Bank Fraud

One of the most discouraging aspects of the last few years has been the role of fraud and malfeasance, especially from the TBTF and politically connected banks and brokerages. As predicted here, all is quiet on the MF Global front as the administration waits for public attention to turn elsewhere before quietly burying the investigation, freeing Mr Corzine to resume his bundling for Obama activities.  Meanwhile, investors remain frustrated and “feeling fleeced.”

Far more serious in its way has been the deliberate fleecing of homeowners in default. Fortunately, one of them found an attorney willing to go the distance, which was considerable, and has now received a judgment of $3 million in punitive damages against Wells Fargo, Read the whole thing. It will make you want to round up a lynch mob to remove Wells Fargo management. As the judge says:

Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed. But perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods. Wells Fargo’s conduct was a breach of its contractual obligations to its borrowers. More importantly, when exposed, it revealed its true corporate character by denying any obligation to correct its past transgressions and mounting a legal assault ensure it never had to.

Society requires that those in business conduct themselves with honestly and fair dealing. Thus, there is a strong societal interest in deterring such future conduct through the imposition of punitive relief….

Remember, there is never just one cockroach.


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