Countrywide whistleblower sees no change in financial sector
WASHINGTON (Reuters) - Eileen Foster beamed as she accepted an award at the National Press Club in Washington for blowing the whistle on mortgage fraud at Countrywide Financial but told the crowd she was deeply disappointed.
Foster, who was fired from her position as head of mortgage fraud investigations for Countrywide after uncovering evidence of fraud and urging a wider inquiry, said not enough has changed in the U.S. financial system.
"Here we are, several years after the onset of the financial crisis, caused in large part by reckless lending and risk-taking in major financial institutions, and still not one executive has been charged or imprisoned," she said at the Press Club on Wednesday, after receiving the Ridenhour Prize for Truth Telling.
Bank of America, which took over Countrywide in 2008, has reached several settlements with U.S. prosecutors over alleged fraud and discrimination in Countrywide's mortgage lending practices. Bank of America also was among five banks that agreed to a $25 billion joint state and federal mortgage servicing settlement, though the banks did not admit any guilt.
It has said it discontinued the mortgage lending practices that were in place at Countrywide before 2008.
Foster was fired by Bank of America shortly after the mortgage lender was absorbed. She had been lobbying her superiors to expand an investigation into fraud by loan officers that included forgery of documents and signatures and inventing income streams for loan applicants.
After a three-year battle, the U.S. Department of Labor's Occupational Health and Safety Administration last year ordered Bank of America to reinstate her and pay her nearly $1 million in lost wages and expenses. Bank of America, however, is appealing the decision, leaving Foster without the job or money.
"Bank of America has objected to OSHA's determination last year in Ms. Foster's SOX case and the matter is under appeal," said a spokesman for the bank in a statement on Thursday.
Foster currently works as vice president for security, investigations and procurement at a credit union in Southern California.
"I believed that Countrywide had totally duped Bank of America (and) as soon as Bank of America looked at the evidence that I had assembled that they would hire me back," she said in an interview on Tuesday.
"I was naive."
The Ridenhour Prize for Truth Telling is sponsored by the Fertel Foundation and the Nation Institute, non-profits that support whistleblowers in the government and corporate world.
Other winners Ridenhour Prizes included an army officer who refused to hush up bad news coming out of Afghanistan and a former marine who campaigned to expose a water contamination problem on the Marine Corps's Camp Lejeune base in Jacksonville, North Carolina.
Also honored were an FBI agent who wrote a book about what he called the U.S. government's botched campaign to justify torturing terror suspects and U.S. congressman John Lewis of Georgia, who was badly beaten while protesting for civil rights in the 1960s.
Two of Foster's former colleagues, both of whom also battled Bank of America after losing their jobs, attended the event at the club on Wednesday.
Michael Winston, who was Countrywide's chief leadership officer, won a $5 million judgment from a jury in California in early 2011. The bank has appealed the decision and has not paid any of the damages.
Cynder Niemela, who had been Countrywide's senior vice president for culture and communications, settled her wrongful termination suit with the bank and is prevented from disclosing details of the settlement.
(Reporting By Emily Flitter; Editing by Matthew Goldstein and Steve Orlofsky)