The Bottom Line:
Under federal law, banks crack down on employees who were jailed, no matter how minor their mistake
Why a crime worth a dime cost a Wells Fargo worker his job.
You’re an employee in good standing with a major bank, but nearly 50 years after a stupid mistake you made as a teenager, you suddenly find yourself out on the street.
So goes the story of Richard Eggers, 68, a customer service representative for Wells Fargo Home Mortgage, fired last month after seven years of loyal service, for stuffing a fake dime in a Laundromat washing machine in the year 1963.
The story, which broke this week, is, to put it charitably, an example of the law of unintended consequences. Eggers is among thousands of employees at financial institutions throughout the country who have been thrown unceremoniously onto the unemployment rolls. “We’ve had close to 500 calls in the past year,” said Natasha Buchanan, a criminal defense attorney at Higbee & Associates in Santa Ana, which represents 24 laid-off bank employees, including five in the Bay Area who used to work for Wells Fargo, Bank of America and BofA’s subsidiary, Merrill Lynch.
The law in question is contained in Section 19 of the Federal Deposit Insurance Act. Expanded and
tightened in the wake of the near collapse of the financial system in 2008, the law prohibits institutions backed by the Federal Deposit Insurance Corp. from employing anyone who spent a day or more in jail for a criminal offense.
The law was supposed to root out financial and mortgage fraudsters, but has fallen primarily on lower-level employees like Eggers, who got two days in the Warren County, Iowa, pokey for his cardboard dime caper.
“It was a stupid stunt and I’m not real proud of it, but to fire somebody for something like this after seven good years of employment is a dirty trick when you come right down to it,” Eggers told the Des Moines Register.
Most of the past offenses committed by Higbee & Associates’ clients were of the petty theft, shoplifting and drugs variety, said Buchanan.
But because of the way the law is written, and the $1 million a day fine for noncompliance it carries, the banks say they have little choice but to obey it to the letter.
“As an insured depository institution, Wells Fargo is bound by Section 19 of the Federal Deposit Insurance Act that prohibits us from hiring or continuing the employment of any person who we know has a criminal record involving dishonesty or breach of trust — regardless of when the incidents occurred,” the San Francisco bank said.
“Wells Fargo has been performing thorough background checks on all its team members — regardless of when they were hired — which includes a fingerprint check with the Federal Bureau of Investigation.”
Bank of America and Citibank did not respond to calls and e-mails on Thursday. JPMorgan Chase declined to comment.
There is a possible way back for fired employees, by means of a written waiver granted by the FDIC. The agency says it has seen a “significant increase” in waiver applications since 2009.
“The issue with the expanded guidelines is that all the discretion is on the back end, in the waiver process, instead of the front end, when compliance personnel are looking at the criminal history of employees,” said an FDIC spokesman.
In Eggers’ case, “Wells Fargo connected Mr. Eggers with a FDIC case manager and hopefully they can pursue next steps,” said Ruben Pulido, a bank spokesman in San Francisco.
It would have helped had Eggers not spent a day in jail, in which case he could have been granted an automatic waiver for such a minor offense. Or, said Buchanan, if Wells Fargo was willing to sponsor his application, the process could at least be shortened.
Right now, that appears to be a step too far for Wells Fargo. “It is not the responsibility of a federally regulated financial institution to intervene in an individual’s application for a waiver,” said Pulido.
Instead, Eggers is relying on a Des Moines law firm, which is representing three other fired Wells Fargo employees — each with minor convictions more than 10 years old — to help him navigate the waiver process.
Buchanan said many affected employees are either unaware of the waiver, or can’t afford to wait a year to find out whether they can get their old job back. “It’s especially hard for those who have been with their bank for 10, 20 or 30 years,” she said.
“I’m having to sign up for Social Security because of this, but I didn’t want to. I had hoped to work four more years,” Eggers told the Des Moines Register.
“I’d prefer to stay busy. I just want my job back.” Joining the big leagues? One doesn’t normally associate Peet’s Coffee & Tea, founded in Berkeley in 1966, with big-time college sports sponsorships.
But here’s the gourmet beverage chain sponsoring Saturday’s opening day Cal Bears game at the renovated “new” Memorial Stadium.
As part of the opening, the Bears are selling opening day tickets for $19.23, the year the original stadium opened, and have been running ads “Presented by Peet’s Coffee & Tea.”
Could Peet’s, which is on the verge of being bought for $1 billion by a German conglomerate (unless another company — Starbucks? — outbids it) be joining beer dispensaries and athletic apparel makers in the multigazillion-dollar college sports sponsorship circus?
“It is a natural partnership based on our Berkeley roots and our already strong presence on campus,” explained
Debbie Kristofferson, Peet’s’ vice president of brand and creative strategy.
“Peet’s is proud to partner with Cal as they unveil their new stadium, which will be an exciting destination for Bay Area families.”
Richard Eggers stands at a Laundromat in Carlisle, Iowa, where he was arrested 49 years ago for putting a cardboard cutout of a dime in a laundry machine.