Scandal after scandal after scandal – Bank of America is once again in the regulator crosshairs. It’s always something with the conglomerate and after years of embarrassing behaviors, poor business tactics and downright illegal actions, many are wondering just how long American consumers have to put up with this has-been.
Sound Familiar, Bank of America?
Last week, it was revealed a former Bank of America executive who was already in the crosshairs of both the Justice Department and federal regulators, somehow managed to find work with Fannie Mae – years after it was clear his ties with Bank of America were unethical at best and illegal at worst. In 2011, Adam Glassner, who was a Bank of America Securities Managing Director, was named as a defendant in a complaint filed by the Federal Housing Finance Agency. Remember, it’s the FHA that oversees Fannie Mae (FNMA).
In the complaint, he was mentioned when concerns were raised over losses incurred by the firm. Incredibly, he was allowed to join Fannie Mae in January 2012 and worked there until this year. In other words, Fannie Mae added a banker whose conduct was criticized by its own regulator less than five months earlier. Last week, his name came up again – this time in reference to “BOA-Securities Managing Director” in a Justice Department lawsuit against Bank of America.
This serves as just one more embarrassing dilemma in the collective financial sector as the United States continues to rebuild its global image in an industry that still hasn’t managed to pull its respective acts together. The fact that it’s the same industry that led to the collective disaster is just one more embarrassing fact.
There aren’t that many people out there with expertise that don’t have a potentially tainted background,
said Isaac Gradman, a lawyer at Perry Johnson Anderson Miller & Moskowitz LLP in Santa Rosa, California, who works with investors and insurers in such cases.
I would hope they would pull from the population with mortgage expertise that didn’t engage in the type of conduct that caused the crisis.
Justice Department Suits
In a separate though simultaneous suit, Glassner wasn’t named as a defendant by the Justice Department. It’s an ongoing civil case filed in federal court in Charlotte, North Carolina. Then again, the water’s hot enough in the initial FHFA lawsuit, which alleged that Bank of America as well as many of its executives – including Glassner – remains liable for misleading customers in statements that offered various documents for mortgage bonds. Thos bonds are what caused “hundreds of millions of dollars in losses at Fannie Mae and Freddie Mac.” Yet, Glassner was hired to work for Fannie Mae.
Glassner Not Commenting
Naturally, Glassner has opted to not comment on the sordid mess and instead, directed the media to Bank of America. Calls there were met with the same “No comment” nonsense that they’ve always hid behind. In the past, when asked about the lawsuit, the bank reverted to similar answers from the past in that “the bonds were purchased by sophisticated investors with access to ample data.” It’s also quick to note that it’s contesting the FHFA suit.
For its part, Fannie Mae spokesperson Andrew Wilson said, it “follows a thorough process when evaluating a potential employee’s experience and expertise,” His emailed comment continues,
We hire employees to help us achieve important goals for the company and for the future of the housing market.
Meanwhile, Denise Dunckel, an FHFA spokeswoman, said in an e-mailed statement that the agency “expects the management teams of Fannie Mae and Freddie Mac to follow sound governance procedures when seeking and hiring new employees.” Somewhere, someone dropped the ball.
What is absolutely incredible is that the unemployment rates in this country are still remarkably high. While the Administration continues to play silly word games with the media, the new jobs that have been added are part time, low paying positions. Yet, executives in and around Wall Street have somehow managed to snake out new positions after playing significant roles in mortgage-bond securitizations before the housing crisis, which contributed to the nation’s worst economic slump since the Great Depression and taxpayer bailouts for the world’s biggest banks. The question is why.
Make no mistake – it’s not limited to just Bank of America. There have been executives with Bear Stearns, which folded soon after the mortgage crisis kicked in (and also recently named in a new FHFA complaint, which also happens to employ some of those folks) as well as Goldman Sachs, JPMorgan Chase, Wells Fargo and Deutsche Bank (among others). There have been 17 separate lawsuits filed that include 130 former financial employees who somehow are now working for many of those same government agencies.
Those government agencies refuse to comment.
William Black, Associate Professor of Economics and Law at the University of Missouri at Kansas City, says the “resiliency of such careers highlights the government’s failure in holding Wall Street accountable for the housing crash”. He then goes on to say,
It’s consistent with their policy that they no longer prosecute elite bankers.
Blacklisting, he says, isn’t much of an option when “pretty much everyone was involved”.
Bank of America continues to move forward with its countless lawsuits. In its suit last week, the Justice Department said Bank of America misled investors about the riskiness of loans backing a January 2008 bond. The complaint describes the activities of two senior executives, including a Bank of America Securities LLC managing director who “ultimately had responsibility” for structuring the deal and preparing offering documents. One person close to the case says that was Glassner. He asked to remain anonymous since he’s not authorized to discuss it with the media.
And now, Bear Stearns, which hasn’t been heard from since late 2008, is gearing up for its own FHFA allegations, stating last week that its only allegations were that “those people” were officers or directors when the firm issued securities in question and that they signed documents for the deals. That didn’t include the paperwork “actually alleged to have contained material misstatements,” according to the filing.
It’s just another week in the American banking and mortgage sector – scandals and all.
Similar Personal Finance News
- JPMorgan Continues Expansion
- Overwhelming Financial Truths: How They Affect Everything
- Eastern Bank Card Customization
- Experts Predict 2012 Credit Card Boom
- Consumers Not Interested in Mobile Banking
- Discover Top Annual Brand Loyalty Poll
- 8 Days & Counting: Candidates & Economy