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Hot Docs 2019 Interview: Oliver Budde Talks “Inside Lehman Brothers” and the Things You Must Know About: Corruption, Human Defect Known as Greed and Much More


Greed, selfishness, human neglect and dishonesty has become a loyal partner in a human’s life. Whether it is you, me, or someone else, there is no way to tell when we will fall, today or tomorrow. This all may not apply to any of us, but there are people who are too good at what they do – in destroying the economy, spreading hatred, and looking for an opportunity to steal as much money as they can, as if they will be able to carry it with them till eternity.
We all know what happened back in 2008, the real estate crisis and how many lives were destroyed due the shady mortgage deals because of certain individuals who wanted to get skyrocketing bonus. The documentary, “Inside Lehman Brothers”, written and directed by Jennifer Deschamps is about everything you need to know related to the strange mortgages taken out by Lehman Brothers that brought the real estate business in the United States to its knees.
Oliver Budde was an in-house counsel of The Lehman Brothers back then and I had the absolute pleasure talking to him over the phone. He provides an in-depth analysis of the world full of corruption, lies, and masquerade painted out and presented as a true and honest government which knows a lot yet does little because of big corporations that have the last word.
MOVIEMOVESME: Can you talk about your interaction with the Lehman Brothers and the position you held in the company?
Oliver Budde:  I worked there from 1997 until 2006 and I was known as an associate general counsel. I mean, Lehman Brothers was a thousand different subsidiaries, but I worked at the top company helping to give legal advice concerning the management of the whole enterprise.
MOVIEMOVESME: And what was your role in getting the truth out to people, to America, about the Lehman Brothers and with everything illegal they were doing?
Oliver Budde: Well, I did not… That is really a second story to be honest with you. Okay? That story is told by those women on the west coast that Jennifer found. I come from a different perspective. I’m more like Matthew Lee. He was an accounting whistleblower and I was a legal whistleblower. But I actually was not involved in sort of revealing things at the end. I had left Lehman Brothers in 2006, basically out of disgust, and then it was in early 2008 where I revealed certain things that were going on. They were lying in their disclosure to the public, but this was not the big stuff that everyone knows about now, the accounting fraud and the mortgages packaging and so on that you suggest. Mine was a different sort of whistleblowing concerning how they were disclosing how they were paying themselves, their compensation disclosure.
There they were playing games and they were hiding millions and millions of dollars that they had given themselves, but they did not want to tell the public about. And so that is the information I gave to the SEC in April of 2008. Which the important part about my story, which no one really picks up on, is I was there, I went to the SEC five months before Lehman Brothers went bankrupt. And this was the time when the whole world was looking at Lehman Brothers, including the SEC who had regulators inside Lehman at that point. And the Federal Reserve also had put people in there to be carefully alongside them and to carefully monitor everything.
And here I come to them and I’m an eight-year in-house lawyer, maximum credibility you would think, and I say, “Hey, these guys are lying about the money they’ve been paying themselves over the years. Here’s the proof.” And I laid it all out for them, Ulkar, and they didn’t do anything. They utterly ignored me. And this is the scandal of my story. But again, it’s a little bit separate from the main Lehman Brothers story of going bankrupt and blowing up the world based on these shitty mortgages that they packaged into bonds and so on.
MOVIEMOVESME: When you went to SEC five months before the financial collapse, nobody did anything. Why do you think that happened? Is it because money talks? Or they knew about it and they just decided to stay quiet about it?
Oliver Budde: My theory is that it is basically one gigantic mafia and the people that take the jobs as lawyers, as people that the ordinary, the common man, thinks, “Ah, he’s looking out for my interest. He’s there to make sure that the law is being followed.” These guys are sort of the most important players in this mafia. They make it all possible. And if you take a look at the details of who has the job of being the sheriff of Wall Street, the prosecutors in charge of bringing the cases, without exception they come from the SEC or from some other regulator or from one of the big law firms that defend the banks. And we expect these people to look out for our interests and they don’t.
So that, in my case, I went to the SEC, as I said, in April of 2008 and at that time the SEC’s head of enforcement, the chief enforcement officer of the SEC, was a woman named Linda Thomsen. She’s now working at one of the biggest Wall Street defense law firms in New York City. And I’m struggling for the name. I believe she’s with Milbank Tweed, but I’d want to double check that. But anyway, Linda now has a big job where they’re paying her literally millions of dollars a year. And why? Because when she was at the SEC, she closed her eyes to everything, including what I told her in April and including things that had come in for years before that.
I mean, the SEC it’s a running joke how bad they are. You remember the Bernie Madoff situation. That was Linda Thomsen also. This guy Harry Markopolos, and he wrote a book, and there have been movies and documentaries, he gave them time after time, “Here is proof. Here is more proof. Here is still more proof that this guy can’t be real, that he must be a fraud.” And they ignored him again and again and again. Why? Because it’s one big club and you’re not in it and I’m not in it.
So yeah. So that’s basically where I come from. And I was much more naive back then. That was 11 years ago. And it’s only over this intervening decade that I’ve come to the sad realization that, “Oh my God, I never had a chance. Oh my God, there was never any point in me bringing that information out either to the SEC…” And I did bring it also to the Department of Justice and attorney generals in New York and New Jersey and Massachusetts. Not one person ever picked up a phone or even sent me a thank you email.
The only emails I ever got back were from the SEC’s website because they have a special address, or they did back then, it’s different now, but back then if you wanted to send them information like this you sent it to enforcement@sec.gov. And each time I did that, and I did it maybe four or five times between April and September, each time I got an automatic email reply saying, “Thank you. Thank you for your submission. We’re on it. We’re looking at it. And we thank you for it. But you must understand because these are sensitive investigations we cannot call you back unless we absolutely need to.”
I mean, they think it all through ahead of time. They cover themselves so there’s an explanation, so it makes sense for me that they’re not calling me back all during 2008. I’m thinking, “Wow, they’ve got it. And any day now they’re going to put the handcuffs on these guys and they’re going to save the day.” And there’s not going to be a Wall Street recession, a big blow up on September 15 with a bankruptcy, largest in history. I was comfortable. I’m like, “Ah, I did the right thing. I’m a great guy.” I’m an idiot, because I made no freaking difference.
MOVIEMOVESME: So now, how wide are your eyes open since then?
Oliver Budde: Fully. They’re fully. I was asleep. I was naive. I was a child. Now I’m a wide awake adult. I get it. And there are a hundred other whistleblower stories of various sizes regarding different aspects of Wall Street or what have you and they all fit the picture. They all fit my theory. They all reinforce. And even if you want to go outside of business and look at the government whistleblowers, from the people involved with Assange to Snowden to Thomas Drake to William Binney. I mean, there is a gang that took over and they’re doing what they want on Wall Street and they’re doing what they want in Washington and we are all just sitting by watching our favorite television programs thinking everything is wonderful. “What kind of coffee will I buy at Starbucks today?” It’s just really, really sad.
MOVIEMOVESME: So as an in-house counsel in Lehman Brothers, what was the most outrageous process you observed?
Oliver Budde: There were many. Yeah. When I was there, and let me just explain, when I left in 2006 the… Okay, let me take a step back. I mentioned to you that I went to the SEC in 2008. That is because certain rules had changed beginning in 2008 concerning how they had to disclose the pay that they had been receiving. And that’s why they, as I described to you, when the rules changed, they could no longer hide the tens of millions of extra dollars they’d been putting in their pocket but not telling anyone about. So now the new rules were going to flush it out so they had to double down, basically, and that’s why they lied. And now I could go to the SEC because it was black and white. What they did was clearly illegal, clearly against the new rules.
But in 2006 when I left, I already had those concerns about the hidden compensation, but the rules were different, they hadn’t been changed yet. And so, there was what people call a gray area. To me it was not gray. It was obvious that we were hiding stuff that we should not be hiding. But because the rules were written by these kinds of lawyers that I’ve talked about that rotate in and out of there, they write the rules thinking, “How can I then exploit this with my client when I get back out in the private sector?” And so the rules were loosey-goosey enough where we could read them in a way back then and say, “Yeah, we don’t have to disclose these tens of millions of dollars because there’s a way they have a comma here or the word ‘a’ or ‘the’ there means that, yeah, we’re okay, we’re safe.”
And so that’s the sort of analysis that really had me pissed off for years, but there were so many other things. The compensation stuff, that was one of the first things I ever discovered. By 1998 I knew that they were playing games with that stuff. And the truth is I turned my eyes and I kept going and I kept taking the big money for years after that because that wasn’t enough by itself. I knew that it was a gray area. I knew that if I didn’t do it, somebody else was going to do it. It’s not like my quitting would’ve made a difference. And I was living a good life so I held my nose and kept going. But then other things piled up.
Just to get to the question you asked, what was the most egregious, I could list a dozen of them. I’m going to give you one that is just, I think, perfectly encapsulates who these people are. 9/11. Okay? September 11, 2001. Well, that happened right next door to our building. We worked right across the street from the World Trade Center in the World Financial Center. We were there with Merrill Lynch and there were a couple of other smaller banks through at the time, American Express, which had owned Lehman Brothers at one point. They were now separate, but we were in the same complex.
Anyway, 9/11 happens. I witnessed it. Just as a little aside, I was on a ferry boat coming across from New Jersey on the Hudson River. The first one had happened just when I came outside that morning and the second one happened right before my eyes. And luckily the boat was in the middle of the river so we just turned around and went back to Jersey and I never had any trouble, but plenty of other Lehman people did and so on.
But anyway, my point is, so the stock market was closed for a couple of days. I think that happened on a Tuesday and I believe on Friday… So I think we gave people the next couple of days off because we couldn’t go to our office anyway. And we ended up leasing all kinds of other space. We leased an entire hotel in Times Square and we put a thousand people there. We did all kinds of things. And I was part of this crew of like 50 executives and lawyers getting a lot of stuff done, scrambling to get back on our feet. And so the first time we found space for ourselves, for Dick Fuld the CEO, the top people, and the lawyers, and I was probably the lowest lawyer, I was the last one in the door and they shut the door at 50 or whatever, but I was able to be in there in those days right then.
And while the whole world is crying, people are still dying, there’s bodies in the pile, it’s smoking for months afterwards, everyone, their whole lives turned upside down, what is Dick Fuld the CEO of Lehman Brothers focused on? “Wow, this is a hot opportunity for me to get the company to buy me a private jet so I don’t have to fly commercial anymore or I don’t have to fly on charter jets. I can have my own jet.” And that’s what he had me do. Three days after the building went down, I was drafting resolutions saying, “Because of terrorism, because our CEO is a near God and we must protect him against all harm, we authorize $50 million to buy a brand new jet.” I mean, that’s not human. That is, it’s sick.
But it’s also, it shows you, this is how Wall Streeters think. These are traders, and on Wall Street… Not traitors to the country, traders with a D, but they are both, but traders with a D. They understand that things change. And today maybe the price of gold goes up because that happened over there. A butterfly flapped its wings in Japan and an elephant scratched its ear and now, you know what I mean? These traders, windows of opportunity open up, and this is what Dick Fuld was attuned to. He saw that, “Wow, right now I could get the board of directors to buy me a brand new jet and I’m going to do it.” And it was just sick to me. And that… I did stay for five more years so I can’t say that’s the one that kicked me out, but that one, from then on I felt like an enemy behind the lines, you know what I mean? I really… That, they lost me for good right then.
MOVIEMOVESME: I get that SEC could not care less but how about the government, the people above the SEC, they knew as well and did nothing to stop it?
Oliver Budde: Yes, yes, yes, yes. You will never find any proof that they know anything about anything that can get them in trouble. These are all smart people. They know when not to use email. They know when not to allow people to record conversations, etc. You know what I mean? They’re smart, very, very smart. But of course they knew. This is how… And this is all kinds of people. There are newcomers, climbers who get up there who want to be big criminals, want to have big money, there are families who have been involved since before America left Great Britain. There’s all kinds of lines. And especially these banking families. The Wall Street money you know. I don’t have to mention the name Rothschild, and I never do because I don’t want to play that conspiracy game, but these are big families with big interests going back long periods of time and they know what they’re doing.
So yes, the people at the top knew. So September happened. September 2008, of course, was right before Barack Obama was elected for the first time. And so George Bush was on his way out. And I never expected George Bush’s people to do much, but then again, as I say, I also didn’t expect them to be able to ignore proof positive of lying about money, which they did, but that was part of my growing up experience.
But anyway, so they switch over to Obama. Now coincidentally Obama and I both went to Columbia, class of 1983. I’m not saying he’s my best friend, but I’m saying I bet I smoked a few joints with him. But we didn’t stay in touch or anything like that. But I actually believed his hype. I actually liked his message, the hope and the change and that. Like, “Great, let’s get rid of this idiot Bush.” And this guy, Barack Obama, and he had a different name in college. He was Barry Soetoro back then, but it was the same guy. I was hopeful like, “Oh, well now, even if they…”
Because by the bankruptcy I realized that the SEC had let me down. So now Barack comes in and he renews my hope. I’m like, “Okay, well they didn’t use my info to prevent the big blow up, but at least now the right cops are in charge and the right thing will be done.” But who does he bring in? First of all, he appoints as a leader of the SEC a woman named Mary Schapiro, and I don’t know much about her, but she was just another corrupt insider from the Wall Street gang. She had been on Wall Street in one form or another for decades.
And then the other guy, the number two guy that Mary Schapiro brings in, the director of enforcement, in other words the replacement for the Linda Thomsen person I was describing before, is a guy named Robert Khuzami. Now, today he is the United States Attorney in Manhattan on Wall Street for Donald Trump. So the story is crazy, but I don’t want to jump ahead. But back then he was in-house counsel, like I had been, but at a more senior level at Deutsche Bank. And, in fact, his boss at Deutsche Bank had himself worked at the SEC 10 years earlier. And so his boss at Deutsche Bank called up the new boss at the SEC and said, “I got a guy for you right here.” And he puts his man, Robert Khuzami, into the SEC from Deutsche Bank into the SEC. Now, of course, one of the biggest bad actors during the crisis was Deutsche Bank. So you know nothing bad happened to them at least coming… Years later they got in trouble. But Robert Khuzami was not going to go after his old friends at Deutsche Bank.
The other big part about the Deutsche Bank story or angle is that Lehman is most known for that thing called Repo 105. It’s in the Valukas report. It’s one of the biggest things that people are scratching their heads over why didn’t anyone arrest anyone? Because it was a blatant accounting fraud having to do with, not the mortgage backed securities in particular, but just all kinds of stuff that they were pushing off… securities that they owned that they would pledge as collateral but pretend that they would sell to change their leverage ratio so they could try to convince the world that they were borrowing less and less money each quarter. It was a total lie. And, as I say, that was the big thing.
But in order to do that Lehman brothers had to find other banks to do these Repo 105 transactions. And there was no US bank that would do it because under US law it was black and white, plain as day that what Lehman was doing with Repo 105 was total bullshit, totally illegal. But under international accounting standards, European banks, for the right amount of money, for the right inducements, could get comfortable. “Yeah, we think we can do some of that for you.” And so Lehman was constantly looking for new European banks to do billions of dollars of these fraudulent Repo 105 transactions every quarter. And guess who did tens of billions of dollars worth? Yes, you got it, Deutsche Bank. And all of that stuff is so technical and so gray area, at best, that you know the legal department of Deutsche Bank as well as the accountants from both Deutsche and Lehman Brothers had to be talking, had to be agreeing.
So he was part of that scam and now he’s the sheriff of Wall Street in charge of investigating it and deciding whether they should charge Lehman. And, of course, they made the decision after “looking at it carefully,” of course, that “No, there’s nothing illegal here. We can’t do anything about it.” And so that’s the guy that inherited the information I had given to the last administration and naturally he was going to bury all of it. And I don’t want to keep going on. And obviously you’ve got me worked up. This stuff really pisses me off.
There are even more ties between the lawyers at Lehman brothers and Khuzami. Khuzami got his first job as a young associate at a Wall Street law firm called Cadwalader. And who gave him that job? The top legal officer of Lehman Brothers. Tom Russo was a partner at Cadwalader. So he owed my boss his whole career basically. My boss, the top guy at Lehman, had gotten Robert Khuzami off the ground back in the 80s. And just to make it even crazier and to show you how my mafia theory holds up, the guy at Deutsche Bank, Richard Walker, the guy who had been the enforcement director at the SEC 10 years earlier, and who had recommended Khuzami to Obama and Shapiro, he too was a partner at Cadwalader back in the ’80s and he too had given that guy Khuzami his first job. I’m just saying those two partners collectively at Cadwalader are the guys that gave this guy his first job. So basically they had been grooming him literally for decades to save them when they pulled off the big scam, which is what happened in 2008.
MOVIEMOVESME: Don’t you find it funny that in the world of money human dignity comes in second and having power of money comes first?
Oliver Budde: Yeah, of course.
MOVIEMOVESME: Why do you think money has so much power over people? Why a piece of paper comes as the priority while people become less and less important?
Oliver Budde:  It’s called greed. Okay? It comes back to that. And I’m not a religious man and I don’t like to discuss it in religious terms, but the religious people, Judeo-Christian traditions, I don’t know so much about the others, know all about guilt and talk about it as a sin. Right? And it’s the best word to describe it. It is a sickness. It is an obsession. And if you have 100,000, you want a million. And when you get to a million, that’s not enough, now you want 5 million. And when you get to five, no, that’s not enough because there are people there that have 50. And they just get lost.
It’s a giant vacuum. It’s a casino. Go to a casino. Go hang out in Las Vegas. You’re in Toronto, so I don’t know where your casinos are. I know there’s one in Montreal. But just go live inside a casino for six or eight hours and you can feel it. You can feel it. It is a weakness in mankind. Something switches off. And maybe it just is not very different from what we would call a survival instinct. But it becomes…
Money is so powerful, because it can buy everything, do everything. It’s just like an automatic switch in people’s brain. “Yeah, it’s better for me to lie, cheat, and steal from everyone around me if I can get some money out of it.” And it’s a powerful defect in humanity that these guys figured out, these families, the old… the layers and layers of people that have been in this business for centuries, they figured that out a long time ago and they have now perfected the art of exploiting it.
And even when these things happen, and there was pretty good reporting, I mean I have lots of criticism, but there was pretty good reporting around the 2008 crisis, coverage on the main networks and whatnot. People don’t even really care it seems to me. They’ve got us beaten down into a state of submission where they can… And people have put different numbers on it, whether that crisis cost the world 13 trillion, or 20 trillion, or 50 trillion, whatever it might be, it’s like nobody cares enough to really follow up. We all want to forget about it. This story is almost dead. Look at… You’re the only media person I’m speaking to about Jennifer’s movie in Canada. What does that tell you? It tells you something pretty bad. And I don’t mean to offend you at all, but I’m just saying nobody cares. Nobody cares.
MOVIEMOVESME: So you just mentioned about greed about money and that once they got 5 million they want 50, once it’s 50 they want 500 million, all these things. So isn’t it interesting that in this digital world we can change and manipulate numbers? We can print as much money as we want and share with everyone. But why is it so limited and exclusive to certain people?
Oliver Budde: You focus the question very nicely. If we can figure out that answer, then maybe it can be peace on earth. I agree with you. There’s plenty for everybody. We can print, we can build, we can make whatever we need for everybody. They’re not too many people. Maybe there’s a limit that we should pay attention to, but we could take care of 7 or 8 billion people. No problem. We just choose not to. I don’t know the answer. Like I say, find the philosopher, find the wise men who can crack that code and we can really open it up because we can all be very comfortable.
And it is sick. And those guys like Dick Fuld, he took out over $500 million from Lehman Brothers over the years all together. It just sits in a bank account. Or maybe some of it is invested in stock A and then a little more in stock B, but it’s like you said, in a similar way, they’re just numbers on a page. He gets a printout, he gets an email, saying, “Now your number is 600 million,” and maybe if in a good month now it’s 612 million. I mean, so what? You only can spend so much each year and the rest just sits there. So I’m with you. That is a very good question. I don’t have the answer. I want one too, though. I want the answer like you do.

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