Beyond Robo-Signing: 3 Other Ways Bank of America Is Screwing Americans
Few institutions incite the kind of populist anger that Bank of America does, even as the Occupy movement stokes rage at Wall Street in general. And with good reason - in an industry that is known for being corrupt, immoral, and ungrateful leeches of taxpayer dollars, Bank of America stands out. The bank, it seems, is constantly making headlines for some new form of corruption or act of greed that screws consumers while padding its executives' pockets. And it gets away with it every time.
The bank was at the forefront of the dubious practice known as "robo-signing" - hiring third-party companies staffed by underqualified foreclosure "experts" to cut corners during the foreclosure process, processing thousands upon thousands of foreclosures a month and wreaking havoc on homeowners' lives.
But as outraged as Americans are about robo-signing (and they should be, especially since the big banks continued to use the practice long after they agreed to stop), the use of foreclosure mills doesn't even begin to scratch the surface of Bank of America's dastardly deeds. As Matt Taibbi writes in his devastating piece about Bank of America in this month's Rolling Stone:
[H]ere's how seriously fucked the financial markets are: Even the most vocal critics of Bank of America consider the mass, factory-style production of tens of thousands of fake legal documents per month not that big a deal. "Robo-signing is like focusing on Bernie Madoff's accountant," quips April Charney, a well-known foreclosure lawyer who has spent large chunks of the past two decades in battle with Bank of America.
Robo-signing is not the disease - it's a symptom of Bank of America's entire attitude toward the law.
Indeed, the bank is screwing Americans is so many ways that robo-signing, awful as it is, is but a drop in the bucket. Below are several examples (among many) of how Bank of America is hurting consumers while continuing to dole out plenty of dough in executive bonuses and compensation.
1. Siccing collections agencies on people who are not in debt
Thanks to Bank of America, we now know that there's something more maddening and nightmarish than being hounded by debt collectors: being hounded by debt collectors when you don't owe anything.
A la their infamous illegal foreclosure problem, big banks are in the practice hiring third-party companies to handle debt collection for them. That would be all fine and well if the banks took care to pass on accurate documentation about their customers. But they don't. American Banker reports this week on a woman named Karen Stevens, who's spent the past three years fighting off a collection agency that Bank of America hired to collect $1,900 in debt - debt that Stevens has long since paid off. Stevens was only able to put an end to the fiasco by hiring a lawyer and suing the collection agency.
Stevens' case appears to be an example of what happens when banks sell batches of accounts without sufficiently scrubbing them of errors and discrepancies ( see related story). Such oversights are drawing into collections quagmires an unknown number of consumers who owe nothing, or for whom debt records are incomplete or nonexistent. For banks, it's a problem that threatens to spark a legal or regulatory backlash or to do further damage to already tarnished reputations.
Aside from getting this work (messily) off their plates, the advantage for Bank of America in doing business this way is that they don't have to deal with their clients' lawsuits when they get screwed over. Blame it on the third-party guy!
2. Sneakily ratcheting up fees on the 99%
As I wrote earlier this month , Bank of America is one of the mega banks that's quietly ratcheting up fees, especially for its lower-income customers, to compensate for new regulations that were designed to protect those very individuals.
This is an especially ballsy move for Bank of America, since it was BofA's proposed $5 monthly debit card fee that incited so much consumer outrage last fall. And yet, mere months later, the bank has announced a fee "overhaul" that will result in customers paying up to $25 per month for a basic checking account.
Maddeningly, the bank is most focused on increasing fees for low-income consumers - Americans who may have trouble maintaining a minimum account balance or who do not have multiple bank services, such as a mortgage. In addition, these customers may soon have less banking opportunities in general, as Bank of America, among other big banks, plans to shift its resources to cater more to "up markets" that make the bank more money than less-wealthy communities.
3. Exploiting the unemployed to rake in fees
When South Carolina signed a deal with Bank of America to distribute unemployment benefits via prepaid debit cards, chances are the state was not actively trying to screw its unemployed citizens. But that is exactly what happened, because Bank of America took advantage of its contract with the state to exploit unemployed South Carolinians by charging many of them hefty fees to access their benefits.
Huffington Post's Janell Ross reported late last year that citizens who live in towns without Bank of America branches - and there are many such individuals in South Carolina - are forced to either drive to another town to access their benefits (something many cannot afford to do) or pay a fee for withdrawing money from a non-BofA ATM. One woman profiled in Ross' article, Shawna Busby, had to choose between making a 100-mile round trip drive to Columbia to access her benefits or pay up. Busby estimated that she had paid $350 in fees to withdraw the benefits that she was legally owed - money she desperately needs for her family since she is, of course, unemployed.
Of course, these are only a few of the ways Bank of America is screwing over the citizens whose taxpayers kept the bank afloat during the financial crisis the bank helped create. And it is only small consolation that BofA claims to be suffering financially these days, because, as Taibbi notes, the bank seems to have plenty of money to go around for bonuses and compensation:
Bank of America didn't pay a dime in federal taxes last year. Or the year before. In fact, they got a $1 billion refund last year. They claimed it was because they had pretax losses of $5.4 billion in 2010. They paid out $35 billion in bonuses and compensation that year. You do the math.
As for the $26 billion settlement that Bank of America and other big banks got slapped with? It let the banks off the hook for its robo-signing misadventures, and may not even be properly enforced by the government. Even if it is, it will be "woefully inadequate to address the wider fraud that went on in creating and pooling mortgages."
On that note, I leave you with three simple words: Move. Your. Money.