Anonymous, the hacker group loosely affiliated with WikiLeaks has posted a series of emails, purportedly from a former Bank of America employee which show a pattern and practice of corruption and fraud at the nation’s largest bank.
The emails are on the site BankofAmericasuck.com and were announced on Twitter with the accompanying #BlackMonday hashtag.
In the emails released, an emailer who identifies himself as a former Bank of America employee dishes on his former employer. And while the emails have not been independently verified per se, Bank of America believes them to be true, dismissing the allegations as clerical and administrative errors and not fraud.
Among the practices uncovered includes “forced-place insurance” where a mortgage borrower who does not maintain an insurance policy on their home has a policy “placed” for them by their insurer. In the case of Bank of America, they own the insurance company, Balboa Insurance. Balboa is the market leader in forced-place insurance. Bank of America used Balboa as the insurer of choice for its forced-placed practice, leading to highly inflated premiums and inadequate policies for homeowners, all the while failing to notify borrowers of the practice.
Anonymous and WikiLeaks have promised for months now to disclose a trove of documents against Bank of America and today’s leak looks like the first shot fired. And while the allegations and practices disclosed are offensive and, if proven true, do rise to the level of fraud via omission, at this point is anyone really surprised? The banking industry has proven to be absolutely unable to avoid fraud absent an intense regulatory scheme in place to force daylight on its practices.
The problem is not requiring borrowers to carry insurance on their homes–indeed, many would argue that such a practice is simply sound practice in protecting the investment made by the lending institutions. The problem is forcing borrowers into an insurance relationship with a subsidiary of the lending institution without disclosure and with added expense to the borrower. It creates a conflict of interest for Bank of America and allows them to double-dip in fee recovery.
Given that most of the media has grown tired of covering the banking scandals that seem to go on without end it is unlikely this story will get the attention it deserves, let alone place it in the larger context of a culture of deception that has come to define the financial services industries.
photo courtesy of moneyblognewz via Flickr