Tweet
Glenn Hubbard, Dean of the Columbia University Graduate School of Business
General business has kept me from reading the deposition Matt Taibbi writes about here, but it sounds amazing.
Anyone who’s seen the movie Inside Job will recall the stupendously angering scene in which (Mitt Romney advisor Glenn) Hubbard pissily snaps at his interviewer for asking about his outside relationships with financial services industry [...]
“This isn’t a deposition, sir,” he hissed. “I was polite enough to give you time, foolishly I now see. Give it your best shot.”
Again, there’s just nothing like karma. If your answer to a perfectly sensible question is going to be, “Screw you, this isn’t a deposition,” exactly how long do you think it’ll be before you end up actually getting deposed? And forced to answer, under oath, just how much your opinions cost?
A couple of years, as it turns out.
Hidden among the reams of material recently filed in connection with the lawsuit of monoline insurer MBIA against Bank of America and Countrywide is a deposition of none other than Columbia University’s Glenn Hubbard. And boy, is it a wild deposition. It’s like Inside Job, only Hubbard has to answer the questions he doesn’t want to answer. Reading it is like watching a man try to avoid breathing in a gas chamber.
Wow, just wow. The deposition is right here. As Taibbi notes, Hubbard testified for Countrywide in the lawsuit. This is one of the bigger mortgage-backed securities cases out there. MBIA is suing Countrywide over misrepresentations and fraud in the underwriting process that caused them to lose lots of money on securities they insured for investors. Hubbard apparently endorsed the view that Countrywide’s loans were of the same quality as other mortgage lenders, and thus they didn’t owe the insurer, or investors, any recompense. The losses stemmed from the financial crisis, according to him.
We obviously have reams of data and documentary evidence to rebut that. But Hubbard picked up $1,200 an hour from Countrywide to lie for them. And in the deposition he reveals that, for all that money, he basically looked at Countrywide loans and then he looked at other loans from the same time frame. And not the loan files, but the failure rates. In other words, he testified to the veracity of Countrywide’s underwriting without looking at, um, the underwriting. You wouldn’t catch any variance between Countrywide and other loans if the fraud was systemic during the time of the bubble – which it was. Ameriquest and New Century and all kinds of other fly-by-night lenders, all of them now defunct, had the same business model – write as many loans as possible, regardless of the quality. Hubbard just compared this crap against one another rather than reality. This part of the deposition that Taibbi highlights is hilarious:
Q. Did you make any inquiry into how Countrywide actually originated its loans?
A. I’m not sure exactly what you mean by that.
Q. You understand there was a process by which Countrywide originated the loans that it included in the securitizations?
A. Yes.
Q. And there was also a process by which Countrywide examined the loans that it purchased from other originators inclusion in securitizations?
A. Correct.
Q. Did you make any factual inquiry into the nature of either the process of origination or the process of due diligence by Countrywide?
A. I’m not an underwriter in this proceeding, so neither of the assignments that I told you would require such.
More than half of the loans Hubbard “studied” came from lenders being sued by other entities for fraud in their underwriting process.
It’s pretty incredible that Hubbard, an academic, thought he could throw this fastball by lawyers involved in MBS litigation for years and years. And it’s almost a shock that Countrywide got so little for their money.
I’m going to have fun curling up with this deposition sometime soon.
26 Comments
Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
Your last day here, correct,DD?
I’m going to miss your reports. Seriously!
And there’s this:
The scene in “Inside Job” with Hubbard sticks in my mind, alright. What a surly, imperious, snotty little shit he was.
How’s that schadenfreude working out for you, Glenn? You don’t mind if I call you “Glenn,” right?
x2, writ large!
As our intrepid Leader of the Free World has said…”They did nothing illegal…” Maybe unethical and immoral but not illegal was also something Obama said but I don’t have the exact quote. Obama said this before any investigative report was on his desk or any court case was resolved. You can be smug when the President is totally on your side.
same here! many thanks and best
wishes to DDay!
What a disgrace that Columbia Business School is allowing itself to be tarred by association with this huckster. Anyway, a bientot David.
Eh? IMHO, most of the MBAs handed out these days are run by hucksters teaching how to be CON artists. Have you scanned what MBAs teach these days? IT’s all about shit like this: Graft & Corruption for YOUR Personal Profit 101.
Great!
So this twit “works so hard” to “earn” his freakin’ $1200 per hour (!!) but is clueless about his so-called area of “expertise.”
Nifty.
Talk about moochers – thy name be Glenn Hubbard. Looks like a right skeevy little rat-shit bastard, too.
United States of Flim Flam and Fear
Another example of the dissolution of society when academia is captured by the corporate state.
That’s true, sadly. When I received my MBA in Finance back in 1975, Ethics was a required course. At that particular university, it is still a required course. Hubbard clearly wouldn’t recognize an ethical approach if his life depended on it.
$1200/hr? WOW!
I work in personal injury. Apparently, in our neck of the woods bought-and-paid-for “experts” are relatively cheap…
Hwy! You stole my comment right out of my
mouth, er keyboard!I’ll bet Hubbard thinks $300/hr for a lawyer with years of litigation experience is “highway robbery.” But he couldn’t even do what he was being paid outrageously to do.
Why, why, why does anybody take this guy (and his numerous ilk) seriously?
And DDay…how are we to function without you? (and when you curl up with this depo, don’t you think you’ll want to post about it, hmmmmm?)
Oh, hell, we understand that you need a break. But geez, we will miss you and miss out on the info that only you bring us. Thanks for your years of hard work.
There are a ton of academics, primarily economists and business school types that serve as expert witnesses. Check out the rosters of firms like Berkeley Research Group, Charles River Associates, and Lexecon/Compass/FTI. Find out if your favorite professor is for sale. For an “expert” the typical rate the academics charge is over $500/hour. For the biggest “experts”, usually the chairs of major departments, they bill around $1,000 per hour.
With high legal and expert fees coupled with limitations on damages due to “tort reform”, the ability to right an injustice in court is near impossible. And try fighting a merger of two corporations like Exxon-Mobil and chevronTexaco. Who is going to pay the million dollars it takes to have a credible opposition? Cuz the government sure as hell is not doing it!
Reminds me of Martin Short’s Nathan Thurm http://www.youtube.com/watch?v=Wc2o8ywKqos
From the deposition:
Q. “What ties do you have today to the financial services industry?”
A. “I’m not sure what you mean by the question.”
Q. “Have you served on the board of any financial services companies?”
A. “Yes, I currently do.”
Q. “Okay. Which companies?”
A. “Met Life which is a large insurance company. And KKR Financial which invests in debt instruments.”
Q. “How are you compensated for your directorships?”
A. “With director’s fees.”
Q. “What are those?”
A. “Both in stock and in cash. I really don’t recall off the top of my head. They’re on EDGAR, you could easily obtain them.”
Q. “For Met Life is it about $250,000 a year?”
A. “That’s probably about right.”
Q. “Is it also correct that you sat on the board of Capmark, a major commercial lender until shortly before its bankruptcy?”
A. “That’s correct.”
Q. “In that position did you have any responsibilities relating to the commercial mortgage lending operations of Capmark?”
A. “That’s a management responsibility, but I was certainly on the board at that time.”
Q. “In an interview with Fortune magazine, you were asked the following question: ‘The financial crisis proved that there was a breakdown in leadership and ethics. Where should corporate America go from here?’ and you answered I actually think pure fraud and ethics issues were important in the crisis but not central.’
In what respects, in your view, were pure fraud and ethics issues important in the crisis?”
A. “Well, I think that if you read the totality of the interview what I go on to say is that in every business cycle there are bad actors at the peak. So that is not unusual.
Rather what was unusual about this business cycle were other economic factors that I go on to describe in the interview and would be happy to do so for you.”
Quite an interesting “economist” we have here, DDay. And a most amazing deposition.
As always, David Dayen, I thank you for the intriguing information, the penetrating humor, and the wise and well-considered perspectives you have shared with us.
DW
DWBartoo, isn’t that amazing, that part you quoted? I really had no idea that directors were compensated so handsomely. Obviously, I don’t do corporate law, or I guess I wouldn’t be surprised.
Have you got down to pages 30-35 or so, where Hubbard twists and weaves and ducks to avoid answering a perfectly clear question about the tests he didn’t run? And his smug assertions that he didn’t need to run any tests to kknow whether the underlying data was accurate, he just assumed it was.
But he didn’t report his assumptions in making his conclusions!
First lesson of law school, recognize your assumptions and account for them in reachiing any conclusion.
No wonder Krugman and others say economic education is based on nothing. Freshwater and saltwater…I don’t know where the terms come from, but guys like this are nothing but charlatans.
Taibbi was in top form in his Hubbard article. The highlight:
It was fair to ask how much Goldman’s “Global Markets Institute” had to pay one of the Ivy League’s leading minds to endorse the giant daisy chains of credit default swaps and collateralized debt obligations that led to the crisis – it was quite a coup, after all, like getting the Dean of Harvard Medical School to pose in public smoking a pack of Kools.
moochers…that’s a good name for this guy and his ilk, too. $1200/hr to do nothing substantive, $250k to attend board meetings (plus expense for getting to the meetings, that much I know) just for one company, (no wonder they always approve management’s actions. don’t wanna cut off that spigot for outrageous money).
Meanwhile, it’s people like him insisting that granny must learn to live on less money than the $13k in Social Security she’s getting now, because…because…what the hell?
Guess I should rethink my rates….if only my clients were of Hubbard’s income…guess he wouldn’t mind paying $1000 an hour…my skills are surely equal to his!
The deposition is a hoot, tejanarusa. Enough bobbing and weaving to put a bobbing weaver bird to sleep or bring yawns to a big-eyed hoot-owl. A charlatan well-”compensated” for his ability to obfuscate, confuse, bedazzle, and generally hornswoggle those not making the killing. A genuine example of a little “bit” going a long ways while piling higher and deeper BS than a stick can at be shaken. Some fascists wear jackboots, while others spin utter and total nonsense into $1200-an-hour hood-wink “work”.
I’ve had the displeasure of knowing such an economist who “worked” for the Democrats, in DC, “advised”, he called it, while building an “on-the-side” operation that bested his university “salary” rather more than ten times over and chuckled happily when I suggested that “free enterprise” as practiced by the Big Capitalists is intentionally inimical to democracy … and that his grandchildren would be living in a world savaged by the ravages of unfettered greed. That was about twenty-five years ago … however, Glenn Hubbard makes that prof look like a puny penny ante piker.
Glenn Hubbard is, definitely, one of the best and brightest … in his own mind, at least. That “type”, and other pusillanimous fabulists of the sociopathic “persuasion” seem in the “ascendency” these last thirty years, and it’s getting much worse of late, I reckon.
;~DW
The fact is that MBNA was a pure fraud too. Their product, insurance for losses on Mortgage Backed Securities, was sold in the tens of billions of dollars worth while they in fact had almost no capital at all to back it up. As such it wasn’t insurance at all.
Instead it was lipstick on the pig. The sellers of MBS’s could represent to buyers that their product was insured and then the buyers of those, overwhelmingly investment managers with fiduciary obligations to make appropriate investments, could tell their clients their money was invested well and safely.
Without the ‘insurance’ offered by MBNA and a couple of other ratfuX&@s in this biz, the demand for Mortgage Backed Securities would have been far lower.
MBNA may win this but the fact is they were partners with Countrywide et. al., in the great mortgage con game. Back in 05 I would watch in utter amazement how the stocks of these mortgage insurers would levitate smartly during every rally. It was sick. There was no secret that MBNA had only a sliver of capital reserves to meet their obligations. Of course since real estate had never deflated on a nation wide basis since the 1840′s they, like everyone, could claim they didn’t need it. Which begs they question of why buyers bought it then. The answer was above. Putting lipstick on the pig. Making MBS an appropriate investment for managers with fiduciary obligations.
Not impossible. Impossible without a shitload of middlemen taking a cut, absolutely. If lawyers couldn’t get rich off of the litigation, it wouldn’t exist. Fact.
Well I wonder.
Maybe Glenn Hubbard isn’t so stupid and maybe Countrywide and BofA know exactly what the game is. It’s obvious to us out here that reality is not being checked, resulting in vast nonsense – but that’s how finance and government work now. Like the picture I get in my mind is of a splintered ship heaving and breaking apart in a storm (gales of laughter), and some part is prissily snorting at some other part for not being in the right position. There simply is no sane reality checking possible, no place where all the parts reference the other parts and hold together. Not here and now, not anymore.
It’s fun to think that the court will laugh at Hubbard’s hubris and incompetence, but on the other hand – a court? Hubbard’s through the looking glass in the land of hubris and incompetence where the highest and hence the lowest judges cannot tell a corporation from a person. Are we so sure that Hubbard hasn’t fulfilled his obligation to Countrywide, that his job wasn’t simply to impressively robosign a form checkbox? Maybe that’s all that’s necessary, maybe that’s all the court can admit it sees. (helpless laughter)
I was writing my comment while you were writing yours. Yes, that’s what I’m talking about! But I was thinking about how Taibbi was laughing at the folly of Hubbard comparing Countrywide loans to those made by companies being sued for fraud. As if there were honest loans and companies to compare to. Aren’t the stats we hear from Bill Black and others that they were virtually ALL fraudulent? Any loans Hubbard compared Countrywide’s to were going to be fraudulent because of — as Hubbard fishily said — macroeconomics. All the fishy loans were in a sea of fraud. All the fishy experts and professors were in a sea of fraud. Criminogenic environment, Gresham’s law, fraud chases honest out of the market. He said it fishily, but in its own way it was true.