If you read through the books on the financial crisis, it becomes clear that there were a large number of whistleblowers, both in private companies and in the government, who were ignored, silenced, intimidated, threatened, fired, and otherwise attacked for speaking the truth about the massive financial frauds at the heart of the bubble in 2000-2008. Brooksley Born could be considered an example of such a whistleblower.
Born was in charge of the Commodities Futures Trading Commission. She wanted to investigate the brand newly-created financial innovations in the 'over the counter derivative' markets of the 1990s. Think of Trading Places, with Eddie Murray and Dan Aykroyd - the Duke brothers committed fraud on the Frozen Orange Juice market by trying to steal a crop report, stealing massive amounts of money from everyone else in the process. Similar things could happen in any futures market, including the brand new 'credit derivatives' markets coming into bloom at JP Morgan and other innovative banks of the day. But people like Bob Rubin, Larry Summers, Alan Greenspan (ironically betitled "The Committee to Save the World" by Time Magazine circa the turn of the century) and others shut down Brooksley Born before she could even start a project to ask questions. The classic documentary on this is the PBS Frontline episode entitled "The Warning" (which you can watch online). Born was hounded out of government after being screamed at over the phone by regulatory-captured officials.
Another interesting example is the hedge fund manager Bill Ackman, who was attempting to tell anyone who would listen that the gigantic 'monoline' insurance companies were built on shaky ground. What shaky ground? The same sorts of credit derivatives that Greespan, Summers, Rubin, et al, had stopped Brooksley Born from examining in the 1990s. MBIA, AMBAC, and other 'monolines' were like miniature AIGs, writing quasi-insurance products called Credit Default Swaps against bundles of financial mystery-meat named Synthetic CDOs. They were kanoodling hand in glove with the New York State Insurance officials and the Ratings Agencies (like S&P and Moody's) to make it legal. What happened to Ackman? The SEC threatened to sue him for attempting to gamble that these companies would fail. So the companies continued to survive; every time they wrote an 'insurance' contract it enabled thousands and thousands of unneeded mortgages to be produced by the banks. Mortgages for the poor to have housing? No. Most bubble-mortgages were for house flippers and 'cash-out refinancers' - people who used their theoretical home equity (their 'paper wealth') like an ATM machine (see McLean and Nocera, "All The Devils Are Here"). This activity, largely based on speculation and fraud, drove housing prices to unnatural highs and led to mass migration from places like California where ordinary people could no longer afford to live. By 2009, the monoline insurers were all dead, AIG was bailed out by taxpayers, and Bill Ackman was doing allright because he got money when they crashed. But things could have gone very differently for him - he could have gone to prison. His story is told in Confidence Game by Christine S Richard.
Was Ackman a whistleblower? It is a good question. I can imagine Yves Smith of nakedcapitalism.com excoriating him for profiting from collapse, as she did of the three main groups in Michael Lewis' book The Big Short. But once the SEC threatens to sue you simply for pointing out facts, then don't you sort of fall into that whistleblower category, no matter the other features of your biography? And how many other people like Ackman were out there, but they decided to keep quiet instead of telling their story?
The Bernard Madoff story is similarly baffling, with whistleblower Harry Markopolos protesting on numerous, numerous occasions to the SEC about the fraud that Madoff was perpetrating. But Madoff's fraud of a measly tens-of-billions is basically dwarfed by the credit derivatives markets (the Credit Default Swaps and the Synthetic CDOs), and the list of his victims is dwarfed by the list of victims of those markets (you. your entire family. almost every person on the planet).
You can also throw in Freddie and Fannie with this lot. I do not know of the specific whistleblower in these cases, but if you read All the Devils are Here by Bethany McLean and Joe Nocera (McClean noted for her earlier work with Peter Elkind on "The Smartest Guys in the Room" about Enron) you will find out what happened to people who opposed Fannie and Freddie in congress. They got 'cut off at the knees', a literal phrase used by high executives at one of the two "Government Sponsored Entities". If anyone opposed Fannie and Freddie, their character was assassinated and they were run out of Washington on a rail.
But why pick on Fannie and Freddie? The big banks, including Bear Stearns, Goldman Sachs, Lehman Brothers, Deutsche Bank, and others were doing similar things, churning out trillions of dollars of worthless mortgages for house flippers and cash-out refinancers, based on the fantasy that housing prices always increase. And on top of that mountain of fraud, they built even more fraud, the Credit Default Swaps (essentially, gambling), and Synthetic CDOs (gambling on gambling), and then sold it to investors like pension funds and 401k plans and school fund managers. And inside some of those banks, there were quasi-whistleblowers too. Lehman Brothers had several excellent 'risk managers' on its staff, until they got fired because they refused to drink the real-estate kool-aid circa 2006. This is described in A Colossal Failure of Common Sense by Lawrence McDonald and Pat Robinson, Uncontrolled Risk by Mark Williams, Devil's Casino by Vicky Ward, and others. At Merrill Lynch, Stan O'Neal fired everyone who dared to question his authority, as he drove Merrill over the CDO cliff in 2006-2007, as described in by Greg Farrell in Crash of the Titans and elsewhere. And on and on and on.
That is just the tip of the iceberg of the financial crisis. There are literally dozens of examples I don't know about or have forgotten to mention. When these big banks and other financial groups were too big to fail, the national debt buoyed them up. The great back of the taxpayer carried them along, creaking and groaning under their weight. Dozens of alphabetic acronyms were created at the Federal Reserve to mask and hide where all the money went, but it could never mask the vast quantities that were poured directly from the public to keep the financial infrastructure of the planet from disappering in a puff of smoke. But that Great Recession iceberg is just one of the many icebergs floating in the national debt sea.
Take Thomas Drake's case, which Jesselyn Radack just wrote about. He, and others, including his ally Diane Roark in Congress, exposed a billion dollar boondoggle, the NSA Trailblazer project. His story has gotten a good deal of publicity for his exposure of illegal activities at NSA - he felt it was "making the Nixon administration look like pikers" (as quoted in Jane Mayer's article "The Secret Sharer", in the New Yorker of June 2011). But the other side of it, as he mentioned in his Ridenhour Prize speech, is that he felt "we were accountable for spending American taxpayer monies wisely". He has even called NSA the "Enron of the US intelligence community" according to Shaun Waterman in the Washington Times.
Trailblazer was part of our new National Security Industrial Complex, to modernize president Eisenhower's "Military Industrial Complex". Lest we forget Ike's warning, here it is, copied from Humanities and Social Sciences Online:
Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations.
This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
And that was not the only occasion on which Eisenhower spoke about the pervasive money wasting possibilities within such a system. Here is his "Cross of Iron" speech, from Information Clearing House:
Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.
This world in arms in not spending money alone.
It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.
The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities.
It is two electric power plants, each serving a town of 60,000 population.
It is two fine, fully equipped hospitals.
It is some 50 miles of concrete highway.
We pay for a single fighter with a half million bushels of wheat.
We pay for a single destroyer with new homes that could have housed more than 8,000 people.
This, I repeat, is the best way of life to be found on the road the world has been taking.
This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.
Could we, today, replace the concept of "heavy bomber" with the "fusion center" or "fighter" with "TSA VIPR team"? Are we now "humanity hanging from a backscatter X-ray machine"?
The project that Thomas Drake exposed, the Trailblazer Project, actually had almost no useful output. For all of that money poured into it, the taxpayers received almost no benefit. It was basically vaporware. All of the privacy violations are now probably being committed by 'twisted' versions of a different project ("twisted" being the word of choice of NSA Mathematician Bill Binney, again from Jane Mayer's New Yorker article). Now multiply Drake's case by a thousand, or ten thousand - the NSA is not the only government agency that throws taxpayer money down the toilet. There are numerous stories of contractors in Iraq and Afghanistan making mass sums of money with little or no accountability. No-bid contracts arranged with companies with close ties to the executive branch. Money disappearing down holes never to be seen again, spent for uncertain purposes on unknown quantities. Bunny Greenhouse won what Joe Davidson at the Washington Post calls a 'bitter sweet' victory for exposing some of this.
How many other Thomas Drakes and Bunny Greenhouses are out there? How many have I forgotten to mention? How many do we not even know about? How many tried to blow the whistle, but were threatened and intimdated into silence? How many took plea bargains, sliently, or simply agreed to resign, quietly, rather than risk a public trial and imprisonment? How many have now watched what happened to these two and others, and are keeping mum about what is going on in all of the thousands of government bureaucracies? To disclose the waste of taxpayer money, you have to disclose government information - and if the government can decide any information it produces is secret, then it becomes a crime to object to your own money being wasted.
Even Alan Greenspan, in his book Age of Turbulence, says that most real frauds and financial crimes are brought to the attention of the authorities and the public by whistleblowers, not by government regulators trying to examine institutions from the outside. In other words, despite his actively destroying the careers of potential whistleblowers like Brooksley Born, even he recognized that whistleblowing is one of the engines of a productive economy and a free society.