Lying Under Oath to The Financial Crisis Inquiry Commission is the Equivilent of Perjury.
The Law:
United States Code, Title 18, Section 1001:"Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals work covers up by any trick, scheme or device, a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined under this title, imprisoned not more than five years, or both."
FROM THE RECORD OF PROCEEDINGS BEFORE THE FINANCIAL CRISIS INQUIRY COMMISSION.
Excerpted from the FCIC Official Transcript
Hearing date: May 5, 2010, Session One.
Sworn Testimony of Witness Samuel H. Molinaro, Jr., (former CFO / COO/ EXECUTIVE COMMITTEE MEMBER, The Bear Stearns Companies Inc.)
FCIC TESTIMONY (from the official transcript):
Some context here is crucial. In the same FCIC hearing, Molinaro testified that Bear Stearns knew that falling home prices was one of the biggest risks the company faced.
And yet, according to the former CFO and COO, Bear Stearns did not model the impact of a "nationwide decline in housing prices." Moreover (as far as Molinaro could recall), there were no concerns or even discussions at Bear Stearns about the possibility of a drop home in prices across the United States.
Now answer this question: DO YOU BELIEVE THE TESTIMONY OF SAM MOLINARO?
We, the trusting staff at Wall Street Law Blog, do not. But, to be fair, we have reviewed a few documents that we are willing to bet came to the attention of Molinaro and the other members of senior management at Bear Stearns.
Consider, for instance, this excerpt from a research report about the housing bubble that Bear Stearns published in September 2006. In it, Bear warns that the ratio of home prices to income was "[a]bout as stretched as it has ever been!"
And how about this conclusion from the same Bear Stearns report?
This report - which was one of many warnings Bear issued about the bubble - is from the fall of 2006. That's about a year and a half before Bear Stearns collapsed. Note that Bear Stearns specifically states that home prices were already falling, but Bear also cautions that "housing conditions have barely begun to normalize, and it will likely be some time before we begin to see signs of a trough."
Now, again we ask: DO YOU BELIEVE MOLINARO?
By Brett Sherman