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Sunday, March 16, 2014

When Compliance Is Honored In The Breach


See this new report from the New York Post on Sunday about an internal Wells Fargo Home Mortgage manual on how to get necessary documents for foreclosures in cases where those documents were originally "missing."  This is a repeat of the infamous robo-signing scandal of earlier this decade.

It seems that the more we have Too Big To Fail institutions engaging in "compliance," the more it really means they're just trying to hide something.  Didn't these institutions -- and Wells Fargo is by no means alone -- hire thousands, or tens of thousands of compliance officers to ferret out exactly this type of abuse? 

It would seem there is either a deep breakdown in corporate ethics, or the entire premise behind compliance departments seems to be one of being a whitewash to better insulate the company against future charges of deliberate intent to commit misdeeds yet to be discovered.  If the latter theory proves true, it would mean compliance officers' true function (and value) is not in "compliance" but in its exact opposite, that being in helping the company evade detection of its misdeeds or, in the event of discovery, to evade the consequences of those misdeeds.

Left forgotten in this story is the fact which remains that thousands of homeowners are getting away with staying in "their" houses for years (and possibly indefinitely) without paying their mortgages.  That is the true tragedy and a deep moral hazard.

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