BUSINESS
04/25/2012 05:19 pm ET | Updated Apr 25, 2012

Eileen Foster, Former Countrywide Executive, Calls For Investigation Into Cover-Ups

WASHINGTON -- A whistleblower who exposed systemic fraud by Countrywide mortgage lenders called on the Department of Justice on Wednesday to prosecute her former colleagues, if not with fraud, then with covering it up.

"If there is insufficient legal evidence to convict these executives of what we believe are obvious crimes, then the federal government should refocus," Eileen Foster, a former Countrywide fraud investigations chief, told an audience at the National Press Club gathered to honor her and five others for their truth-telling.

"Overwhelming evidence of perjury, witness tampering and obstruction of justice exist in the numerous claims, court filings and trial and investigative transcripts," Foster said. She herself was fired after reporting that falsified income documentation and faked signatures had been used to steer borrowers into bad mortgages.

Countrywide and all its mortgages were bought by Bank of America in 2008. Foster said Countrywide's "rogue culture ... was welcomed, instead of rejected by Bank of America."

Bank of America told iWatch News last year that it takes "appropriate actions" when it uncovers fraud, including cooperating with law-enforcement. Bank of America was one of five banks that agreed to a $25 billion settlement with the U.S. government in February to resolve civil charges related to mortgage fraud.

Assistant Attorney General Lanny Breuer, responding to Foster's earlier call for prosecuting loan executives for fraud, told CBS News in December that he found "the excessive risk taking to be offensive" and "the greed that was manifested by certain people to be very upsetting." But, he said, "that in and of itself doesn't mean we bring a criminal case."

In an interview with Rolling Stone published Wednesday, President Barack Obama was asked why nobody is on trial for the financial frauds that triggered the global economic crisis.

"[I]n some cases, really irresponsible practices that hurt a lot of people might not have been technically against the law," Obama said. "They might have been the wrong thing to do, but prosecutors are required to actually build cases based on what the law is." He added however that he thinks "there's still possibilities of criminal prosecutions."

Foster's comments came just a day after federal officials arrested a former BP engineer on charges of obstruction of justice for allegedly destroying hundreds of text messages that described high volumes of oil flowing from the ruptured Deepwater Horizon oil well, higher than the estimates that BP was making public at the time.

Foster had another suggestion for the Justice Department, in addition to pursuing the alleged cover-up: Cut out overly timid prosecutors entirely.

"Perhaps financial industry whistleblowers should be permitted to present their information to grand juries without the 'help' of government prosecutors," she said. "Then the people can decide how best to address this outrageous wrongdoing."

Foster was one of five people who received Ridenhour Prizes on Wednesday, named in honor of Ron Ridenhour, a Vietnam veteran who exposed the infamous My Lai massacre during the Vietnam war and then went on to work as an investigative journalist.

Other prize winners were Rep. John Lewis (D-Ga.), a hero of the civil rights movement; Army Lt. Col. Daniel Davis, for speaking out against senior military leadership and their deceptive portrayal of progress in the war in Afghanistan; Ali H. Soufan, for his book, "The Black Banners: The Inside Story of 9/11 and the War Against al-Qaeda," in which he shares evidence that torture was immoral and ineffective; and Rachel Libert and Tony Hardmon, for their documentary, "Semper Fi: Always Faithful," which chronicles of one determined Marine's quest to expose contaminated drinking water on a Marine base.

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