Alayne Fleischmann has told Rolling Stone magazine of her attempts to bring attention to the dodgy mortgages. The Sub Prime mortgages she saw being touted as low-risk ultimately ended up costing finance giant JP Morgan $9 billion in fines.

Alayne Fleischmann. Image:

Alayne Fleischmann. Image:

Ms Fleischmann was working as a lawyer at JP Morgans when she discovered around 40 per cent of mortgage holders had overstated their incomes. This meant they were at a significantly higher risk of defaulting on their repayments. This risk meant the loans could no longer be considered low-risk securities. If JP Morgans attempted to sell these mortgages as low-risk instead of disclosing their true nature the company could be exposed to charges of fraud. Revealing the true risk of the loans, however, would make them impossible to sell.

Ms Fleischmann gave evidence to the US Securities and Exchange Commission about her attempt to shed light on what was happening. She claims she wrote emails to her bosses. They responded angrily, telling her not to leave a paper trail.

In 2008 she was ‘let go.’

When the borrowers began defaulting and the nature of the loans eventually became known it precipitated the greatest financial meltdown in the history of modern economics.

Ms Fleischmann has said she decided to speak to Rolling Stone, and make public her witnessing of what happened because, “… if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”

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