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Bank of America Will Pay Whistleblower $930,000

This article was written by in Career and Work. 9 comments.

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

Updated December 22, 2011 and originally published September 26, 2011.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 9 comments… read them below or add one }

avatar 1 wylerassociate

not surprised about this at all. Bank Of America has very bad leadership and it’s one thing after another with them. I do wonder in retrospect if they regret acquiring countrywide financial.

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avatar 2 Anonymous

Regret: For those that profited greatly, then either fled or got fired by BoA – no regrets there! Those left behind? – Yep!

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avatar 3 lynn

It’s encouraging that these things are coming out in the open, more so now than ever before. A person can feel the underlying greed, but proving it is another story. Ms Foster was a courageous lady.

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avatar 4 Ceecee

Don’t have any accounts there, or own stock. Don’t plan to, for sure, now.

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avatar 5 Anonymous

“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”

I’m not sure if you mean this is how things ought to be or if you’re being cynical or something.

I don’t think shareholders really demand that companies fight legal battles to avoid paying any money even when the company is clearly in the wrong. I think most logical shareholders would instead prefer that the companies they own would just obey laws in the first place. I don’t think people buy stock in companies expecting the company acts illegally then uses lawyers to avoid the costs of doing so.

There should be no shareholder versus customer mentality about how companies are ran. Good companies aren’t ran that way.

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avatar 6 Luke Landes

In a perfect world, companies would see that consumer-friendly policies will eventually pay off for shareholders, but often short-term needs trump long-term needs. Particularly when the Board of Directors have a significant vested interest, and other institutional investors own a large portion of shares… you find decisions aren’t always made with the customer in mind. Of course shareholders and customers alike would prefer that companies follow the law… but whether it’s a rogue department or failure from the executive level, the primary concern for major shareholders is minimizing the damage.

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avatar 7 Anonymous

Yeah that makes sense. Sorry if I got a little ‘preachy’ there. ;)

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avatar 8 Donna Freedman

Hats off to the lady for sticking her neck out (wow, two cliches in one sentence!). I wish it weren’t so risky for employees to tip off investigators. How else will illegal practices be brought to light?
I wish, too, that companies that make money off customers would consider the needs of those customers at least as important as the needs of the shareholders. (Yeah, I crack *myself* up, too.)

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avatar 9 shellye

I hope Ms. Foster invests her money wisely.

I don’t feel one bit sorry for B of A…

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