Fed regulatory rules squeeze banking employees

Low-level workers fired because of new banking standards

 Excerpt:

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, 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 Carlisle on Feb. 2, 1963.

"It was a stupid stunt and I'm not real proud of it, but to fire somebody for something like this after seven good years of employment is a dirty trick when you come right down to it," said Eggers of Des Moines. "And they're doing this kind of thing all across the country."

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. "Banks are afraid of the FDIC and the penalties they could face," Buchanan said.

The regulatory rules forbid the employment of anyone convicted of a crime involving dishonesty, breach of trust or money laundering. Before the guidelines were changed, banks widely interpreted the rules to exclude minor traffic offenses and some other misdemeanor arrests.

Comments: First of all, I work for said bank but I don't believe this article is about that bank but rather federal regulations. Secondly it explains why the charge "intent to evade taxes" was such a serious issue for me! (And why HR was tracking the results).

Wachovia wrangling - snag?

Wells Fargo, Citigroup, Wachovia negotiations continue

Excerpt:

However, The Wall Street Journal, is reporting that the negotiations have hit a snag. The newspaper cites unnamed sources familiar with the negotiations as saying both New York-based Citi (NYSE:C) and San Francisco-based Wells (NYSE:WFC) are worried that Wachovia’s bad mortgage loans could lead to steeper losses than initially expected.

...

In some ways, it is interesting to note which parties aren’t involved. Wachovia, which on Friday accepted a $15.1 billion offer from Wells, is not at the table. Nor is the Federal Deposit Insurance Corp. directly involved at this time.

Citi, walk away from Wachovia!

Excerpt:

Call me crazy. But isn't the solution simple?

Citigroup should walk away -- even if it has to be paid to do so -- and go find something else to buy.

Wells Fargo (WFC, Fortune 500) wants to buy all of Wachovia for about $15.7 billion, or $7 a share. Citigroup (C, Fortune 500) announced four days before Wells swooped in with its bid that it planned to buy just the banking assets of Wachovia for about $2.2 billion, or $1 a share.

Do the math. $7 or $1? Which is the better deal for Wachovia shareholders? Hmm.

Comment: Maybe they both should walk away?

More banking news: FDIC & merger rumors

Federal bank insurance fund dwindling

Excerpts:

Banks are not the only ones struggling in the growing financial crisis. The fund established to insure their deposits is also feeling the pinch, and the taxpayer may be the lender of last resort.

The Federal Deposit Insurance Corp., whose insurance fund has slipped below the minimum target level set by Congress, could be forced to tap tax dollars through a Treasury Department loan if Washington Mutual Inc., the nation's largest thrift, or another struggling rival fails, economists and industry analysts said Tuesday.

Treasury has already come to the rescue of several corporate victims of the housing and credit crunches. The government took over mortgage finance companies Fannie Mae and Freddie Mac, and helped finance the sale of investment bank Bear Stearns to J.P. Morgan Chase & Co.

Eleven federally insured banks and thrifts have failed this year, including Pasadena, Calif.-based IndyMac Bank, by far the largest shut down by regulators.

Additional failures of large banks or savings and loans companies seem likely, and that could overwhelm the FDIC's insurance fund, said Brian Bethune, U.S. economist at consulting firm Global Insight.

Wachovia merger speculation heats up

Excerpt:

Wachovia, with its dominant Eastern franchise is seen as a promising merger partner for a company with big banking ambitions.

...

Wells Fargo & Co. (NYSE:WFC) has long been viewed as a potential merger partner, given the San Francisco bank’s dominance in the West.

WaMu may seek merger as pressure mounts

Excerpt:

Washington Mutual's stock has lost almost 94 percent of its value from its 52-week high of $39.25 on September 19, 2007, to its close on Tuesday of $2.36, as investors worry about continued losses related to risky real-estate loans.

The company's woes has led to speculation that it is primed for a takeover.

On Wednesday the New York Post reported, citing sources, U.S. federal regulators recently called a number of banks asking if they would consider buying Washington Mutual should it eventually falter.

In recent days federal banking regulators contacted Wells Fargo & Co (NYSE:WFC - News), JPMorgan Chase & Co (NYSE:JPM - News), HSBC (LSE:HSBA.L - News) and several other financial institutions to gauge their interest in a possible acquisition of the largest U.S. savings and loan institution, the paper said.

Comment: A Wells Fargo - Wachovia merger would be a merger of equals (equal in size, not in quality!). Wells / Wachovia would a National franchise à la Bank of America. A Wells Fargo / WaMu deal would be in Wells existing "footprint" - BIG FISH swallowing small fish.