Bank of America can’t catch a break. A whistleblower, Eileen Foster, brought fraud at Countrywide Financial Corp. to the attention of Countrywide’s Employee Relations Department shortly after Bank of America acquired the company. Bank of America then allegedly fired the whistleblower in retaliation, although the bank claims the termination was due to the employee’s management style, not the fact she led an investigation that uncovered fraud.
The U.S. Department of Labor says Bank of America must reinstate the employee and pay her $930,000 for lost income, interest, damages, and attorney fees.
Countrywide specialized in subprime loans, and the employee’s investigation uncovered wire, mail and bank fraud at the company, as a matter in the course of doing business. Countrywide used predatory lending tactics and falsified loan documents.
As a result of the investigation, six branches of Countrywide in Boston closed. After the closings, Countrywide agreed to pay $3.1 million to Massachusetts and $3 billion in loan modifications. According to the Department of Labor, also as a result of the investigation, Bank of America retaliated by firing Foster.
From the Wall Street Journal:
Countrywide then initiated an investigation into allegations of harassment and misconduct by Foster, the report says. The report says Foster wasn’t initially informed of the investigation but several employees were interviewed for it. One employee who was interviewed went to the general counsel and the chief operating officer of Bank of America to express concern Foster was unfairly targeted, the report says.
An employee told the Department of Labor the investigators asked “leading questions and had a profoundly biased view” of Foster.
Foster was fired in September 2008. An executive said she engaged in “inappropriate and unprofessional conduct with your staff and displaying poor judgment as a leader,” according to an email cited in the government’s report.
Bank of America will repeal the Department of Labor’s decision.
Despite protections for whistleblowers, many who believe they witness unethical activities in an organization may not raise the issue to the appropriate authorities. The culture of an organization plays a larger role in decisions to go against co-workers and superiors than documented protections. Even though retaliation is not permitted, the fear is great enough to keep most people silent. Particularly when the unemployment rate is high, employees are willing to stay silent and keep their jobs. The Department of Labor is charged with ensuring that employees are not afraid to speak out when there is evidence of wrongdoing.
In addition to this issue for employees, consumers should also pay attention. While Countrywide Financial (Bank of America Home Loans) is not the same entity that provides savings accounts and credit cards within Bank of America, it is part of the larger organization. Interest rates and customer service tend to be the biggest drivers for the choice of banks, but the attitude of the larger corporation can legitimately play a role in these decisions, as well.
While Bank of America may not be continuing any possible retaliation, they are appealing the decisions. Of course, this is the only possible course of action because in the end, the company must answer to its shareholders who expect the company to avoid any unnecessary expenses if possible. When shareholders’ priorities are different than customers’ priorities, it may be time to consider alternatives, like credit unions and mutual insurance companies.
Wall Street Journal
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