Sunday, September 02, 2012

Great Moments in Government Regs, 1,000s of Low-Level Bank Employees Have Been Fired

From USA Today:
Richard Eggers doesn't look like a mastermind of financial crime. The former farm boy speaks deliberately, can't remember the last time he got a speeding ticket, and favors suspenders, horn-rim glasses and plaid shirts. But the 68-year-old Vietnam veteran is still too risky for Wells Fargo Home Mortgage, in Des Moines, Iowa, which fired him on July 12 from his $29,795-a-year job as a customer service representative.

Egger's crime? Putting a cardboard cutout of a dime in a washing machine in nearby Carlisle, Iowa, on Feb. 2, 1963.

Eggers got a chance to explain himself to company officials after they received the results of his criminal background check from a Florida company called First Advantage. He was fired anyway.

The computerized report obtained by First Advantage listed Eggers' crime as "fraud." However, records in the Warren County Courthouse confirmed his account of the 1963 incident. The files say he was arrested as a 19-year old for "operating a coin changing machine by false means" and convicted of that charge.

Big banks have been firing low-level employees like Eggers since the issuance of new federal banking employment guidelines in May 2011 and new mortgage employment guidelines in February. The tougher standards are meant to weed out executives and mid-level bank employees guilty of transactional crimes, like identity fraud or mortgage fraud, but they are being applied across-the-board thanks to $1 million a day fines for noncompliance.

Banks have fired thousands of workers nationally because of the rules, said Natasha Buchanan, an attorney with Higbee & Associates in Santa Ana, Calif., who has helped some of the banking workers regain their eligibility to be employed.

24 Comments:

At 9/02/2012 1:30 PM, Blogger PeakTrader said...

Over-regulated America
The Economist
Feb 18th 2012

"A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee."

My comment: $10,000 times 150 million is $1.5 trillion.

I suspect, regulations, in general, have less than $1 in benefit for each $2 in cost.

If true, then the average U.S. worker is throwing away over $5,000 a year, just for compliance.

 
At 9/02/2012 1:33 PM, Blogger Jon Murphy said...

Along similar lines to what you're saying, Peak, read an article (I think it was in Bloomberg) that states businesses spend about $150 billion a year on tax regulations alone. In other words, on top of what they must spend on taxes, they spend $150 billion just to make sure they are done correctly.

 
At 9/02/2012 2:44 PM, Blogger Methinks said...

Ever taken an AML (anti-money laundering) exam? We are required to annually. A few years ago I began cheering for the money launderers about half-way through. Now I cheer for them from the beginning. The government is ridiculous.

 
At 9/02/2012 2:48 PM, Blogger PeakTrader said...

Jon, the study above that concludes regulations add $10,585 in costs per employee seems to be only federal regulations, and not state and local.

Another study, a 2011 econometric study based on 50 years of data, "Regulatory Expenditures, Economic Growth and Jobs: An Empirical Study," concludes:

"A 5% reduction in the regulatory budget, which equals about $2.8 billion in spending, increases GDP by roughly $75 billion and the number of jobs by about 1.2 million annually.

In recent years, however, the size of the regulatory budget has risen sharply, with the Obama Administration proposing numerous new regulatory agendas.

Each regulator (or employee of a regulatory agency) costs the American economy, at the margin, $6.2 million in economic output and about 98 private sector jobs each year."

 
At 9/02/2012 3:04 PM, Blogger PeakTrader said...

So, it seems, if Obama deregulated, instead of accelerated regulations, the country would be at full employment and the Fed would be in a tightening cycle to slow economic growth.

 
At 9/02/2012 3:08 PM, Blogger juandos said...

I'm guessing that Richard Eggers is taking Sen. Dodd and Rep. Frank off of his xmas card mailing list, right?

 
At 9/02/2012 3:17 PM, Blogger JPINTX said...

That old universal law strikes again....unintended consequences. Although in the case of most regulation, seems like the regulators are warned but refuse to believe/don't care. I mean after all they are smarter than everyone else and do for all our benefit.

 
At 9/02/2012 3:18 PM, Blogger JPINTX said...

That old universal law strikes again....unintended consequences. Although in the case of most regulation, seems like the regulators are warned but refuse to believe/don't care. I mean after all they are smarter than everyone else and do for all our benefit.

 
At 9/02/2012 3:21 PM, Blogger juandos said...

From the CEI: Ten Thousand Commandments: 'Estimated regulatory costs, while "off budget," are equivalent to over 48% the level of federal spending itself'...

'Regulatory compliance costs dwarf corporate income taxes of $198 billion, and exceed individual income taxes and even pre-tax corporate profits'...

 
At 9/02/2012 4:21 PM, Blogger Krishnan said...

Putting a cardboard dime in a washing machine almost 50 years ago is cause to get fired.

Cheating on your taxes and blaming the software for it can cause you to get appointed to be in charge of the Tax Authority itself - Geither.

And we wonder what is wrong with our GOVERNMENT.

Making a stupid comment about rape and abortion can cause the entire country to come down on you (Akin) - while actually being accused of rape and lying to Congress can keep you as President of the US and rake in almost 100 million dollars as an ex-president.

Are we not a great country or what.

 
At 9/02/2012 4:56 PM, Blogger hancke said...

Krishnan, *like*

 
At 9/02/2012 7:13 PM, Blogger Buddy R Pacifico said...

I am not sure if Mr. Eggers was convicted of a misdemeanor or felony. I would not hire someone convicted of a felony.

Regardless...

Who commits scams and by extension frauds?

"The Psychology of the Scam":

"To be a good con man, you need to be manipulative, charming, and a flawless pathological liar. Being a successful con man often depends on your ability to persuade people to ignore common sense and their own best interests, and you have to be convincing to do that. Sociopaths have developed those skills to the point of instinct."

That seems to describe Bernie Madoff and many other financial fraudsters.

 
At 9/02/2012 8:38 PM, Blogger Larry G said...

or ...many politicians, eh?

:-)

 
At 9/02/2012 9:01 PM, Blogger Methinks said...

Krishnan, 1000 "likes". Spot on.

 
At 9/02/2012 11:13 PM, Blogger gadfly said...

Here is a WTMJ story about a woman with a splendid work record who was fired by Wells for a 40-year old shoplifting conviction. She worked the phone banks and had nothing to do with cash or contracts.

Crony capitalists are the worst kind - and I say that despite the fact that WF owns me - invests my retirement savings and has all my money.

http://www.todaystmj4.com/news/local/150363015.html

 
At 9/03/2012 1:15 AM, Blogger PeakTrader said...

Buddy says: "I would not hire someone convicted of a felony...Regardless."

A classmate in Accounting (my minor was Accounting, at the University of Colorado) had his bike stolen. So, he bought another bike, which turned out to be stolen.

He pawned it and although he owned it for three months, he rounded up to the nearest year, which was one year when asked on the pawn form how long he owned the bike.

He was charge with a felony and his public defender talked him into pleading guilty, since he should've been exact on how long he owned the bike, given he was an Accounting major, and couldn't defend him successfully.

 
At 9/03/2012 7:21 AM, Blogger Unknown said...

The big crooks hang the little crooks.

 
At 9/03/2012 8:26 AM, Blogger Larry G said...

LIKE

 
At 9/03/2012 8:26 AM, Blogger Larry G said...

LIKE

 
At 9/03/2012 2:08 PM, Blogger Ron H. said...

Peak

"He was charge with a felony and his public defender talked him into pleading guilty, since he should've been exact on how long he owned the bike, given he was an Accounting major, and couldn't defend him successfully."

Aren't accountants allowed to make stupid mistakes - especially before they are accountants?

His public defender did your classmate a terrible disservice unless there's a lot more to this story that you aren't telling us. It's never in anyone's best interest to plead guilty to a felony.

I would expect a neutral judge to throw out such a case, or a jury to fail to convict based on a not guilty plea.

 
At 9/04/2012 9:14 PM, Blogger Hydra said...

Sounds like a lot of oportunities for the right people.

 
At 9/04/2012 9:18 PM, Blogger Hydra said...

SOunds like a lot of opportunities for the right people.

I once knew a fellow who opened a car dealership near a prison. Almost all his help was on work release. He never had a labor shortage.

 
At 9/04/2012 9:41 PM, Blogger Hydra said...

Sounds like a lot of oportunities for the right people.

 
At 9/06/2012 3:29 PM, Blogger Ruth Knoll said...

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