Former employees of Bank of America have recently filed sworn statements against the bank. According to one report, employees would delay processing of loan modifications, would regularly lie to potential borrowers about the completeness of their applications for loan modifications, and even went so far as to deny the applications after taking out crucial documents.* The company and its officials also offered rewards to certain employees for foreclosing on a certain number of consumers.* Bank of America also allegedly lied to the federal government about its loan modifications.*
In addition, the bank would also attempt to steer consumers away from mortgage modifications under the Home Affordable Modification Program (HAMP).* Instead of HAMP modifications, Bank of America would talk consumers into contracts that were much more favorable to it.* As in many such situations, if an employee were to dispute or challenge the bank’s actions, he or she would be summarily dismissed from the company.*
This is not the first scandal to hit major U.S. banks, nor is it the first to hit Bank of America. Not long ago, it came to light that major banks were engaging in improper “robo-sign” activities, whereby the banks would falsify court records in order to try to foreclose on homes.* With other banks, Bank of America even entered into a settlement with the attorneys general of several states in the wake of the “robo-sign” controversy.*
Many are calling for stronger regulation and oversight of U.S. financial institutions. Whether it will come and whether increased regulation and oversight will help prevent abuse by major banks across the nation is still to be determined.
This case is a strong display of the power of inside “whistleblowers” to curb corporate wrongdoing.
*Bank of America Whistleblowers Allege Rot at the Core of the Mortgage Industrial Complex, (Huffington Post, June 20, 2013), http://www.huffingtonpost.com/ray-brescia/bank-of-america-whistleblowers_b_3464583.html