Lehman Brothers Did Business With Mortgage Fraudsters Back In 2000

The Lehman Brothers collapse is shocking! Unless you remember a little story from 8 years ago

A joint investigation by the NYT and 20/20 showed Lehman Brothers did business with mortgage broker First Alliance, charged with making fraudulent mortgages and engaging in predatory lending. First Alliance customers complained about extremely high fees and higher interest rates than what they signed up for. An internal memo by a Lehman brothers exec called First Alliance a mortgage “sweatshop” whose employees “leave their ethics at the door.” First Alliance settled charges with the FTC in 2002, and then went out of business.

Lehman Brothers defended its business relationship with the company, calling itself “an underwriter, not a regulator.” Today, they finally learned their lesson.

Lehman Had Long Relationship With Suspect Mortgage Brokers [ABC] (Photo: Getty)


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  1. BrianDaBrain says:

    First of all, great picture!

    Second, how many companies out there didn’t engage in predatory lending practices? I believe that would be a much shorter list.

    Third, this whole situation is so not good.

    • Inglix_the_Mad says:


      My credit union. Then again, as my real estate agent said at the time, “if a credit union endorses you, you’re golden.” So that comparison may not be entirely valid here.

      @Grrrrrrrrr: Capitalism in general is a big pyramid scheme, whereby the very rich at the top take advantage of everyone in the middle and all the little guys at the bottom. If done correctly, everyone “wins” and gets something out of it (although certainly, the guys at the top end up with a lot more than the folks at the bottom). It’s not a bad thing..everyone gets something out of it.

      No disagreements here. Entitlement factor kicks in for the people at the top as much as the bottom though. I keep hearing about Republicans, Libertarians, et al, railing against “entitlements” all the bloody time. Some of these people have never been one step into poor. My family isn’t terribly poor or anything, but I didn’t get much help after 18. I don’t expect an inheritance either. I expect my parents to spend it or donate to church, charity, whatever.

      I think everyone should have to live poor for 5 years. Really learn what “poor” is like, even in America. Some people act like it’s a cakewalk, and I’ll give you that compared to Chad, it is. Then again if some snot-nosed, silver-spoon, entitled brat went from having a nice car, no problems eating, no worries about rent, no worries about paying for college, and had life turned on them. They’d sing a different farking tune to be sure.

      All of a sudden life gets a lot more desperate and real when you have no money for a car, less money for food (no five-star dining or even frequent fast-food), rent is always thin, and you’re stealing from peter to pay paul and mary to cover peter, you learn about how life’s a b*tch and flip the burger kiddo.

      Never happen though, makes too much sense.

      • battra92 says:

        @Inglix_the_Mad: Oh by the way, I was poor for half my childhood. It’s not something we’re proud of but we never once took welfare or felt entitled to having someone else pay our bills. My parents worked at least 2 jobs each and I worked myself through school.

        Because of this, not despite it, I’m a Republican. When you know what it’s like to earn money you feel less inclined to let other people take it from you.

        • stevejust says:

          @battra92: Umm, George Bush Sr. signed the $200 billion dollar tax-payer bail out of the Savings and Loans. Now his son sat in office as Fannie Mae and Freddie Mac imploded, which will cost us another $200 billion dollars.

          Plus the $500 billion or more for the war in Iraq.

          Your logic is totally awesome. Since it has no basis in reality. Republicans are taking way, way more money from you than any social program any democrat ever wanted. And they get away with it because people are stupid.

        • Techguy1138 says:

          @battra92: Um you are obviously proud of that fact.

          I know nothing about you except you are a republican business major who was poor and refused social assistance.

          You said you were a Republican to make some kind of point. You said you were a business major to instill some kind of authority. You said you were poor and didn’t take assistance because you are proud of that fact.

          I suppose that you don’t drive on state maintained roads since that is a form of welfare. You never worked at a company that has received a major tax break or a sweat deal from local officials either. Both of those situations would have you being an indirect recipient of governmental aid.

          That argument is so tired it boggles the mind that it continues on.

          Just like big business get bail outs and tax break to benefit the nation common people can get help also. Yes sometimes business abuse the system and get more than they should. No bid contracts are a big example. Sometimes individuals scam the system. Individual people who abuse the system cost nearly nothing compared to corporate abuses of such a system.

          How many welfare queens does it take to equal one saving and loan crisis?

          Just as there is graft there are good uses also. As government invests in business and reaps broad rewards the investments in individuals also is a net profit.

          If I work as a computer programmer and make 100,000$ a year I pay quite a bit in taxes. Now lets say I’m laid off. Right now I pay no taxes. This makes the government sad. :(

          Lets now say the job market is tight and now I take the first job I can get and now I make 30,000 a year. this also makes the government sad. :( See at 30,000 USD a year I make less than I used to pay in taxes. Republicans are happy, I guess, because I’m paying less taxes.

          Someone figured out that by helping people in these transition periods,just as businesses get help starting up and expanding, people get better jobs and pay more money in taxes.

          So by giving the programmer 30k in unemployment assistance so he can feed his family and keep them at the same social level the government may literally make an additional million dollars or more over the lifetime of that worker. In addition it is more likely that his children will be successful in making money.

          Social welfare an investment in the citizens of the country. Just like any diversified investment some parts don’t pay off but in a whole the nation profits.

  2. Jonbo298 says:

    At least all these corporations are finally realizing that when you break the rules/law, it WILL come back to haunt you and much much more. Does it suck for the average consumer that this is happening? Yes, but we’ve been blinded by CEO’s claiming all is well and appeasing stockholders until doomsday hits for the company.

  3. Jevia says:

    Somehow I’m starting to think that those that might have been part of Obama’s plan to raise taxes on families making over $250,000 might not be quite so many anymore.

    Frankly, I’m going to be real surprised if this country doesn’t go into a recession at the rate things are happening. Granted I wasn’t really paying attention to events during the last official recessioni (was a bit young then), but this does sound worse.

  4. Nofsdad says:

    I’ve been watching “recessions” and “recoveries” for over 60 years now and if this ISN”T a recession we’re in right now, then we’ve never been in one. And don’t try to spoon feed me that bullshit about x number of quarters of declining GDP required before it’s a recession.

    There are two levels involved here. If your at a level on the food chain where you still have something left, the tendency is to claim it’s not a recession.

    If you’re part of the millions in the lower working classes who are losing ground every day, not only in how much they make but how much they can buy with it, it’s a different story.

    Anything that reduces my buying power by as much as it’s been reduced by the actions of these major banks and financial institutions over the past 4-5 years is a damned recession and don’t try to tell me any different.

    Like I said, I’ve been through 60 some odd years of this crap and it’s as bad now as I’ve ever seen it and doing nothing but looking worse every time you turn on the TV or pick up a newspaper.

    You people can play semantic games with the word “recession” all day long but the simple fact is that a whole damned lot of us are worse off this month than we were last month and we’re gonna be worse off next month than we are this month and so far there’s no light at the nd of this tunnel.

    Especially if you just sit there fat dumb and happy depending on a lying bunch of politicians for your info and depending on them to fix the problems until it actually starts to gnaw on your personal nether regions.

    • Techguy1138 says:

      @Nofsdad: The wording is all economic voodoo. There needs to be a non-academic word to describe what is happening to normal people. ‘Screwed’ is applicable, but not descriptive enough.

      It’s seems the easiest thing to do is take part your savings and move them into foreign currency stocks or funds.

      That of course is not a rousing vote of confidence for our country and only helps your investments hold value as opposed to being able to support you. How you deal with month to month rent is still a big deal.

      I happen to be at the level where I have something left, but I still have less than I had before. Only the relatively huge drop in housing prices has increased my spending power. Only 2 more huge corrections and I can afford a house. Only if my investments are still worth anything at that point.

    • battra92 says:

      As a graduated business major I weep for those who cry foul at capitalism when capitalism is not the problem here. Capitalism is supposed have some people fail who do the wrong thing.

      @Nofsdad: Nurse, can we get this man a sedative?

      We’ve been through much, MUCH worse (even 7 years ago looked bleaker than now) so we’ll weather the storm.

      If I was king of the financial world, I would like to mandate that people save so much per paycheck. If we were a nation based on savings like we were in the 40s and 50s we would be a lot better off.

      While we’re nowhere near a depression (as much as one political party would love us to be in one) one side effect from this I hope is that it does help to change the culture a bit and encourage saving.

  5. gliscameria says:

    No suprise here.

    A company I used to work for was in court with them forever. They realllllly know how to manipulate the law and break it without consequence. Smart guys.

  6. u1itn0w2day says:

    They had to know this was going on.They probably took away the hard sell and replaced with your dreams praying on the weaknesses and desires of their victims just like a professional grifter.

    I still blame the borrowers for signing to get money for a house they should be renting but there are certain things you shouldn’t even be allowed to ask or sell

  7. Grrrrrrr, now with two buns made of bacon. says:

    Capitalism in general is a big pyramid scheme, whereby the very rich at the top take advantage of everyone in the middle and all the little guys at the bottom. If done correctly, everyone “wins” and gets something out of it (although certainly, the guys at the top end up with a lot more than the folks at the bottom). It’s not a bad thing..everyone gets something out of it.

    But, all it takes is for the people at the top to succumb to the greed..that desire the milk all the other pawns in the pyramid scheme for “just a little more.” That’s what the guys at the top did…the got too greedy and knocked over the house of cards and suddenly, everybody loses. Sadly, the people at the bottom who had the least to gain, lost the most…and perhaps made it so the pyramid can’t even be rebuilt.

    Let’s hear it for greed!

    • u1itn0w2day says:

      @Grrrrrrrrr: capitalism is a pyramid scheme.Can’t agree more,especially with these mortgages.

      Who owns these mortgages is a problem but a theoretical question.In reality,if THE owner of the mortgage agrees to a short sale what did they ACTUALLY loose? I know the original contract wasn’t honered but what did they loose?

      And I keep on hearing most are paying their mortgages-I agree but do the mortgages being written off as a loss have any value?Are the banks subtracting the couple years of payments & fees from their write offs? For example only if the average ARM is 300K with 30k in payments and fees are these banks writing off 270K or 300K?.

  8. johnnya2 says:

    I want to know how the government can bail out Freddie Mac and Fannie Mae, give Chase the keys to Bear Stearns for virtually nothing, and then have Lehman crash. Airlines have been given bailouts, the auto industry has their hand out for 50 billion. the oil companies actually have corporate welfare as well. But if you are poor, working class, or have dark skin you are abusing the system and portrayed as evil. The big problem is each of those CEO’s still made HUGE money and never have to work again, while the average worker loses their job, security, pension and are stuck looking for work in the worst economy since the great depression. Thank you to all those who keep putting in the republican and democratic machines. Maybe you should check out Ralph Nader who predicted much of this in the mid-90’s

    • stevejust says:

      @johnnya2: I too am wondering why Bear Stearns got the bailout and Lehman didn’t. Is it about not contributing to the right politicians? Or is it a matter of Bear Stearns happened early enough that at that time there was still a shred of hope of stopping the dominoes from falling over, and now that a few have fallen (IndyMac & the GSEs) the idea is that the situation is inexorably headed downhill to fast to be contained anymore.

      Incidentally, not too long ago, I made a movie about how Dick Cheney’s money is invested in foreign funds such that he actually stood to make money if the US Dollar would fall against foreign currencies.

      If instead of Vice President of the US he were Vice President of a corporation, we could all be suing him for breaching his fiduciary duty to us as citizens… I mean shareholders.

      + Watch video

      • quail says:

        @stevejust: At one of the forums I stumbled across this weekend they talked about the upcoming/just happened Lehman’s bankruptcy. They also talked about Bear Stearns getting a bail out while Lehman’s probably wouldn’t.

        Seems that Bear Stearns is tied into the basic functioning of the stock market. The day in and day out trading. If they’d gone under Wall Street would have been greatly impaired in getting its transactions done. (Don’t ask me how. Just repeating what I’d read.)

        Bear Stearns was a vital organ like a heart. Lehman’s was just a leg.

        • stevejust says:

          @quail: Could be. But I also read this on MSN:

          “Campaign funds from Lehman employees
          Obama’s campaign treasury has collected nearly $400,000 in campaign contributions from employees of Lehman Brothers, while McCain campaign has $145,000, according to the Center for Responsive Politics, a non-partisan research group.”


    • quail says:

      @johnnya2: Read somewhere that the golden parachutes for the executives at the bailed out companies were canceled.

  9. FMulder says:

    A company built on slavery in the 1800’s, continues a corrupt financing legacy with mortgage fraud, and finally collapses….