According to reports this week, the banking industry is cracking down on employees with criminal records, even minor ones. The reason? New regulations in the FDIC’s banking and mortgage employment guidelines, which impose strict penalties on banks and mortgage lenders for employing individuals who have committed crimes involving dishonesty, breach of trust, or money laundering – reasonable provisions for individuals entrusted with handling other people’s money. But the application of the regulation is surprising in some cases.
This week, both the ABA Journaland the Des Moines Register highlight the case of Richard Eggers, a Wells Fargo customer service representative who was dismissed after a background check revealed he had been convicted of using a cardboard cutout of a dime in a coin-operated laundry in 1963. The Des Moines Register investigated why low-level employees like Eggers were being fired for such minor crimes, finding that the new regulations’ stiff penalties have banks scared:
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.
“Banks are afraid of the FDIC and the penalties they could face,” Buchanan said.
The Register notes that the FDIC has a process in place for employees to obtain waivers, particularly for de minimus offenses in which the employee was sentenced to less than a year and never served time in jail (Eggers spent two days in jail for his crime and is therefore ineligible for a waiver). But while banks may assist high-level employees with waivers, low-level workers are generally on their own. The situation has created an opportunity for lawyers like Buchanan, who may have new clients as banks continue to purge employees like Eggers.
Posted by Emily Fisher
A cynic might say this is another attempt to window dress compliance and corporate and/or social responsibility whilst the big “gambles” continue at the top ….