Photo: flickr: born1945
We knew this was happening before the crisis, but thanks to a Missouri-based senior manager at Citigroup, we know for sure that it’s still happening.Sherry Hunt is an Annie Oakley impersonating, Mid-Western mum who got her start processing loans in Alaska in 1975. Now she’s a senior manager at Citi, and last August she won a lawsuit against her boss, accusing Citi of violating US mortgage regulations. The company was asking her to sign off on faulty, incomplete mortgages, Bloomberg Markets magazine reports.
It sounds like deja vu, but there are a few key differences — one of them being the fact that after the financial crisis, Citi took $45 billion in bailout money from the U.S. government. That’s more than any other US bank. And, of course, there’s the post-crisis mortgage regulation clearly meant to red flag the kind of practices Citi was asking Hunt to hide.
So here’s what happened to Sherry Hunt.
It was back in March 2011 when Hunt’s boss, Jeffery Polkinghorne, an O’Fallon executive in charge of loan quality, 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.”
Hunt never even considered following his orders (from Bloomberg Markets):
“All a dishonest person had to do was change the reports to make things look better than they were,” Hunt says. “I wouldn’t play along.”
For her honestly, Hunt was awarded $31 million of the settlement money in a lawsuit she brought against Citi.
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.
“More people haven’t come forward because they saw what happened to me,” says Bowen, who’s now an accounting and finance professor at the University of Texas at Dallas. He says Hunt is the exception. “Sherry is an absolutely fantastic lady who knows what she’s doing. She has a conscience. I have the highest regard for her.”
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 “arse was on the line,” she reported what was going on in her division to her human resources department and to the SEC.
“I am afraid of what I know,” she wrote the SEC on May 24, 2011. “I do not want to know what I know. I have nothing to gain from coming forward and have no hidden agenda.”
The next day she went back to work. The SEC made no promises, but eventually there was a lawsuit, Citi admitted no wrongdoing (as usual) but in February of this year they paid $158.3 million to settle.
So, Sherry Hunt for President?