This is correct. War story. When I was a baby lawyer, we somehow got involved in a civil Rico case against Mellon Bank in federal court. The short version is they were selling home mortgage financing with negative amortization aspects that were supposed to be approved under Fannie Mae underwriting guidelines.
They sold the loan packages, but nobody could get their clients approved because they used far stricter underwriting instead of the guidelines mandated by the contracts. Mellon kept loaning more money to builders to keep them afloat, and they got further in depth until they went bankrupt and Mellon swooped in and bought all the properties at $.10 on the dollar.
I flew to Pittsburgh to depose the vice president in charge of the program, who was thoroughly unimpressed at me and our Rico suit. Arrogant and insulting was the tone of the day, and his superiority dripped from every word. On a hunch, one of my final questions was, âWhen you learned the underwriting guidelines weâre not being followed, I guess that put Mellon in a bad place because it did not have the funds to meet the loan obligations.â
He answered by laughing, and then telling me I knew nothing about the financial world and the financial solvency of Mellon Bank. His last line âWe couldâve fully funded if we wanted toâ became the reason I defeated the summery judgment and got to trial, and the reason they gave us a seven figure settlement.
I literally learned that there is much fruit to be picked if you went as high up the tree as they would let you. Those captains of industry were so arrogant they could not be bothered to learn anything about the facts of the case or the legal theories involved. You just interrupt their golf games and mistress meetings. And I would bet my house that there were no negative consequences to him for me winning my piddly lawsuit. As brisket says, they truly have almost no consequences as a downside.