A Bank of America employee will collect $930,000 from his former employer, Bank of America, for being fired in violation of the whistleblower protections. The employee blew the whistle on fraud at Countrywide Financial Corp. and led internal investigations that found “pervasive wire, mail and bank fraud involving Countrywide employees,” according to the U.S. Department of Labor. He was terminated soon after the bank acquired Countrywide in 2008. In addition, Bank of America must reinstate the whistleblower. He claimed that others who tried to report fraud to Countrywide’s employee-relations department suffered persistent retaliation. The $930,000 includes back wages, interest, compensatory damages and attorney fees.
“It’s clear from our investigation that Bank of America used illegal retaliatory tactics against this employee. This employee showed great courage reporting potential fraud and standing up for the rights of other employees,” David Michaels, assistant secretary of the Labor Department’s Occupational Safety and Health Administration, was quoted as saying in a recent Bloomberg article.
In an email, a bank spokesman stated: “The bank’s actions in dismissing this associate were solely based on issues with her management style and in no way related to the complaints and allegations she made. Bank of America encourages associates to raise issues they see. We take such escalations seriously and investigate them thoroughly.”
This latest setback comes on top off other serious problems at Bank of America, whose liability for Countrywide’s toxic mortgage-backed securities could reach $50 billion to $100 billion, according to press reports. The struggling bank has announced it may eliminate 30,000 positions as part of a cost cutting effort.
In addition to the job cuts, Bank of America sold $5 billion of preferred stock. It has also and agreed to sell 50% of its ownership in a Chinese lender, and is trying to sell a significant portion of its mortgage business, according to press reports.
Sales of structured notes issued by Bank of America have sunk to the lowest level since January 2008 as a result of investors’ concerns about the creditworthiness of the bank, according to press reports. Credit default swaps on BofA have surged recently, reflecting the increased premium being demanded by third parties to make good on BofA’s debt obligations should the bank default on them. BofA second quarter loss was the largest in its history and its common stock has fallen by approximately 44% in early September.
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