A jury found Bank of America liable of selling defective mortgages on Wednesday. But while there have been a handful of major cases against banks for their actions in the crisis recently, this one is unique: it blames an individual. The jury found Rebecca Mairone, who was a top manager at Countrywide, liable on the fraud charge she faced for her role in pushing quantity over quality in its mortgage-writing program. Other suits that alleged mortgage fraud before the crisis didn’t name individuals, such as the ones against Bear Stearns and Wells Fargo.
Mairone may certainly be to blame for some of the practices that fueled the crisis. Federal lawyers say she led a program nicknamed the “hustle” that gave bonuses to bankers who originated loans more quickly, incentivizing them to overlook the creditworthiness of the borrowers. “When the loans were sold to mortgage giants like Fannie Mae and Freddie Mac, they failed, generating more than $1 billion in losses,” the New York Times reports.
This was a widespread practice. Yet Mairone is so far the only individual who has been pinned with blame for her actions in the lead up to the bursting of the housing bubble. Meanwhile, Angelo Mozilo, the former CEO of Countrywide, never faced criminal charges, although he did pay a $67.5 million settlement in a civil fraud case with the Securities and Exchange Commission.
Wall Street is definitely a boys’ club. Women hold just 18.6 percent of executive officer positions in the finance and insurance industries and less than 20 percent of board director roles. They are about a third of all employees and just over 15 percent of executive or senior-level officials and managers in the companies that make up the “Investment Banking and Securities Dealing” industry.
Yet Mairone is just the most recent woman in finance to take the blame when things went awry. In the wake of JP Morgan’s failed London Whale trades that cost the company at least $6 billion and were conducted by a man, the first head to roll was a woman. The company also nearly booted a female shareholder over the matter. Male CEO Jamie Dimon wasn’t held accountable.
Women may have also been scapegoated during the financial meltdown. Erin Callan of Lehman Brothers and Zoe Cruz of Morgan Stanley were both high-ranking executives who were fired or pushed out when their companies faltered. In general, female executives were three times as likely to lose their jobs in the recession as men, despite their smaller numbers.
Michelle Ryan, an associate professor at Exeter University, calls this phenomenon the “glass cliff.” During times of crisis, companies promote women into leadership positions, particularly for taking charge of the dangerous parts of the companies. “Women often tend to occupy these dangerous leadership positions in dangerous times, when things are getting hairy. When things are going great, it’s usually men who occupy these roles,” she says. When everything starts to fall apart, women are on the front lines.
Although Mairone — as well as Ina R. Drew of JP Morgan (who resigned after the London Whale scandal), Callan of Lehman, and Cruz of Morgan Stanley — may have acted badly, in an industry dominated by men the trend seems to be that women are still the first to take the blame.