cabinet secretary Sir Gus O'Donnell and deputy governor Paul Tucker the favourites to replace him.


Bill Clinton Bill Clinton, former US president
Politicians' current plan to help prevent another financial crisis is to ringfence banks' risky "casino banking" divisions from the more pedestrian high street banking departments. 13 years ago Clinton repealed the Glass-Steagall Act, which had done just that. Clinton's move, which came after fierce lobbying from bankers, heralded the birth of superbanks and primed the sub-prime pump.
He also signed the Commodity Futures Modernization Act, which exempted credit-default swaps from regulation. Around the same time Clinton also beefed up President Carter's 1977 Community Reinvestment Act – forcing lenders to take a more sympathetic approach to poor borrowers trying to get on the housing ladder.
Gordon Brown Gordon Brown, former prime minister
Brown's big boast as chancellor was that he had "abolished Tory boom and bust". He hadn't. His prime ministerial tenure was spent presiding over the biggest bust since the Great Depression.
In his last big speech before becoming prime minister just before the crisis began he praised bankers for their role in bringing in a "new golden age for the City of London".
To tempt foreign bankers to work in the City he backed low taxes for non-doms and "light-touch" regulation that meant they could get away with a lot more in London than elsewhere.
Brown is now working on projects to improve child poverty levels and education, worldwide, with organisations such as the United Nations.
George W Bush George W Bush, former US president
The meltdown happened on Bush's watch. While Clinton got the ball rolling with sub-prime lending, Bush failed to bring in much tighter regulation, bar the Sarbanes-Oxley Act brought in after the Enron scandal. And he didn't do a lot to stop the boom in lending to "Ninjas" [no income, no job applicants].
Nouriel Roubini, the economist who earned the nickname Dr Doom for his prediction that the crisis was about to hit, blames Bush. Obama "inherited a mess", Roubini has said. "We're lucky that this Great Recession is not turning into another Great Depression."
Bush is in self-imposed political exile and has been notable for his absence in Mitt Romney's campaign to become the next Republican president. "He is enjoying his life in Texas. He's not seeking the limelight. And he is really focused on the Bush Center," his spokesman said recently. He has "no plans to endorse, at least not at present," the spokesman added.
The former president has written a book, Decision Points, about the 14 biggest decisions of his presidential career. The former president was paid $7m for 1.5m copies.
Phil Gramm Senator Phil Gramm
"Some people look at sub-prime lending and see evil. I look at sub-prime lending and see the American dream in action," Gramm told a Senate debate in 2001.
Another dynamite quote. "When I am on Wall Street and I realise that that's the very nerve centre of American capitalism and I realise what capitalism has done for the working people of America, to me that's a holy place."
It was Gramm that had fought hardest for deregulation and helped write the law that enabled the creation of financial giants such as Citigroup and Bank of America.
He remains unrepentant. Just a couple of weeks ago Gramm, who went on to work for Swiss investment bank UBS until earlier this year and is now a visiting scholar at the American Enterprise Institute, said: "I don't see any evidence that allowing them to affiliate through holding companies had anything to do with the financial crisis nor has anybody ever presented any evidence to suggest that it did."
Sandy Weill, however, a man with hands-on experience of running a too-big-to-fail bank as the former chairman and chief executive of Citigroup, begs to differ. Last week Weill said: "What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real-estate loans and have banks do something that's not going to risk the taxpayer dollars, that's not too big to fail."
Weill added: "The world changed with the collapse of the housing market and the real-estate bubble … so I don't think it's right anymore (to have huge investment and retail banking combines)."

Wall Street/Bankers

Abi Cohen Abby Cohen, Goldman Sachs senior strategist
Bear market? Cohen appears not to have heard of the term.
She made a name for herself in the late 1990s by being the bullest of the bulls during the dotcom bubble, and it's hard to remember when she hasn't been bullish since.
She's still a bull now. "If we were to look just at fair-value estimates over the next year to three, we think that returns that are roughly 8-10% on the stock market are sensible," she told Bloomberg last week.
Kathleen Corbet Kathleen Corbet, former CEO, Standard & Poor's
The credit rating agencies, of which S&P is the biggest, gave triple A ratings to the mortgage-backed securities that turned toxic and were accused of conflict of interest because the bond issuers were paying them for the ratings. As one S&P analyst wrote in an email, "[A bond] could be structured by cows and we would rate it."
Another analyst emailed a colleague: "Let's hope we're all wealthy and retired by the time this house of cards falters."
Corbet resigned amid a wave of criticism in 2007. She has since set up a company to invest in tech, energy and, of course, financial services companies. She has a tumblr, but is yet to actually blog.
Hank Greenberg Maurice "Hank" Greenberg, former chief executive AIG insurance group
While AIG was taking a multibillion-dollar bailout from the US Treasury and the Fed after its massive credit default business went sour, 100 AIG execs where spending $444,000 on a golf and spa retreat in California. "Have you heard of anything more outrageous?" said Elijah Cummings, a Democratic congressman, said. "They were getting their manicures, their facials, pedicures, massages, while the American people were footing the bill."
Greenberg, now 87, has now started over – and is running C V Starr & Co, a private equity firm named after AIG's founder Cornelius Vander Starr. Hank's son Scott is helping tap up sovereign wealth funds and the ultra-wealthy for cash for buyout deals expected to last a decade.
Andy Hornby Andy Hornby, former HBOS boss
The former wunderkind of British business who came top of his 800-strong class at Harvard and rose to become a board director of Asda by the age of 32 was the man running HBOS when it had to be rescued by Lloyds. His reputation took a knocking from the FSA, with the regulator finding HBOS guilty of "very serious misconduct" in the run up to its taxpayer bailout and rescue by Lloyds. But he's still a busy man. After HBOS's demise he was installed as chief executive of Alliance Boots (he quit last year with no payoff) and is currently chief executive of bookies Coral and non-executive chairman of online and mail order pharmaceuticals business pharmacy2U.
Fred Goodwin Fred Goodwin, former RBS boss
Fred "the shred" was stripped of his knighthood earlier this year as public anger over his role in causing the financial crisis reached boiling point. Goodwin, who has been dubbed "the world's worst banker", brought Royal Bank of Scotland to its knees via a series of over-ambitious acquisitions. A string of 20 takeovers transformed RBS into a global leader but Goodwin wasn't satisfied and just before the financial crisis struck he led a $100bn takeover of Dutch bank ABN Amro.
RBS went on to record the biggest annual loss in UK corporate history and had to be bailed out by the government to the tune of £45.5bn. It is now 82%-owned by the state.
Goodwin hit the headlines again recently when he was blamed for a crisis at Scotland's biggest architecture firm, RMJM, where he was an adviser. About 80 staff left the firm after a battle over unpaid fees.
Steven Crawshaw Steve Crawshaw, former B&B boss
What would the fictional Mssrs Bradford and Bingley say? The two bowler-hatted gents represented good, old-fashioned prudent banking. B&B's downfall can perhaps be traced to a single moment of arrogance in 1995 when it splashed out more than £1,000 for Stan Laurel's bowler hat to display at its head office.
Steven Crawshaw bought the specialist lender Mortgage Express from Lloyds TSB, which catered for the self-employed, those seeking second-home finance and buy-to-let mortgages. The loans earned the nickname "liar loans" because the applicant didn't have to prove they had a regular income. When the wholesale money market collapsed, so did B&B, as it couldn't finance the loans. Eventually, B&B was nationalised, a few weeks after Crawshaw stepped down with heart problems. He left with a pension worth £105,318 a year.
He has apparently retired to the Yorkshire countryside, and his only public role appears to be chairing the advisory board of the School of Management at Bradford University.
Adam Applegarth Adam Applegarth, former Northern Rock boss
Applegarth transformed Northern Rock from a sleepy Newcastle building society into the nation's fifth-largest mortgage provider. But the business collapsed and images of customers queuing up outside Northern Rock to rescue their savings have became the dominant memory of the financial crisis.
In the five years running up to the bank's disaster, he was paid around £10m. During the 18 months immediately before, he cashed in shares worth £2.6m.
He collected a £760,000 payoff despite the TSC savaging his conduct at the bank. It was also later revealed that he was having an affair with a junior colleagues during the crisis.
In 2009 Applegarth started his first job post-Northern Rock, advising US private equity firm Apollo Management. He is no longer listed as part of the team on the company's website. But remains in the post advising the firm's European Principal Fund on buying up distressed debt.
He has also reportedly set up a company, Beechwood Property Management, with his son Greg. But there is very little publicly available information about the company.
Richard Fuld Dick Fuld, chief executive Lehman Brothers
"The Gorilla of Wall Street", as Fuld was known, steered Lehman deep into the business of sub-prime mortgages. Lehman took the loans and packaged them up into (soon-to-be toxic) bonds which they sold to investors.
Fuld is said to have raked in almost $500m in pay and bonuses during his tenure as chief executive, but the 66 year old insisted to Capitol Hill that he actually only earned $300m. During the testimony, Fuld was asked if he wondered why Lehman Brothers was the only firm that was allowed to fail. "Until the day they put me in the ground, I will wonder," he said.
A lot of Americans might have been stung by the collapse in property prices in the wake of the crisis. Not Dick, in November 2008 Fuld transferred the ownership of his $100m Florida mansion to his wife. They had bought it four years earlier for $13.5m.
In 2009 Fuld joined US hedge fund Matrix Advisors. A year later he joined broker Legend Securities, he left the firm earlier this year.
Ralph Cioffi Ralph Cioffi and Matthew Tannin
Cioffi and Tannin are two of a very small group that have faced financial penalty for their role in causing the crisis. The pair, who ran Bear Stearns hedge funds that went bankrupt in 2007, were accused by the SEC of misleading investors about the risks of sub-prime loans.
This summer the pair agreed to pay$1.05m to settle the charges. US District Judge Frederic Block described the fine as "chump change". Their investors lost $1.6bn.
"I certainly would have liked my career to have ended differently," Cioffi said in a 2010 interview.
Lewis Ranieri Lewis 'Lew' Ranieri, 'godfather' of mortgage finance
Ranieri wanted to be an Italian chef, but his asthma stopped him working in smoky kitchens. Instead he moved into trading via Salomon Brothers mailroom and pioneered the mortgage-backed bonds immortalised in Liar's Poker.
In 1984 Ranieri boasted that his mortgage-trading desk "made more money than all the rest of Wall Street combined". But when sub-prime borrowers started missing payments, the mortgage market stalled and bond prices collapsed. Investment banks, overexposed to the toxic assets, closed their doors and investors lost fortunes.
"I do feel guilty," Ranieri said in an interview in 2009. "I wasn't out to invent the biggest floating craps game of all time, but that's what happened."
He blames Wall Street for misusing his brainchild to construct "affordability products" that homeowners really couldn't afford.
Joseph Cassano Joseph Cassano, AIG financial products
Cassano has been dubbed "patient zero" of the global economic meltdown. He ran the AIG team that sold credit default swaps in London that led the company into bankruptcy and a massive bailout. Democratic senator John Sarbanes said Cassano "single-handedly brought AIG to its knees".
After the bailout Cassano refused all media interviews and had not spoken about the crisis until he was called before the US congress financial crisis inquiry commission in July 2010. "I think there would have been few, if any, realised losses on the CDS contracts had they not been unwound in the bailout," he said, adding: "my perspective diverges in important ways from the popular wisdom".
Cassano, who used to live in an opulent townhouse behind Harrods, has since moved back to Westport, on Long Island Sound, where he is apparently unemployed, and uncontactable.
Chuck Prince Chuck Prince, former Citi boss
Just when the sub-prime crisis was starting to take hold in the summer of 2007, Prince told the FT he didn't expect the brewing crisis to hurt his bank. "As long as the music is playing, you've got to get up and dance. We're still dancing," he said. Shortly afterwards the music stopped and Citi racked up more than $45bn of writedowns.
Recently, Sandy Weill said handpicking Prince to be his successor was "one of the major mistakes that I made".
Last year Price said: "If we want a better outcome, supervisors and business leaders had better do something different this time around."
He hasn't been heard from again since.
Angelo Mozilo Angelo Mozilo, Countrywide Financial
Mozilo popularised the notion that practically anyone could have a massive mortgage, even if they didn't have a job. Countrywide was the world's biggest sub-prime lender before it was rescued from bankruptcy by Bank of America.
The SEC investigated Mozilo over fraud and insider dealing charges, but in the end he agreed to pay a $67.5m fine and accept a lifetime ban from serving as a company director. The fine represents just over a 10th of Mozilo's estimated net worth of $600m. The SEC's director of enforcement said: "Mozilo's record penalty is the fitting outcome for a corporate executive who deliberately disregarded his duties to investors by concealing what he saw from inside the executive suite – a looming disaster in which Countrywide was buckling under the weight of increasingly risky mortgage underwriting, mounting defaults and delinquencies, and a deteriorating business model."
Earlier this year, Mozilo, who was known as "the orange one" for his effervescent tan, hit the headlines again when Congress released a report into how Countrywide used its "VIP program" – which offered favourable terms to influential figures – to influence Washington policymakers.
Mozilo and his wife Phyllis sold their LA home for $2.9m earlier this year. The LA Times described it as "Georgian Colonial-style two-storey" property, sitting above the second fairway at the Sherwood Country Club, complete with "a cherry-finished library-office, five bedrooms, six bathrooms and an oversized four-car garage". The couple still own a string other luxury homes in southern California.
Stan O'Neal Stan O'Neal, former boss of Merrill Lynch
Another casualty of the thirst for CDOs. By June 2006, Merrill had amassed $41bn in sub-prime CDOs and mortgage bonds, according to Fortune.
O'Neal, who had Merrill security guards hold a lift at all times for his exclusive use, was booted out (with a $161.5m golden parachute) and Bank of America snapped Merrill up less than a year later.
There were rumours O'Neal was going to join Vision Capital, a hedge fund run by two visually impaired managers, but the role never materialised. Vision was later investigated by the SEC.
Jimmy Cayne Jimmy Cayne, former Bear Sterns boss
While Bear Sterns was going bust Cayne was playing bridge in Detroit. He's quite an accomplished player and has won several rounds of the North American Bridge Championships. But he was less good at running Bear Sterns, with CNBC naming him one of the "worst CEOs of all time".
Bear Sterns was sold to JP Morgan for $10 a share, compared with the $133.20 a share it was trading at before the crisis. Cayne, who had a big stake in the company, lost about $1bn.
Cayne has now disappeared from the corporate public eye, but it is still possible to play him at bridge online.


Christopher Dodd Christopher Dodd, former chairman Senate banking committee
Dodd pushed back against calls for tighter regulation on Fannie Mae and Freedie Mac, while receiving $165,000 in campaign donations from … Fannie and Freddie.
The Dodd-Frank Act, which aims to reform Wall Street, is named after him and financial services committee chairman Barney Frank. But Dodd disagrees with proposals to split up big banks' investment banking and high-street divisions. "[The idea that] breaking up these institutions is going to solve the problem, I think it's frankly too simplistic an approach," he said last week.
Geir Haarde Geir Haarde, prime minister of Iceland 2006-2009
Haarde is the only politician to have been found guilty by a court of helping to cause the crisis. Earlier this year an Icelandic court found Haarde guilty of failing to hold emergency cabinet meetings in the run up to the crisis. Haarde fell from power after the country's three biggest banks collapsed, the country's economy went into meltdown, and the government was forced to borrow $10bn (£6.3bn) to prop up its economy.
During the trial, he said: "None of us realised at the time that there was something fishy within the banking system itself, as now appears to have been the case.
The American public
It wasn't just the bankers who were greedy. The men and women on the street took out billions of dollars of loans they knew they couldn't afford. American families' wealth has fallen by 38.8% between 2007 and 2010, according to the latest three-yearly data from the Fed. The collapse in house prices, which was caused by Americans' failure to keep up repayments on loans they couldn't afford, caused US families median net worth to decline from $126,400 in 2007 to $77,300 in 2010.
John Tiner John Tiner, FSA chief executive 2003-07
He once had a reputation for being the luckiest man in the City. Without a university degree, he worked his way up to the top of accountant Arthur Andersen – and left nine months before it collapsed under the weight of fraud and false accounting at its client Enron.
In July 2007 he quit as chief executive of the Financial Services Authority with praise ringing in his ears (his leaving party reportedly cost the regulator £20,000). But the praise quickly evaporated, not least for the FSA's inadequate stewardship of Northern Rock, which was slammed in an internal report.
Tiner, who has a personalised T1NER numberplate, then joined colourful entrepreneur Clive Cowdery at insurance buyout vehicle Resolution. They bought Friend's Provident life insurance group but then the deals dried up and last week the group revealed it could no longer return cash, as expected, to shareholders.

Tuesday, 7 August 2012


Credit crunch: elusive ghosts of the financial feast lurk in the shadows

It is half a decade this week since the 'world changed', in Adam Applegarth's famous phrase. But what has happened to the architects of economic meltdown? And has anything really changed for them?
Northern Rock
Customers of Northern Rock queue outside the Kingston branch of the company in London on September 15, 2007. Photograph: Cate Gillon/Getty Images
When Adam Applegarth was forced out of a sinking Northern Rock in December 2007, it was amid the kind of numbers that tend to dance in front of your eyes. In the five years running up to the bank's spectacular crash he had been paid around £10m. During the 18 months immediately before he cashed in shares worth £2.6m. On leaving he secured a golden goodbye to be paid in monthly instalments, totalling £760,000. His pension, payable when he turns 55, is worth £304,000 a year.
The year after his exit he was glimpsed in a very familiar setting, once again turning out for the second XI of his beloved Sunderland Cricket Club. "This summer," said one of his old associates, "he will be putting his feet up. He is playing an awful lot of cricket, enjoying his motors and travelling."
In the autumn of 2009 Applegarth became a senior adviser to the American private equity firm Apollo Management, advising a new arm, the European Principal Fund, on the buying-up of distressed debt – perhaps a field of expertise. Three years on he remains in the job and shielded behind a communications firewall administered by a New York PR firm called Rubenstein Associates, whose other clients include Walt Disney, the Las Vegas Comedy Festival, and the American Kennel Club.
When I contacted them, I was handed over to a breathlessly efficient operative called Melissa, who said I should send over my questions. With a view to at least trying to get his attention, I kept them non-confrontational, and short: What does Mr Applegarth's role at Apollo involve? Could he explain how the depth of banks' problems in 2007 first revealed itself to him? And how has his life been since? Twenty-four hours later she called back: "Put us down for a decline to comment," she said.
So, on to another lead. In September 2010 it was reported that Applegarth had joined his son Greg in setting up a company called Beechwood Property Management, in which he held 55 of the 100 shares. Their documents list both men's occupation as "consultant". Their registered office is on the 11th floor of a gleaming Newcastle office block called Cale Cross House, but when I called the in-house security guard he had never heard of them. In fact, this is merely the address of their accountants – who passed on a message, with no result.
There is no entry for Beechwood Property Management in the phone directory, nor has it a website. On the face of it, it is a ghost outfit, whose existence is only noticeable to those hard-bitten people who pore over records held at Companies House.
Such is the great cloud of silence that now surrounds people who were once among the loudest voices in the financial services industry.
The reclusive lifestyle of former Royal Bank of Scotland chief Fred Goodwin barely needs mentioning. Steve Crawshaw, who turned Bradford and Bingley from a staid building society into a specialist in self-certified mortgages and left the company weeks before it had to be nationalised, has apparently retired to the Yorkshire countryside: his only publicly-recorded activity these days is as the chair of the advisory board of the School of Management at Bradford University, who forwarded him my list of questions, but I heard nothing back.
Even the few who still have heavyweight business roles keep schtum: there may be a beautiful poetry in the fact that the former HBOS chief executive Andy Hornby is now the boss of Coral bookmakers, but getting him to talk is a non-starter. "As the article does not relate to his current role at Coral he wishes to respectfully decline your request," said his spokesman.
At the height of a financialised age, it was the done thing to refer to these people as "Masters Of The Universe". Five years on, picking through the subsequent career histories of those who sparked first the credit crunch and then the crash, the suggestion of omnipotence sounds absurd. Most of the people at the centre of the events of 2007-8 tend to suggest a much less titanic stereotype: the faded rock star, often still trying to keep their hand in, well aware that the hits have dried up, the old tricks have long since turned embarrassing, and their time has passed.
Meanwhile, a very awkward question sits in the public mind: will there ever be any convincing payback?
In the US, only a tiny handful of former bankers have been criminally indicted on charges relating to the crash: most notably, Ralph Cioffi and Matthew Tannin, two former Bear Stearns employees – and one-time sub-prime specialists – who were acquitted of fraud and conspiracy in November 2009. In February this year a civil case brought by the Securities and Exchange Commission was settled on the basis of a $1.05m payout from the two, which the judge in charge termed "chump change".
The only big figure sent to jail for his part in two decades of crazed speculation and irresponsibility has been Bernie Madoff. By contrast, the people who bundled up the bad debt in arcane financial instruments that pushed the world to the brink of ruin are still out there: hugely diminished – but free, and hardly penniless.
Even those who steered Lehman Brothers into catastrophe and thus started the decisive crash of 2008 seem to have got away with it. In May this year an internal memo from the SEC leaked to Reuters said that after its investigation into the bank it had been "determined that charges will likely not be recommended".
Which brings us to 780 3rd Avenue in Manhattan, the location of an almost comically dull office block that looks like a giant house brick.
Inside is the HQ of Matrix Advisors. Its founder is a byword for the events of 2007-8: Dick Fuld, the CEO of Lehmans, until its cataclysmic demise. Back then, he was the pumped-up corporate icon once known as "the Gorilla", the man who summed up his business style with the boast that he wanted to reach into the bodies of Lehmans' competitors, "rip out their hearts and eat it in front of them before they die".
These days he apparently flits between New York and his homes in Florida and Sun Valley, Idaho – on bog-standard commercial flights, according to witnesses – looking after a tiny outfit which provides "strategic advice to client management teams and senior employees … across all aspects of business". One source close to Fuld has said that the workforce extends to "a young guy from Lehman and two secretaries". When I called their office, I therefore had the tantalising sense that the figure most indelibly associated with the crash might only be a few yards from the person parrying my questions. Her name was Carla Schiavo: she suggested I send over a few lines of inquiry.
What, I asked, does Mr Fuld's work at Matrix Advisors involve? What are his views on the aftermath of the credit crunch and how banks and regulators have responded? What did the financial services industry need to do to recover its esteem? Eventually, Schiavo pointed me in the direction of Fuld's lawyer, a former president of the New York Bar Association named Patricia Hynes – who, predictably enough, did not deign to reply to either phone calls or emails.
Two months ago Fuld was seen at an ice hockey game between the New Jersey Rangers and the New York Devils. An eyewitness reported on the scene for the Wall Street news and gossip site Dealbreaker: "He was with two goons who were clearly his bodyguards, one sitting next to him in a tan jacket and the other one standing behind him in black. Fuld was wearing a suit … I guess to try and look like he actually has a job he was coming from before the game."
Documents filed with US regulators two years ago said Fuld's work at his new venture stretched to around 60 hours a week. Such hard graft may be a necessity: proof, as with the sale of his Park Avenue apartment three years ago (for $25.87m) that he may not be enjoying quite the life of unending luxury that some would imagine, and setting money aside for future litigation, which has so far been met from the coffers of Lehmans' insurers. There is also an abiding sense of twitchiness. When a reporter doorstepped him three years ago, he blurted out: "You don't have a gun. That's good."
For others who were intimately involved in the crash, there is a similar sense of shrunken lives, and mouths sealed shut. Kathleen Corbet was the president of the hugely important ratings agency Standard & Poors, but quit in August 2007 just as it started to become clear that the safe-as-houses triple-A ratings given to mortgage-backed securities had turned out to be illusory. She is now in charge of Cross Ridge Capital, a small private equity firm based in New Canaan, Connecticut – and did not respond to messages asking for her take on what happened in 2007 onwards, and what has transpired since.
Neither did Maurice "Hank" Greenberg, who pumped up AIG to the point that the American group became the biggest insurance company in the world – only to watch it plunge towards bankruptcy and become 80% nationalised by the US government.
He resigned two years before the start of the crash, in 2005, in the midst of the accounting scandal that began the firm's nosedive – but the fact that he avoided direct involvement in the crash presumably accounts for the fact that in controlled circumstances, he can speak with a belligerence that might suggest the events of 2007-8 never happened.
"We now have huge government, which is not the creator of opportunity – it's the private sector that creates opportunity, so our basic values are under attack," he recently said, warning against the prospect of "regulating ourselves out of business". By way of putting his money where his mouth is, Greenberg is suing the US state for $25bn, alleging that AIG's board was "coerced" into turning over control of the company to the federal government.
Such a high-profile action contrasts with the post-crash story of his old AIG colleague Joseph Cassano – the man who sold credit default swaps in London to keep the money coming in, and thereby pushed the company towards such ruin that it needed £182bn of US taxpayers' money to keep it alive. Back then, Cassano lived in an opulent townhouse behind Harrod's. He has since moved back to Westport, on Long Island Sound, where he is apparently unemployed, and uncontactable.
But if there is one man who remains the best embodiment of all the delusion and absurdity that led to the crash, it is 74-year-old Angelo Mozilo, the son of a Bronx butcher, a man so tanned that his skin looks like an orange dipped in toffee. Until July 2008 he was the chairman and chief executive of Countrywide Financial, the USA's biggest provider of sub-prime mortgages. Between 2001 and 2006 he took home something in the region of $470m.
The company crashed from August 2007 onwards, finally being bought out by the Bank Of America. In a civil case that ended in October 2010 Mozilo settled with the SEC to pay $22.5m to cover allegations of fraud and insider trading, with a further $45m going to his company's former shareholders to cover "ill-gotten gains", to be taken from BoA and Countrywide's insurers.
The SEC's director of enforcement said this: "Mozilo's record penalty is the fitting outcome for a corporate executive who deliberately disregarded his duties to investors by concealing what he saw from inside the executive suite – a looming disaster in which Countrywide was buckling under the weight of increasingly risky mortgage underwriting, mounting defaults and delinquencies, and a deteriorating business model." At the same time, Mozilo was cashing in shares to the tune of $285m.
Last year a criminal investigation into Mozilo's activities was shelved. But the intrigue swirling around him will not go away: four years after stories about his firm's dealings with American lawmakers first appeared in the media, a Congressional Committee has alleged that Mozilo ran a "Friends of Angelo" unit to grant influential members of congress preferential loans, and thereby subdue any drive to rein in his very risky kind of business.
The impact of what Mozilo and his company did cannot be overstated: it was Countrywide that led the drive to drown the international financial system in bad debt, while he was paying himself spectacular amounts of money. In Wall Street, the City and beyond, the result of what he and his colleagues were doing was a deathly panic, and the end of the boom years; in the real world, millions of people had their homes repossessed or lost their jobs and now we labour under the austerity cuts that still grip the Western economies like a vice.
In May this year a piece in the LA Times reported that Mozilo and his wife Phyllis had sold their home in Thousand Oaks, 29 miles west of near LA, for $2.9m. It described a "Georgian Colonial-style two-storey" property, sitting above the second fairway at the Sherwood Country Club, complete with "a cherry-finished library-office, five bedrooms, six bathrooms and an oversized four-car garage", along with "an infinity pool, spa, lawn and a built-in barbecue".
Reading it, you wondered if perhaps, in their own way, the Mozilos were feeling the pinch. And then came the last sentence, and the sickly scent of the high life, uninterrupted: "They hold other southern California properties in trust, in Riverside and Santa Barbara counties."