I normally relegate stories that focus on personal finance to Links, but this article by Naomi Wolf, “Banks Siding Against the Customer in Fraud Cases,” (hat tip reader Francois T) is such an appalling illustration of how predatory the banking industry has become that I felt it was worth highlighting to readers.
When a customer is a depositor, its bank is a fiduciary under the law. Per Wikipedia:
A fiduciary duty[2] is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the “principal”): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents. The word itself comes originally from the Latin fides, meaning faith, and fiducia, trust….
When a fiduciary duty is imposed, equity requires a stricter standard of behavior than the comparable tortious duty of care at common law. It is said the fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where his fiduciary duty conflicts with another fiduciary duty, and a duty not to profit from his fiduciary position without express knowledge and consent. A fiduciary cannot have a conflict of interest. It has been said that fiduciaries must conduct themselves “at a level higher than that trodden by the crowd”[3] and that “[t]he distinguishing or overriding duty of a fiduciary is the obligation of undivided loyalty.”[4]
Yves here. Note the responsibility of the fiduciary. Crudely speaking, it is required to put the principal’s interests first. Yet the banks, when confronted with fraud against their customers, do the exact opposite. Not only are they concerned only with escaping liability, it appears their success in making the customer bear all costs (even in cases where the bank might have been clearly at fault) means they also lack incentives to take preventive measures.
In addition, it contains a very important lesson: if you think a bank account has been compromised, close it immediately, no matter how much your bank balks (and since banks resist this course of action, you may need to be ready to withdraw funds and open accounts at a new institution).
From Wolf:
I
n 2005 I started to notice irregularities in a checking account I held with WaMu; but the irregularities were ambiguous. I sought at various times over the course of the next two years to go over all my statements — but had trouble getting all my records from both online banking and from my branch itself. A busy working parent, I was certainly not as proactive as I should have been — and, like many consumers of bank services, since we had family accounts and two mortgages at WaMu for many years, and had good relationships with our local branch, I also made the mistake of trusting the bank.
I noticed eventually that checkbooks were missing from my home, and finally my accountant got enough of the records to see an unmistakable pattern of fraud, and called my attention to it. I filed a police report and alerted WaMu to the fraud. For month….I complied with what the WaMu bank officials directed me to do — which was to leave the accounts open so they could investigate, they said, the fraud. If the fraud is reported within six months of confirmation of fraud, it is liable for the loss.
Then the same officials who had directed me to keep the accounts open, disappeared — systematically, for just over six months. When I sought to talk to the fraud department, I still could not get records — including my own missing bank statements — even to see the full extent of my losses. The bank officials who had directed me to keep my accounts open were unavailable at the branch — over the course of many attempts to speak with them. The police at the Sixth Precinct needed to see the missing documents, but even they could not force WaMu to hand over their — my — records. (WaMu’s own internal emails cite a $300,000 figure for my loss from fraud — I still did not have enough of my records to identify the loss. It is illegal, by the way, to withhold from an account holder his or her own records).
At eight months after the fraud discovery was confirmed — eight months of trying to communicate with officials and a fraud department who were oddly unavailable or unresponsive — I received a form letter from the WaMu Fraud Department advising me that according to the regulations, I had had a six month window for taking action; and (since WaMu had played out the clock for eight months) the letter asserted that I had waited ‘too long’ and my case was closed.
Inadvertently, subsequent to that, a WaMu bank official handed me the wrong file — wrong from his point of view; illuminating from mine, and from any consumer’s. It contained emails, some of which you can see at TheSmokingGun.com, from WaMu bank officials to one another — and including emails from and to their counsel, PR department and and the fraud department — that take as given that stonewalling a client with a fraud claim on the bank is standard practice; and yet one freaked-out bank official in the emails warns his colleagues that if their mechanisms in this regard became known, their practices would be all over the newspapers.
I was stunned by what seemed from the emails to be a systemic practice. Why would a bank want to perpetuate bank fraud rather than fight it?
As I researched the issue and spoke to other consumer bank account holders whose accounts had been corrupted by fraud, and to consumer advocates, I learned how systemic experiences such as mine — and worse experiences — are becoming. I heard from consumers across the country from all walks of life who had also been misdirected by their banks, or told that for various technical reasons their corrupted accounts could not be closed, and then faced difficulty reaching fraud departments or officials once the fraud was confirmed….
Customers assume that banking regulation and Congressional oversight means that if they find fraud on their checking accounts, there is accountability — which is not in fact the case; strong bank lobbyists translate into weak protections for consumers and, as you can see from the emails, the bank’s reasonable assumption that most customers in this situation will not be able to hold them accountable. And indeed, since legal action is time-consuming and expensive, most defrauded bank customers do eventually give up and go away…..a bank’s fraud investigation department is actually likely fraudulently representing itself as the customer’s, rather than solely the bank’s, advocate. Banks such as WaMu — and now Chase, which bought WaMu — expect such people to simply go away. They — and we — should, rather, reach out to our elected representatives for wholesale reform — and put each and every such case online, so consumers can see the worst offenders for themselves, and, with the power of the internet and their own consumer choices, protect themselves and demand accountability.
79 comments
Comments are closed.
I am (sadly) not surprised. About three years ago my mother, invalid and confined to a hospital bed in her home then and still, had a situation where a part-time caregiver took her credit cards and some checks and spent thousands of dollars of my mother’s money in a matter of days. When the fraud was discovered and my sister and I (on my mother’s behalf) notified the card issuer and bank of the fraud, they launched an “investigation” to determine if in fact fraud had occurred. It dragged on for months and at the end of that time their initial finding was that no fraud had occurred and that my mother was responsible for the charges and checks.
It took the services of a lawyer to bring the bank to its senses. In the end, it turned out that they had video surveillance from ATM machines, point of purchase locations (like the local MegaMart) and so on which showed the caregiver using the stolen card and checks but apparently they knew they’d never recover the money from the caregiver and decided that it would be easier to steamroll an old and frail woman who they thought would not be in a position to fight back.
Let me re-state that concisely: The bank/card issuer knew positively that fraud had occurred and yet chose to deny that fraud had occurred.
The banks are not our friends. They will do only what they are forced to do, and that included complying with the law.
In the end, with the services of an attorney, the bank admitted that fraud had occurred, reimbursed my mother and turned over the results of their investigation to the local DA who in turn brought charges against the thief who in turn entered a plea of guilty and wound up in jail (for a short time.) But like I said, we had to essentially force the issue. If I and my sister had not intervened, they’d have stuck my mother with the loss.
Roman Berrt said: “It took the services of a lawyer to bring the bank to its senses.
[….]
The banks are not our friends. They will do only what they are forced to do, and that included complying with the law.”
Naiomi Wolf said: “…the bank’s reasonable assumption that most customers in this situation will not be able to hold them accountable. And indeed, since legal action is time-consuming and expensive, most defrauded bank customers do eventually give up and go away…”
The sad truth is that most people can’t afford legal action.
The appropriate term to describe the modern-day bank is “bully.” I’m going to pick on you. It’s not right. But there’s nothing you can do about it.
Yep, most people can’t afford lawyers who charge several hundred dollars per hour, so in a sense the only justice you get depends on whether or not you’re wealthy. Same goes for criminal justice as well. Color me bitter and cynical.
Not only are banks NOT our friends, but pretty much the whole corporate system operates like this. It’s one scam after another and “buyer beware” here in scamerica.
Sometimes it helps if you cite UCC 4-406, the specific provision of the Uniform Commercial Code that imposes liability on the bank. The customer’s duty is to diligently review statements and report any errors or fraud to the bank. As long as the customer promptly notifies the bank, it’s the bank’s problem. The bank has the burden of proving that the customer was not sufficiently diligent, and that the losses could have been prevented if the customer had been diligent. Here is the text:
http://www.law.cornell.edu/ucc/4/4-406.html
..yet one freaked-out bank official in the emails warns his colleagues that if their mechanisms in this regard became known, their practices would be all over the newspapers.
We’ll see about that.
(And how do the mechanisms “become known” if the MSM systematically suppresses knowledge of them, as it does? And then they pull the kill-your-parents-and-plead-mercy-as-an-orphan scam: “We can’t report it because outlets like us aren’t reporting it. People aren’t talking about it, so we can’t talk about it.” Never mind that they would be talking about it if you reported it. That was the MSM’s role in the criminal suppression of single payer as an idea and policy prescription. There’s plenty of other examples.)
If there’s one takeaway from this I wish everyone would internalize, it’s that an example like this bank fraud is not an isolated incident, not an exception, not an accident, it’s no “abuse”, it’s no aberration, no bad apple is involved.
It’s typical, it’s intentional, it’s systemic. It’s a core part of the finance sector’s “business model”. This is organized crime, and nothing else.
I reckon most NC readers get that. Now if the MSM would only do what actual journalists are supposed to do, so that these practices really would be “all over the newspapers”, that these practices would be systematically reported, catalogued, and analyzed in a regular manner, while editorial pages called for the purging of these rackets, that would help educate the people at large.
But since the MSM is part of the organized crime syndicate itself and typically reports only the “news that’s fit to print” according to the banksters, the pivotal question,
How do we break out of the blogosphere and into the public consciousness?
remains difficult to answer.
What we are witnessing is the descent of the United States into third-world status, or into a culture of distrust and noncooperation. I call it the Mexicanization of the United States.
And I’m not sure most Americans fully understand where this all leads. In Mexico, not even the mid-level government authority (police chief, mayor, congressman) dare venture out into public without an army of bodyguards. And even then they are frequently gunned down. The assassinations are almost always marked up by the authorities as being motivated by “the drug war,” but I suspect the motivations are much more complex than that. Either way, you’re talking about a decent into a culture of violence and social chaos.
Dan Kahan in “The Logic of Reciprocity: Trust, Collective Action, and Law” describes how the descent into perdition occurs:
A relatively small fraction of the population (consisting, perhaps, of those who’ve been trained in neoclassical economics) consists of committed free-riders, who shirk no matter what anyone else does, and another small fraction (consisting maybe those who’ve read too much Kantian moral philosophy) of dedicated cooperators, who contribute no matter what. But most individuals are reciprocators who cooperate conditionally on the willingness of others to contribute. Moreover, some reciprocators are relatively intolerant: they bolt as soon as they observe anyone else free-riding. Others are relatively tolerant, continuing to contribute even in the face of what they see as relatively modest degree of defection. And a great many more—-call them neutral reciprocators—-fall somewhere in between.
Under these circumstances, individuals are unlikely fully to overcome collective action problems through reciprocity dynamics alone. No matter how cooperative the behavior of others, the committed free-riders will always free-ride if they can get away with it. Indeed, their shirking could easily provoke noncooperative behavior by the less tolerant reciprocators, whose defection in turn risks inducing the neutral reciprocators to abandon ship, thereby prompting even the tolerant reciprocators to throw in the towel, and so forth and so on. If this unfortunate chain reaction takes place, a state of affairs once characterized by a reasonably high degree of cooperation could tip decisively toward a noncooperative equilibrium in which only the angelic unconditional cooperators are left contributing (probably futilely) to the relevant public good.
As Kayan goes on to explain, the only way to stop the descent into perdition is that free-riders be punished:
Maximum cooperation, then, probably requires that reciprocity dynamics be supplemented with appropriately tailored incentives—-most likely in the form of penalties aimed specifically at persistent free-riders. Although trust and reciprocity elicit cooperation from most players, some coercive mechanism remains necessary for the small population of dedicated free-riders, who continue to hold out in the face of widespread spontaneous cooperation, thereby depressing the contributions made by relatively intolerant reciprocators. In the face of a credible penalty, however, the committed free-riders fall into line.
In the United States, however, neoclassical economic theory and its ugly twin in the fields biology and psychology—-the New Atheism preached by the likes of Ayn Rand and Richard Dawkins—-have become so dominant that we no longer believe in punishment of financial or economic crimes, or that altruistic punishers or strong reciprocators even exist. Everything is about the self, about the individual and individual fitness, and the group and group fitness be damned.
But the altruistic punishers and strong reciprocators haven’t gone away. They’re still out there, despite what the neoclassical economists and their New Atheist allies profess. And as a criminal defense lawyer in San Antonio told me many years ago, when the authorities—-the legislature, law enforcement and the courts—-don’t deliver justice, what you get is street justice.
For more on the interaction of the individual and the group (the system or the culture) and how it is the combination of these two that shapes behavior, there’s this intriguing lecture
by Amanda Pustilnik.
Here’s a link to Kahan’s essay.
Thank you Down South, excellent post and link. I obviously agree fully.
You call it the “Mexicanization” of America. I call this the “caveat emptorization” of America.
the caveat-emptor free-market ideologues are fools.
they laugh at financial victims as ‘sheeple’ and cloak themselves in a “well they should have known better or at least learned the information”. but life is simply not long enough to learn everything.
I am a doctor and I laugh myself to pieces every time I hear them claim how smart they are and how they are able to make “informed” medical decisions. I’m sure mainly based on GoogleHealth web searches or whatever.
I have 11 years of medical training AFTER college (so not including all the pre med courses), and yet I have to rely on my own doctor’s recommendations since I am not an internist. I know that I am in her hands and that in the end I have to trust her. I am not so foolish as to think that I am “fully informed”. I am a financial dork, so am relatively informed there. But what about when I fix my car? or when I buy a house? or when I contract for legal services? In the end, I have no choice but to TRUST my counterparty. The caveat emptorization of America is breaking that trust, and thus eventually all commerce beyond dark-ages technology will break down.
we have a very long road ahead since we can’t even trust our fiduciary agents.
Man! Can I relate to that, or what? Family members of a hospitalized patient coming with their copy of “100 pills to avoid” or “10 things your doctor doesn’t want you to know”.
Sigh! Glad I’m out of this grinder!
Interesting analysis. Thanks for the insight. Not sure I understand how Richard Dawkins ends up in the same bucket as Ayn Rand though.
This article by Jonathan Haidt and to the Rand-Dawkins link more specifically this lecture by David Sloan Wilson should help to explain.
The Wilson lecture is right on the money about what is unsatisfactory about “The God Delusion”. The ideas about group selection are pretty uncomfortable if you grew up on “The Selfish Gene”. Good!
And in the accurate question about what religion makes people do, a slightly bizarre connection to some early writings of Nietzsche. Not quite what one expects from an evolutionist.
And this from an article by David Sloan Wilson in eSkeptic I think sums up the difference between the New Atheists like Dawkins and atheists like Wilson:
The founding fathers realized that religions work well for their own members but become part of the problem at a larger social scale. That is why they worked so hard to accomplish the separation of church and state, along with other checks and balances to prevent some members of the super-super-organism from benefiting at the expense of others. In this context I share Dawkins’ concern that some religions are seeking to end the separation of church and state in America. I am equally concerned that the checks and balances are failing in other respects that have nothing do to with religion, such as unaccountable corporations and extreme income inequality.
New Atheism, with its almost exclusive emphasis on the individual and the self, lacks a moral framework to rein in unaccountable corporations and extreme income inequality, things that destroy the very glue that holds our group (nation) together.
This is silly religious mumbo jumbo. Dawkins explains why group selection does not exist in his book The Selfish Gene. Being atheist has nothing to do with being selfish. If you need religion for you to become a good person, you’ve probably had bad parents or perhaps you have free riding genes.
Religion and atheism are both externalizations of human organisms. ALL externalizations of all organisms are deceptions made to get needs met for sustenance (these deceptive externalizations can also be called tools of dominance). The need that religion and atheism fulfill is for the organism to understand the organisms context in its perception of the world around it as it goes about getting its needs met to sustain itself. It fulfills an anchoring need. Perception and deception are the two primary forces of organisms. The organism perceives and creates (or does not create), a deceptive, tool of dominance, externalization. Understanding the terrain is essential for evolutionary continuation of an organism.
What’s evolution got to do with religious belief? Whether or not an externalization persists through time depends on its efficacy as a tool of dominance. Is it a valuable deception or not? Religion and atheism persist because they have served human organisms well in that they both serve to orient and stabilize the organism within its terrain. They both also serve to form alliances with other organisms. When individual organisms combine into groups their deceptions combine and are used to get the group needs met — they are then turned upon other organisms — and so the group adaptation also passes through time.
The belief system always matches the perceptive abilities of the organism, or group of organisms, in their place in evolutionary time.
But it IS a dog eat dog cannibalistic world and group alliances are constantly being torn apart by deception from within for many reasons, but the reason(s) always have at their heart deception, in that they are externalizations made to get the needs met of the individual organism, or group of organisms making the deception. Dawkins and Wilson may externalize for a pay check and status, but others co-opt their efforts to validate their own deceptive machinations of caveat emptor, free markets, etc., and in doing so that trait of hijacking the initial deceptions is also carried forward because it too is successful in getting the needs of the hijackers met.
If you take this back to its evolutionary beginnings you can see that human organisms are in reality amoral and the morality that we do have is an adaptive evolutionary morality (always under attack from within and without), that has developed over time.
Rather than refuting that reality when it is co-opted for an alliance breaking, selfish, greater deception, it should be embraced and used to justify more and greater transparency in alliances (government) and greater involvement of ALL organisms in the alliance so much so (vigilance) that they can not be co-opted.
Self interest includes group interest, group interest includes individual interest. Those that selfishly destroy the alliance of the group and the health of the total group organism by taking too much income and controlling too much asset wealth should be cast out of the gene pool.
Deception is the strongest political force on the planet.
So you define New Atheism as something that lacks the ability to make judgments about things like unaccountable corporations and income inequality — then you dismiss it because it lacks the things outside your definition. Quite the circular argument.
You seem to be claiming a belief for New Atheists they would not claim for themselves: that our innate concept of fairness cannot be applied to income inequality or whatever else, merely because it arises from evolution. This is both circular and breathtakingly illogical.
I checked your links in vain for any justification of your repeated pairing of Dawkins and Rand. On one page I found a glancing mention of Rand which stated merely that her doctrine of self-centeredness has made atheism less popular, which is precisely my point in wondering why it is that you repeatedly conflate the two. I don’t do videos so maybe I missed something in one of them.
Thank you again Attempter and DownSouth—and Yves. If not more, your insights will at least serve well as post-mortem documentation for those performing the autopsy of empire. The record can no longer be “disppeared”.
Surely no one can know where the very real Mexicanization of the US will lead. The US-Mexican border marks the starkest division of rich and poor anywhere in the world, where except for plutocrats, “caviar empty” has gone global. When that critical pressure relief valve down-south is shut or intolerable pressure builds on both sides, then the incipient revolution (so-called drug narco violence) we see in Mexico may spiral past critical mass here too. The solstice of 2012 approaches rapidly.
Thanks too, DS, for the links. The dysfunctional dystopia of Ayn Rand’s unenlightened self-interest is self-evident, but I didn’t see the connection to Dawkins either. “The God Delusion” left me with a similar sense of despair, but I had not seen the connection.
Reading Dawkins and Rand, I couldn’t help recalling the lyrics of Moody Blues “Threshold of a Dream”:
“First Man: I think, I think I am, therefore I am, I think.”
“Establishment: Of course you are my bright little star,
I’ve miles
And miles
Of files
…and now to suit our great computer,
You’re magnetic ink.”
“First Man: I’m more than that, I know I am, at least, I think I must be.”
“Inner Man: There you go man, keep as cool as you can.
Face piles
And piles
Of trials
With smiles.
It riles them to believe
that you perceive
the web they weave
And keep on thinking free.”
Thanks for your good words, Doug. I sure hope this record is ineffaceable.
Very interesting social essay by Kahan. Thanks for publishing that DownSouth. The divide and conquer politics have certainly done the number on the society.
Even in environments online with economic authors you see the effects. No trust to take risks for whom can you trust these days? Or each one thinks they alone will solve the world’s problems. Or devolving toward non-efficient technologies as the patience level toward working toward something better (albeit a choppy) process is gone.
I’ll still charge the abyss and collaborate because it is far more interesting to do so with the few that get it. Besides, every dark night has a new dawn so may as well make interesting contacts for when innovation is not smothered by the the status quo. That is what is dying and being attempted to be preserved. Evolution won’t permit a status quo to continue and the pain of the attempt becomes a catalyst to accelerate it’s progress. That is how George Soros became so wealthy, he bet on what I mentioned above and coined it the Theory of Reflexivity.
There are far better sources in the matter, like Micromotives and Macrobehavior, by Schelling. Those sources avoid the religious slant of your post above, while get to the important part of the matter: It is possible for a minority with very extreme priorities to completely reshape the way a community behaves, as their actions send ripples through a community of individuals.
The classical example is a group with a small percentage of strong racists, along with a majority which just doesn’t want to feel like a big minority. The end result under most conditions is a very segregated community.
DownSouth again repeats his scurrilous association of Richard Dawkins with Ayn Rand, asserting Ayn Rand is a “New Atheist” when this term has a well-defined usage which does not apply to Rand in the slightest. Citing the work of others to justify this mistake is a poor defense and a failure of judgment. There are many who seek to discredit Dawkins and his fellow travelers by associating them with the nihilistic screeds of Madame Rand. But as we all know, selfishness will happily seize on any philosophy to justify itself.
attempter,
Without a free press we are orphaned; subjected to every kind of exploitation.
Its not for nothing that a free press has been referred to as the Fourth Estate; integral to the system of checks and balances; the branch of government that represents the people.
Not only the banks, but all our institutions like the schools and universities, military, government bureaucracies and oversight agencies have, without adult supervision for decades, become aligned to support each others tyrannical instincts, and against the public interest.
What had been a free press has become the corporate news with the power to speak to the people with no constraints, the unlimited right to lie, and no debate. In other words, the press as it exists today is a total fraud. It is not merely that the press has been corrupted; it is that the press does not exist in its function as the people’s representative; a constraint on the power of government.
I would argue that blogs work best for professionals; by that I mean only those motivated to spend a lot of time researching who are already well informed. That’s a great thing, but it’s not a substitute for strong institutions dedicated to keeping an eye on government sufficient that the government is respectful and careful.
Yes, blogs seem to have a specialized audience. I don’t know if there’s been a significant rise in readership among blogs and particularly the econoblogs since the crisis began.
But I’d imagine there’s a natural limit to it, if only the one imposed by Internet access (which has probably already peaked; it seems like the FCC shot its entire bolt of enthusiasm for the NBP merely in having promulgated the proposal; since then it’s acted as if it wants nothing more than to cave in, and has only pretended to still be seeking enactment under duress from the public Internet community and some in Congress).
It’s something like the mass media which has to speak to the masses, but as you say the existing media is corrupt.
So the only possibilities are to un-corrupt it (not likely) or find a substitute. But what?
Here is your answer Attempter. The big money guys don’t really want another media outlet that rocks the status quo to DownSouth’s salient Kahan essay post. Because the very few among them that do understand are petrified of making enemies.
Those who would give up Essential Liberty
to purchase a little Temporary Safety,
deserve neither Liberty nor Safety. – Ben Franklin
Substituting the security of government over liberty leads to the death of virtue and morality.
Banks rely heavily on the enormous cost a defrauded customer lawsuit incurs on the defrauded. This modern version of the Wild West takes the law out of the equation and substitutes it with raw force the banks possess. The government itself uses the same raw force when suit by its own employees. Government agencies are, by and large, organized according to the 50s organizational practices (e.g. three employees have a supervisor who enjoys almost absolute power and doesn’t do anything but supervision). As a result, abuse and harassment are prevalent. Many government employees injured by these abuses cannot afford to complain and internal reform is impossible.
Customers and employees will be protected from abuse only when following the law will be enforced by swift and affordable reaction to violation.
It’s a dog-eat-dog kind of climate out there. How what banks do is any different from what other companies and individuals do?
With all due respect, what about “fiduciary” don’t you understand? Under the law, a fiduciary is held to a higher standard than “normal course of business.” They are REQUIRED to put their customer’s interest before their own.
What about shareholders?
Shareholders come first…unless otherwise specified by law. Which brings us right back to fiduciary duty.
There is only one good reason they can avoid it: “They own the place!” (Congress) as Senator Durbin famously said.
BTW, is it any wonder banks fear the establishment of a strong CFPA?
Whoa, shareholders come LAST. Equity is a residual claim, after all other obligations, meaning legal (such as payroll and contractual obligations), governmental, and to higher priority liability holders (depositors, senior lenders, secured lenders, junior lenders, preferred equity) have been met.
And anyway, let’s look up some news – from contaminated eggs to BP’s spill, to Monsanto, to big Pharma (doctor/patient), real estate (broker/buyer) … all sort of duties and responsibilities have been defenestrated.
Fiduciary duty is trust, and trust is in short supply these days.
No, dude, you have it wrong. Fiduciary duty is a prescribed legal standard. “Trust” is not.
That reminds me of the old old story that tells of a guy who borrowed some money and did not want to pay it back. When called before a judge to swear that he gave the borrowed money back to the lender, he put the money inside a hollow walking stick. In front of the judge he gave the walking stick to the lender and swore that he gave the money back, then took the stick back and walked away.
BTW, the Wiki article you site states: A fiduciary duty is a legal or ethical relationship of confidence or trust.
As much as we would like to single out the “banks”, they are not that much different from the rest of the pack, only perhaps more successful.
nilys,
Banks do have a fiduciary duties UNDER THE LAW to depositors. The Wiki reference was to provide a definition. Go read FDIC enforcement actions. They all refer to “unsafe or unsound practices and/or breaches of fiduciary duty.”
I am not arguing that they don’t. All I am saying is that they, just as about everybody else, interpret their duties and responsibilities – whatever these may be – in a very narrow “legalistic” sense. And that is the problem.
If one listens to William Black carefully, it sounds like some times he is saying that the whole society is corrupt through and through, even through he seems to be immediately attacking the financial and political system. There is something to this. The problem would be much more manageable if banking were the odd man out.
Yves, sorry to go a little off-topic, but I have a question.
Do online brokerages have a fiduciary duty towards their customers?
When we were shopping for a brokerage a year or so ago, I read some of the account agreements and was appalled. Fidelity’s, for one, said the customer was responsible for all cases of fraud, regardless whether the fraud could be traced to the customer’s carelessness or to Fidelity’s!
As Erin O’Hara explains here, she suspects there is a causal relationship between crime and
a sense of one’s worldview. So from our perspective, and if in we think in general that people will do good things out there, if we think in general there’s a relationship between our effort and outcomes, if we think in general it’s a just world, it’s irrational to commit crimes. But suppose you’re an individual whose worldview is in general that people are lousy, they’ll cheat you at every possible second, that there’s no relationship between your effort and the outcome, why not engage in criminal conduct? It’s unlikely to lead to good results, but what is likely to lead to good results?
Maybe I should put O’Hara’s comment in context. In the United States, just like in Mexico, we have created an environment where large corporations, legislators, law enforcement, the justice system and other governmental authorities operate with impunity. And at the same time we have cranked up punishment on blue-collar and drug crime to unprecedented levels.
This greatly exacerbates the unjust “sense of worldview” O’Hara is talking about that is conducive to crime.
Damn you are on a roll today. I boiled it down why I won’t participate in the crime wave. Moments before my death, my two sons will feel no shame or receive no scorn for what I did with my time. And I know that now already seeing them almost fully grown men.
Trust is broken not only in the capital markets but in banks at large. Small banks are at a gigantic disadvantage without the overly generous liquidity, liberalized accounting standards and the losses are socialized as the large banks enjoy. So now, small community banks are being bought as they become increasingly distressed.
Consolidation of the banking sector means Jack and Jill depositor have fewer choices in who to trust with their nickles and dimes. What is more likely, physical robbery or robbery BY the bank?
Service based society eh? We are being served UP on a platter. The banks clearly do not want or need our capital, so I say fine, it takes two to tango.
Sadly, this isn’t the only example of robbery and fraud. The ARS muni bond market is another prime example. When that market imploded, banking reps and the bond units themselves simply disappeared leaving investors lost.
The mortgage market, HAMP, etc. also are replete with examples of rough handling, bordering on fraud (I can’t prove it) with dire consequences to individuals.
So where is the DOJ, AGs and our congressional ‘leaders’?
The large TBTF banks hold no alliances to anyone except themselves, they also do not hold any national alliance, are without borders. They are free to shunt profits overseas to avoid taxation among other activities.
Hopefully, people en mass will find a way to conduct their ordinary lives and business without them as they have proven themselves over time to be unworthy of that trust. I can’t afford to RISK it. I’m also not going to pay twice for their misdeeds and illegal, predatory practices by using their brand of ‘services’. Trust is earned, once lost regaining of trust takes time, transparency, diligence and patience all qualities severely lacking now in doing business in our land.
It is a shocking story indeed. I use a credit union for over a decade now. They are not perfect either but they are not out to gauge your eyes for a couple of dollars. Customer service over the phone is 9am – 4pm, but since most of the banking I do is online, I only talk to them every couple of years.
There will be no progress in this country so long as these banks are strangling fair play.
Where’s the politician willing to break the TBTF banks? And jail their managements?
The gradual decay of financial ethics, and their corruption of the political process from top to bottom has corroded the social contract in ways that have yet to play out… but will.
Listening to the commercials that come out of these TBTF entities… always with sentimental music… and family values… and how much they care about their communities…
It’s just really too much. This financial system has lost the confidence of those who must rely on it.
We must re-make it… and relegate the current managements, their models, and their ethics to some well-guarded and secure distant location.
FYI: Interesting article in the NYT today about judges refusing to sign-off on cozy “slap on the wrists” settlements between banks & prosecutors:
http://www.nytimes.com/2010/08/24/business/24judges.html?hp
In effect, they are raising the newsworthiness of some of these crimes & forcing some MSM coverage.
Absolutely hilarious close to this post! The mark, deceived by the crooked bank, implores fellow suckers to seek remedial measure from the crooked government that has created the scam rule of law and that is owned and controlled by the crooked banks …
“Banks such as WaMu — and now Chase, which bought WaMu — expect such people to simply go away. They — and we — should, rather, reach out to our elected representatives for wholesale reform — and put each and every such case online, so consumers can see the worst offenders for themselves, and, with the power of the internet and their own consumer choices, protect themselves and demand accountability.”
“Fiduciary responsibility” — ha hah ha ha hah ha ha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah ha — soooooo fucking funny!!!!
‘Rule of law — ha hah ha ha hah ha ha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah haha hah ha — oh dear jesus — my sides are killing me!!!!
Call me when you are ready for the election boycotts.
Deception is the strongest political force on the planet.
And, wait until the poor brainwashed suckers using, “the power of the internet and their own consumer choices” to “demand accountability” find out they need an internet license to tell their sob story to the same pricks that let the banks run rough shod over them. Already happening in Philly and only a matter of time for this egregious scam to blossom …
Excerpt;
“All the bloggers holed up in basements in the City of Brotherly Love and trying to survive off of Google AdSense revenue may be out of luck. The Philadelphia City Paper printed an article last week that revealed the sob stories of part-time freelance writers and bloggers who, despite making minuscule amounts per year through advertising, are still being forced to pay an annual $50 “privilege license” in accordance with the Business Privilege Tax. The city treats self-employed writers as “businesses” as long as their blog has the potential to make a profit. So, when those in charge of under-the-radar sites received a letter from the city last May asking them to pay either a onetime $300 fee or $50 per year, many were less than pleased.
Barry’s music-oriented blog, Circle of Fits, is hosted on Blogspot; as of this writing, its home page has two ads on it, but because he gets only a fraction of the already low ad revenue — the rest goes to Blogspot — it’s far from lucrative.
“Personally, I don’t think Circle of Fits is a business,” says Barry. “It might be someday if I start selling coffee mugs, key chains or locks of my hair to my fans. I don’t think blogs should be taxed unless they are making an immense profit.”
Bloggers are also required to pay the appropriate taxes on their income, regardless of how little money they made. Barry, for instance, made only $11 over the course of two years.
The most painless solution may be for bloggers to resign themselves to fate and abandon Google AdSense or other ad services. Yes, the minimal profits that once came rolling in will dry up, but the self-satisfaction of refusing to give the city that hard-earned blog revenue will be preserved.”
More here …
http://nymag.com/daily/intel/2010/08/philly_blog_tax_exceeds_m
Are we ready for the election boycotts yet?
Deception is the strongest political force on the planet.
In 2004 our organization, New Democracy, tried without much success to organize a boycott of the presidential elections. The illusions of fake democracy are so powerful that two of our members said that the people who had proposed the boycott should be jailed(!). I suspect we were merely before our time; the experiences of the 2008 Democractic sweep and the Obama presidency have disillusioned many. But election boycots need to have a positive, movement-building goal to be worth doing. Here is an article from 2004 discussing boycotting as strategy.
The Movement Needs a Plan for 2004
by Dave Stratman
February 20, 2004
massrefusal.org
newdemocracyworld.org
The anti-war, anti-direction-in-which-our-country-is-moving movement desperately needs a coherent plan of action.
Voting — for Dean or Kucinich or “anybody but Bush” — is hardly a satisfactory strategy, even if Kerry were not the front runner. Not only do politicians invariably do in office what they swore not to do while on the stump. Electoral politics by its nature goes against two essential elements of democratic movement-building: expanding people’s sense of social possibility and developing in people the confidence that they themselves are the key force for change. The “lesser-of-two-evils” nature of electoral politics is not about expanding possibility but contracting it, promoting not the most desirable candidate but the most “electable”: bye-bye, Kucinich, hello Kerry. Aside from this problem, voting is still about choosing someone who will presumably solve our problems for us — the opposite of mass democratic action. It is a strategy which in the entire course of American history has never worked.
Marches on Washington and local demonstrations are useful to a point, but that point has been passed. Such demonstrations typically involve the highly-committed traveling far from home to express their commitment and pressure government officials. They involve a huge expenditure of energy and money for relatively little return. Except for fleeting media coverage, demonstrations mainly affect their participants, assuring them that they are not alone. This is no small achievement. But it is not enough.
We need a strategy, if not to replace demonstrations, at least to supplement them with something more politically far-reaching and less limited to activists.
To be effective, a strategy must meet certain requirements. It must have the potential to include many millions of people. It must make a powerful political statement. It must strengthen people’s faith in themselves and each other as agents of change. It must not require individuals engaged in it to take excessive risks. And it must embrace a long-range democratic vision, beyond its immediate goal of stopping the next war or other disaster. It must be a small step making a big statement that many people can take together to strengthen them to move further along a path to fundamental change.
New Democracy is proposing a strategy that meets these requirements. We are calling on people to refuse en masse to vote in the 2004 presidential election — and to say why they are doing it. This is a strategy that can include the entire electorate, including the 50% who already do not vote. It makes a powerful statement: that the electoral process is a fraud. Its mass character and its message will strengthen people’s understanding that real change must come from them, not from some front-man for the monied elite. The only risk it poses for individuals is the combined thrill and fear that come from admitting to ourselves that we’re on our own: no man on a white horse is going to save us.
Our strategy, which we call Mass Refusal/2004, is obviously geared to the election-year context. It is meant to be developmental, a small step millions of people can take together which makes a powerful political statement and prepares them for further action. Mass Refusal/2004 is only one step in a continuing campaign to build a mass democratic movement in the U.S.
What are the next steps? In her recent address to the World Social Forum in New Delhi, noted Indian author Arundhati Roy called for a world movement to challenge the occupation of Iraq. She said,
“We have to become the global resistance to the occupation.
Our resistance has to begin with a refusal to accept the legitimacy of the U.S. occupation of Iraq. It means acting to make it materially impossible for Empire to achieve its aims. It means soldiers should refuse to fight, reservists should refuse to serve, workers should refuse to load ships and aircraft with weapons.”
We can begin our mass resistance with Mass Refusal to choose which candidate will continue the occupation, as they all promise to do in one form or another. After the election, strengthened and refreshed by our collective rejection of fake democracy, we can build the movement to undertake refusals which entail more risk, including direct refusals to do the work of Empire.
In the short time since we first proposed it, our strategy proposal has gotten decidedly mixed reviews. Some people have felt liberated at not having to vote “for the lesser of two weevils.” Others have reacted with shock and outrage. “Have you completely lost your minds???” was one of the more temperate comments we received from a young Democratic Party activist in response to a recent fund-raising letter. We have had similar reactions even from people not wed to the Democrats, who simply don’t have a great deal of confidence that millions of ordinary people feel exactly as we do about the society and can be mobilized to change it.
The shock and awe our strategy proposal has caused among activists is actually a sign of how badly it is needed. Belief in the electoral system is the last great illusion in American society, an illusion typically more deeply cherished by political activists than by the broader community, who have learned from experience that politicians lie. Activists also know this — how could they not? — but they refuse to give up hope that Howard or Dennis or John might somehow be different and might somehow save us all. The touching but misplaced faith of activists in political hacks and a fraudulent process is a measure of their lack of faith in ordinary people as the force for change. We must never forget what happened before the invasion of Iraq: millions of ordinary people here and abroad rose up to oppose the war, while the Democrats collaborated with the war-makers.
This MassRefusal strategy can reach far beyond the already-engaged to what one friend calls “the people on the sidelines” — the majority of people in our society, who have been demobilized by undemocratic institutions operating in an undemocratic, atomized culture; people whom the media, the political parties, the unions, the schools, the governing agencies at every level have discouraged from participating in society and have left deeply alienated. These millions of people know very well that they are unrepresented in the political process. Political scientist Walter Dean Burnham has shown that the characteristically low turn-out rates in U.S. elections are not a sign of apathy or laziness on the part of the electorate but of political understanding; the profile of non-voters in the U.S. matches that of those who vote communist or socialist in European elections. Burnham writes, the “huge ‘hole’ in American participation [in elections…] seems inseparably linked…to the total absence of a socialist or laborite mass party as an organized competitor in the electoral market.”
Our strategy proposal is the outgrowth of an earlier campaign. In 2001 New Democracy proposed a strategy to a committee of large teacher union local presidents in Massachusetts to counter what is known here as MCAS, a high stakes test administered at most grade levels in the public schools which tenth graders must pass to earn a diploma. We called the strategy MassRefusal. We explained to the local presidents that MCAS is part of a broader corporate plan of social control, aimed at getting people to accept their place in an increasingly unequal and undemocratic society. Our proposal was that teachers vote in their local unions not to administer the MCAS tests. Our hope was that at least a few locals would refuse the test and start a groundswell of refusal. An anti-testing movement already existed in Massachusetts, but was hamstrung by its reliance on politicians and the legislative process; MassRefusal was a strategy for teachers to take their and their students fate in their own hands through collective action.
The union presidents on our committee were terrifically excited by the proposal. Janet Dufault, president of the Education Association of Worcester, exclaimed, “Teachers will be dancing in the streets if we do this.” We issued our “Call for MassRefusal,” signed by six local union presidents, a former state teacher union president, and several other educators, calling on teachers to refuse to administer the MCAS. This writer addressed the building rep committees of five large union locals about MassRefusal.
And then…nothing happened. Not only did no teacher local vote not to administer the MCAS; no local even met as a whole to consider the question. There were a number of reasons for this outcome — the culture of their unions has demobilized teachers in important ways — but the overriding reason was fear. Many teachers have expressed outrage at the MCAS, and none of them has been fired for refusing to administer the test. But the accumulated fear and cultural conditioning of years of deferring to authority has left its mark. (I should note that our campaign for MassRefusal reached its height in the fall of 2001, shortly after 9/11 — an event which redoubled the climate of fear and made it much harder to focus on the tests.)
My point in this example is not to single out teachers but to point out the fear that pervades American society. People in every walk of life have been under attack in manifold ways by the corporate beast, and people have lost much of their sense that they can fight back. Millions of relatively high-paying manufacturing jobs have been lost through automation or shipped overseas, while many white collar jobs are being outsourced to India and elsewhere. Many other jobs have been reduced to temp work. Teachers have been told for decades that they have failed, and have been subjected to ferocious educational “reforms.” People are under the gun and they know it.
We cannot build a successful movement unless we can overcome fear. In his 1991 book, Breaking the Barrier: The Rise of Solidarity in Poland, Larry Goodwyn points out how rare are mass democratic movements in human history. There are a great many barriers to the rise of such movements, the most fundamental of which is the internalized fear which people accumulate over years of cultural conditioning. The “necessary condition [of social movements],” writes Goodwyn, “is the conquest of fear and an overcoming of social habits generated by fear. When a handful of people find a way to achieve this conquest, a political sect appears; when a great number do, a large-scale social movement can form.”
The fear that Polish workers had to overcome in creating Solidarity had very real roots: a Communist party-state that dominated every area of life, from the factory floor to the unions to the schools and media and security police to the government itself. The party ruled by insuring that there was no “democratic space,” in Goodwyn’s phrase, in which popular forces could assemble and reinforce each other, no institution which working people themselves controlled where they could gather their ideas and strength. Individuals challenged the party-state only at their peril and few did so openly. While police beatings and black-listings and worse were always available to keep workers in line, there often was little need to apply these measures, since people had learned to censor their own words and behavior.
While we don’t live with the same level of threats that ordinary people faced in Communist Poland, still there is rising fear, and there is precious little “democratic space” where people control their own institutions organized around their own shared values and ideas where they can overcome their fear. MassRefusal/2004 is a movement-building step designed to help overcome fear and encourage people to see themselves as the great force for change. Our past attempt to shut down high stakes testing in Massachusetts was defeated by fear and passivity within unions dominated by conventional politics; through MassRefusal/2004 and other movement-building steps, we hope the movement will become strong enough to see successful mass refusal by teachers in the future.
A final word here about the long-range vision of the movement. Underlying the “anti-direction-in-which-our-leaders-are-taking-us” movement is a positive vision of human life and values fundamentally different from the vision which drives the war-makers and ruling elites. The positive elements of this vision are perhaps too seldom evoked, as people scramble to stop the next atrocity. But as the movement grows and matures, it will more consciously project its vision of a better world implicit in the values which drive it.
If we are to succeed, this vision must find its source and sustenance not in new elites, whether Left or Right, but in the lives and values of ordinary working people here and around the world. It must imagine a new world rooted in the already-existing struggle of ordinary people in the face of a profoundly anti-human culture to create relationships which reflect human life as they believe it should be. In a society based on inequality and selfishness, most people try, in the little piece of the world that they think they can control, to create relations based on love and trust and mutual respect. The most intimate acts of kindness and the most public acts of mass resistance and revolution are on a continuum of struggle to humanize the world. Solidarity and equality are the best values which drive the movement today, and they are the values which should shape the whole world in the future. The more aware of its own implicit vision the movement becomes, the stronger it will be.
Dave Stratman is former Washington Director of the National PTA and the author of We CAN Change the World: The Real Meaning of Everyday Life (New Democracy Books, 1991). He can be reached at newdem@aol.com.
This article may be copied and posted on other websites. Please include all hyperlinks.
massrefusal.org
newdemocracyworld.org
“If we are to succeed, this vision must find its source and sustenance not in new elites, whether Left or Right, but in the lives and values of ordinary working people here and around the world.”
Well, in that case, you’re going to need an ENTIRELY new way of talking because based on the way this post is written, the only thing this election boycott would accomplish is getting the “professional left” to voluntarily disenfranchise itself.
Maybe you should call on the Tea Party first, and take it from there.
Our elected representatives aren’t listening. They’re bought and paid for. What we should be doing is organizing a mass general strike. I have no hope this will happen, because this country is full of people who don’t get it. They happily go to work and their apartment each day, not realizing that something is wrong.
The banks, insurance companies, oil companies and other large cooporations, have the Bush-Gingrich laissez faire/deregulate attitude where government is supposed to get out of the way.
WE ARE GETTING IT.
Yes, you’re getting it, but there a plenty of other folks who do not.
The theme of this particular blog is profoundly sad, especially in the fact that it isn’t really shocking.
What is so sad is that it is people who are committing this abeting of fraud because they are too lazy and too cheap as servants of enterprises to install requisite security measures.
This Mexicanization of the US is really about the loss of the Republic to some form of have-have not social democarcy. It is occuring because of a dilution of the culture of the founders. It is occurring because our economic system has been subverted by the observance of convenient yet false economic ideologies.
On two occassions I have been at the effect of identity theft and mail theft. In each instance my bank was cooperative only in that they acceded to my directions only because I demanded that they act. There were a few dollars of stop payment fees, but then to recapture that amount would have been consigned to small claims court and my time is worth far more than the cost of that effort. I don’t bank with that bank anymore and have since gone to a small community bank that seems to be able to keep things straight.
My experience tells me that it is very much a caveat emptor world. This comes as no surprise to me in that I do believe that if you operate from the point of view of caveat emptor you’ll operate in a mode that protects your interests.
Call it Mexicanization, call it banana republic, we have lost the Republic and most people think that it is their democracy has been taken from them. What has been taken from them is something far more valuable and far more sustainable than some ephemral and polluted concept of democracy.
I very much agree with your post, although I would shade the last paragraph a tad differently. Nothing has been taken from us that we didn’t allow to be taken.
As you say, we live in a caveat emptor world. Vigilance is always required.
So many just want to wind up the toy and let it go without supervision or effort. This does not work. The most important principles I would teach anyone are the prioritization of values and the use of constant vigilance to uphold those values and ideas you find most important. What most people hold onto are empty labels and catchphrases and short term selfishness masquerading as morality. And then they’re surprised by the results. I’m not. And I take it from your many posts that you’re not either.
As for the banks, I went through this rigmarole last year, and the bank (which shall remain nameless but really likes to play up patriotism) not only ignored those at my small business chasing down the fraud but basically told me to f*ck off when I stepped in and threatened to remove all my business accounts (over seven figures combined ADB). So I went ahead and f*cked off. They truly just didn’t care.
To uplift humanity and punish it, at the same time, is indeed a laborious task.
Soon we will see the modern day version of Jesse James and Dillinger. Ever wonder why the public protected them.
HSBC bought Republic Bank (in NYC) where I had an account. When accounts were converted, new checkbooks were issued, and mine never made it to the mailbox.
HSBC was completely incompetent, and accused me of stealing my own money. My Republic account was always short too.
Yves, looking at Magnetar, do you honestly believe that the banksters have any ethical qualms about screwing their customers? All you sweet NC-philes, here’s a scoop. The banks are not your friends. They do not see you as a client as much as they see you as a mark – to be fleeced. I have no relationship with any bank. I am a member-owner of a credit union. There is only one way this could be fixed – end for-profit banking. After all, finance is a parasite on the economy – there is no value to the host of growing a parasite.
She failed to notice $300k leaving her account over a period of two years?!
Sorry, I’m with the bank on this one. There is clearly fraud at play here but it is the customer, not the bank.
The law is plain — banks are not the fiduciaries of their depositors, the relationship is one of creditor and debtor, with the bank being the debtor.
As the California Court of Appeal noted in 1991 in connection with a depositor’s claims against a bank arising out of unauthorized transfers:
Commercial Cotton ‘s [an older case] characterization of a bank-depositor relationship as quasi-fiduciary is now inappropriate. While some aspects of that relationship may resemble aspects of the insurer-insured relationship, there are equally marked differences between those relationships. Since appending the quasi-fiduciary label to the ordinary bank-depositor relationship runs counter to both pre- and post- Commercial Cotton authority, and such a label provides no analytical framework against which to evaluate the propriety of extending tort remedies for contractual breaches, we no longer approve the denomination of the ordinary bank-depositor relationship as quasi-fiduciary in character. Copesky v. Superior Court, 229 Cal.App.3d 678, 280 Cal.Rptr. 338 (1991)
Should it be otherwise? Maybe so. The rule arose in the 1800’s and was based upon a banking systemn based entirely paper era where the ability of a third party to unlawfully extrract money from one’s account was far more difficult that it is in today’s electronic world.
However, current technoogy may provide a practical solution. I get a text everytime when even $1.00 is withdrawn from my account. The bank provides this service for free. That service would probably helped stopped the fraud described becuase almost anyone could pretty easily spot an unauthorized withdrawal within the 30 days of the mailing of a statement as required by UCC 4406.
If someone can’t manage this type of communication, such as an elderly or otherwise impaired person, then maybe the rules need to be adjusted to take that into account.
Does anyone have any suggestions as to what an ordinary person does about this? Unfortunately I’ve had a similar experience myself.
Unfortunately it seems you need a credit card at least to rent a car or buy an airplane ticket these days. You need savings to buy a house, some mixture of savings or debt -and savings is a prime target of fraud- for the house and/or a college education. Either way a bank is involved. The cute, friendly, local credit union isn’t of much use if you have to travel internationally much and need access to cash when you are in a country with a banking system somewhat disconnected from that of the U.S.
I know the advice is to simplify your life, but it takes years to successfully change one’s lifestyle from that of a middle class person to that of a poor person. Poor people tend to not have much savings, to rent, to live paycheck to paycheck, not to go to college, to avoid banks or the police, possibly because they know they can’t rely on the various institutions that make these things possible.
If the U.S. is being “Mexicanized” or “Russianized”, the change seems to have accelerated recently. Its difficult to keep up.
Fraud through credit card theft(or it’s various forms, you know, etc etc) is entirely different than money being taken out of your account…which is done either through a debit card or check use. The simple solution is to never use a debit card and write checks rarely(for me, I only write them if the bill is large and they don’t take credit card(or don’t charge for credit card use)). Many personal finance websites and other places have made this recommendation many times…but I did forget to mention one thing.
Credit cards are different in that if you find theft from ANYTIME in the past, they must refund it to you. There need not be any investigation to hold things up because they are liable for any losses that occur through theft of a credit card, not the credit card user.
I wonder if Ms. Wolf is a little off her rocker. I don’t want to presume because I’ve never met her. But she says that:
“I noticed eventually that checkbooks were missing from my home, and finally my accountant got enough of the records to see an unmistakable pattern of fraud . . . ”
Checkbooks? That’s plural. Missing from the home? That’s burglary. How many check books went flying out of her house, and how did they fly? We’re not in basic bank fraudland here. Either this is breaking and entering or we are in the Twilight Zone getting messed around with by the Magonians, which I would not question because I’ve seen their work myself. They take this very seriously in Saudi Arabia. Just try going over there and talking shit about the “Jinn”. You’ll see how fast they put you on a plane back to wherever you came from. LOL.
This case could be stranger than just fraud and greed. The world is not only stranger than we suppose but stranger than we can suppose. Unless you really let your mind fly. But then it might not come back. That’s always a problem.
And I am perfectly serious . . .
http://www.kippreport.com/2009/07/saudi-family-takes-genie-to-court/
Wolf has spoken about the warm welcome she always receives upon re-entering country. Smart as a whip but dumber than a pile of rocks…at he same time LOL…talk about the human condition!
Craazyman … I wondered about that check book remark myself but chocked it up to her being stupid and flighty as well as gullible and thought she probably trashed them herself. But I do have a bias against banks and so read right over it — my bad. It is a suspect remark.
About those poor Islamic people being robbed and harassed by Jinns.
We don’t have that problem here in scamerica because catholics and protestants have guardian angels to keep the Jinns at bay. Catholics and protestants really know how to let their minds fly …
And I am perfectly serious . . .
http://www.beliefnet.com/Inspiration/Angels/2009/03/Catholics-Protestants-Angels.aspx
Deception is the strongest political force on the planet.
I agree, this doesn’t pass the smell test.
First of all, OK, the checkbooks ‘disappeared’/were stolen/whatever. And then what – the theif wrote checks? If so weren’t the numbers out of sequence on the statements (ever notice that * on your statement when the cashed checks are listed in order.) I suppose if you have the account number you could arrange for a few bill pays, but again, how hard is it to track down what bill was paid and for whom.
Also: The bank told her to keep the account open? Right, sure they did, because that way they could unleash their own private police force to swoop in on the criminal after their entire staff was instructed to placed a personal call making sure that each withdrawal from Wolf’s account was legitimate.
Here’s what I think happened:
1. Wolf (or her husband) misplaced a checkbook.
2. Wolf (or her husband) had some nit-sh** transactions in their account that they can’t trace/remember/agree on…
3. Wolf reads something on smokinggun about the evil banking empire
4. Wolf talks to the WAMU branch staff about some things she can’t trace, acts like its no big deal and then lies in wait until she can pitch an online fit about the $40 to $60 she can’t account for in her checking account.
And that $300K in fraud she cited, you know, the one where people read it quickly and pick up and repeat the factoid that Wolf’s out $300K w.o. realizing that that figure was probably in some WAMU pitch to its customers identity fraud protection. She never says she lost a dime or what the irregularities were. Not a word of specifics.
I do not for one second want to imply that the banks aren’t parasitic or that we don’t face a huge societal problem. But women like Wolf will never solve those problems; they’ll just line their pockets playing would be victim/activist.
davidu,
You are barking up the wrong tree, big time. You may be offended at the idea that someone is affluent enough that they can have $300K siphoned off and only have a dim sense that something is amiss, while most people’s financial situation is sufficiently tight that we’d notice if $300 or $3000 went missing. And she clearly knew something was wrong LONG before the losses got to $300K. The bank wasn’t cooperating, she had to involve her accountant, and even then her account was beign pillaged for well over six months after fraud was taking place.
But you ignore facts on the ground and impose your own fantasy. You basically don’t like her because she is rich and successful. She’s not a trust fund baby, she’s self made. The fact that she has that much floating through a bank account most decidedly means she has help, probably lots, which means multiple people in the house, not hard to imagine someone getting access. And not everyone does sequential checks; I’m often writing checks on one account out of two sets of check books.
Contrary to your accusation, she DOES provide details, via her complaint (and I link to it on the blog), which if you had done YOUR homework before taking potshots, you would have read. Consider this bit:
“…monitoring of the above mentioned accounts was difficult, as WaMu consistently failed to send monthly statements.”
So how are you going to be able to see what is going on with your finances if you don’t get statements? I for one refuse to use electronic banking; I think it’s much too risky to have account information (save credit cards, where liability is limited) anywhere on my laptop. When she did try electronic banking to get a handle on things, she was told a password has already been set up on her account, hence she could not go that route. That should have been an immediate red flag at WaMu (and for her). WaMu was uncooperative when she did try to get statements to do forensics.
Her ATM card also disappeared (it appears it was stolen) and she told WaMu immediately to cancel it, they said they had but they in fact did not. Money was siphoned off that way too.
There’s a lot more, BTW.
So you’ve made clear you don’t like successful people who are so busy they can afford not to be closely on top of their finances, and you’ll make unfounded accusations based on your bias.
“A busy working parent, I was certainly not as proactive as I should have been — and, like many consumers of bank services, since we had family accounts and two mortgages at WaMu for many years, and had good relationships with our local branch, I also made the mistake of trusting the bank.”
Wolf’s writing just drips of upper middle class, limousine liberal leveling, which lemme tell ya, I’ve about reached my fill of.
Pure ad hominem. And tell me exactly what her being defrauded has to do with her politics? This is a consumer protection issue, and her case illustrates that even a well off, high balances customer does not rate with banks.
If she was mere middle class or worse, what epithet would you try?
If she were middle class or worse, she would be in a small banking lobby, or on the telephone to India, trying to explain that her debit card had a $30 charge for a porno that she did not make.
She would then find out that the $30 charge overdrew her account by $0.40 and she was then charged a 30 overdraft fee, as well as 35% interest on the $30.40 “loan” that the bank extended on her behalf.
If she didn’t have the money, her credit would be destroyed.
This woman is affluent, can probably afford an attorney if she wants one, and has a column from which to shout.
She started the game with much better odds and still got screwed.
I’m sure “they” are very concerned, lemme tell ya, about what you have to say.
It wouldn’t make much difference if she was conservative, liberal or independent. If the bank was screwing her, it was screwing her. I, for one have yet to see a transaction take more than a day or so to clear anywhere in the US, yet you can’t have your money for 10 days sometimes. I believe banks play games with money to cheat the system. As long as the funds are in limbo, they belong to the bank. Wamu, it appears, wasn’t exactly a saintly operation, so there is no telling where the funds went. They might have merely been on vacation for awhile.
I wish I knew the nature of these frauds, but it is clear that there is much difficulty in a bank reversing a fraud. For one, who gets money out of a bank account other than a bank? Even if you want to get your money out of the account, they have to get it out. Thus, they are the keeper of the key.
Anyone who has examined banking knows it is based on the lending of money that doesn’t exist and collusion between banks to hide the fact they don’t have the money to pay that they have loaned. They invented it, as is known to about 5% of the population.
I was fortunate to read a Supreme Court case a few years back on a reference. The case was Clearfield Bank and Trust vs the United States. It was over the cashing and clearing of a $25 and change stolen Social Security check. The government wanted their money back. The bank sued to contest that the government waited too long.
The check was cashed at a Montgomery Wards store. The court ruled in the governments favor, but not for the reason they were the government. There 2 things held. One was that the government was a equal, not a superior in business dealings, they did business on business terms. The other was the check wasn’t presentable because the one who presented it wasn’t a holder in due course of the document. The liability of the bank should be absolute, in that this ruling in general voids all fraudulent checks and makes the bank liable for replacing the funds. Clearfield had recourse against Wards, but they had to pay the government.
This doctrine voids all fraudulent bank dealings. It is like buying a property and not getting clear title. I don’t know about Wamu, but at my bank, it is next to impossible to get funds on a check without the payee being present with identification. Like any financial transaction, they can trace its origin without a lot of trouble, but it does likely cost them. No holder in due course, no funds are good. From what I understand, this means that if someone steals your checkbook and cleans out your account, the bank is liable for giving them the money. I could be wrong, but the Supreme Court is a pretty strong source of opinion in this matter.
There is more banks do that I think is crooked. If I write someone a check and I have funds in the bank, the bank is supposed to pay them. But, most banks now charge someone a fee for presenting what amounts to their own liability. I consider this discounting ones on liability on the spot. I have thought for a long time that a class action suit would be in order. They would no more allow me to discount my liability to them than the man in the moon because I showed up with cash. There they are giving me money they owe, as surety and discounting it.
Had banks discounted their liabilities from the start, there would have been banking, as people and companies wouldn’t have taken bankers acceptances in return for goods. It is my understanding these instruments circulated as cash back in the day. This is just one more bait and switch that has been pulled on modern man by a group of shameless thieves.
Sorry, just a nitpick:
“I don’t know about Wamu, but at my bank, it is next to impossible to get funds on a check without the payee being present with identification.”
Yes, the payee, probably in this case Montgomery Ward. Smart check fraudsters don’t present the stolen checks for cash at the bank, they use them to buy stuff.
One important lesson in this story is we should all be careful about our bank accounts. The best way to handle problems like this is not to have them in the first place!
One thing I do is keep two separate accounts, my bill-paying account and another account in which I keep my money. Whenever I pay bills, I transfer just enough money into the bill-paying account to cover those bills. I treat the account number on the other account as a “state secret,” and the only two transaction types it ever sees are (1) deposits and (2) transfers to the bill-paying account.
Wolf’s not all that self-made, but that’s not the point. Her assistant was stealing from her. Why she didn’t either close the accounts or open new ones and have deposits made in those is beyond me. Busy working parent is a canard. RICH enough to have an assistant, and not astute enough to notice. Wolf would rather be a victim of a big icky bank than some wage slave she probably berates on a daily basis.
My goodness, we wear our class resentments on our sleeve, don’t we?
Do you have the foggiest idea how long it takes to establish who committed a fraud, particularly when a bank is not cooperating and providing records? And you assume she has only a single person who has access to her house, when she probably has at least a nanny, an assistant, and a cleaning person.
So you’d have her fire all three without knowing for sure who was guilty, and ascertaining for sure (per davidu above) that it wasn’t some all in the family screw up.
Gee, I’d love to have you as a boss. Fire everyone on the first sign of trouble, no idea if the trouble was real or who was responsible.
“So you’ve made clear you don’t like successful people who are so busy they can afford not to be closely on top of their finances, and you’ll make unfounded accusations based on your bias.”
You’re right Ives, didn’t read the source documents I’ve just read too many Naomi narratives with her as the earnest victim. By way of example: “After nine months and many calls and e-mails, I was shocked to conclude that the atmosphere of collusion that had helped to keep me quiet twenty years ago was still intact—as secretive as a Masonic lodge.” (from Wolf’s wikipedia page).
BTW, I just was advised that I will not be able to cash my paycheck without a fingerprint scan. Now I know the reason why. Meaning that since the banks can’t possibly verify every signature (yet are liable for forged checks) and since the consumer no longer is willing to monitor his/her accounts, big brother will do it.
This is progress?
First, you refusal to read Wolf’s lawsuit, and your blanket rejection because you admit you don’t like her is a textbook exaple of a cognitive bias called halo effect.
Second, your bank implements a policy you don’t like, and you a. with no data, suggest it is happening at other banks; b. apparently are unwilling to switch to a bank with policies you like and c. act like a victim.
Third, you have NO factual basis for your assumption as to why the bank now wants fingerprints, and astonishingly, you blame it on the consumer! Dude, the BANK is responsible for verifying the validity of a signature. My last bank DID verify my signatures and would even call me upon occasion to see if a check that had a signature they weren’t certain of was really mine. And again by implication, you blame the new policy on Wolf and people like her! For all you know, some buddy of a board member or senior exec got a sweetheart contract for implementing this fingerprint scanning equipment and software. You really have NO idea how this change came about.
Fourth, let’s say this is becoming widespread bank policy. The odds are very high that this would be getting an official push. The IRS is getting very intrusive and the government generally is into trying to find reasons to collect biometric information on citizens (look how DNA sample are collected on pretty much anyone who is arrested, even if charges are dismissed). Another reason is to crack down on terrorist financing (I know people with top security clearances working on this, it’s a major initiative).
So you are presented with facts, or at least more details, you repeat that you hate Wolf, and you imply with NO proof that a new bank policy you don’t like is due to people like her.
So you are unwilling to consider evidence and just get louder in voicing your prejudices.
Yves, easy.
You are coming at me with all the ammunition of a Harvard educated MBA. Why? Can’t you size up who you’re talking to (average professional living-wage slave). And my impression is that you’re framing my assertions as though they’re coming out of an embittered, miserable, poor-me middle class victim. I feel I’m about as financially secure/settled in my life as I can be, but I also feel that Wolf and her contemporaries really don’t have a grasp of their privilege and how it impacts their worldview.
BTW, I did go back an read Wolf’s complaint, I was just letting you know I was wrong/embarrassed for not doing so before I made that first post. And I still, frankly, have the same reaction. The bank is wrong, the bank is predatory and why would you leave $300K in excess of your living expenses in an ATM accessible account. Haven’t you even cautioned people leaving money in accounts with debit card access? Moreover, why would you keep using an account when you knew funds were being misappropriated from it? I can only imagine you would do that if you were in a position that money really wasn’t that big an issue for you.
What I am trying to get across (not very well apparently) is that Wolf is NOT writing from a perspective of ‘look guys I’m up here on the power/money food chain and they still tried to screw me over.’ Her tone indicates that I should have an affinity with her because we’re in the same boat. We’re not, and that’s OK, but please don’t ask me to pretend those differences don’t exist.
One day I noticed three checks against my credit union account that I hadn’t written. I immediately went to the local branch and an employee spent an hour with me reviewing all my recent activity and printing out copies of the fraudulent checks for me to provide to the police. All my funds were moved to a new account with temporary checks that I could use that very day. Yet another reason to appreciate banking with a credit union.