[Ed. Note: The following story comes from Dwight Haskins. The entire story appears on his blog. Dwight is one of the most passionate whistleblower advocates we know. He is a former senior financial analyst and government bank regulator. We have previously carried some of his stories on our blog, Due Diligence. ]
by Dwight Haskins
A smoking gun pointing to the financial crisis in March 2007 is seen by this memo (following overview comments) from the NTEU [National Treasury Employees Union] President to FDIC Chairman Bair.
Overview commentary. The corporate culture at FDIC caused low morale at the FDIC in the years leading up to the Financial Crisis. This was because bank examiners were told in 2006 “to no longer do a routine examination so they could get out of the banks in record time so not to be a burden to bankers.” Loan files were subject to merely cursory reviews, if any review at all and lending practices were skimmed over. Of course, this led to most incidents of discriminatory lending going undetected and/or unreported by examiners. While seasoned examiners knew the nature of the problem going unreported, senior officials at the FDIC were more than willing to be bank accomplices to ensure banks were not disciplined or embarrassed for violating regulations and the law.
While the NTEU was unable to prevent the FDIC to changing to a vastly compromised “pay for performance” system beginning in 2005, the NTEU correctly predicted the result. The FDIC used the new performance system to penalize and retaliate against those most vocal in support of the union and most willing to point out problems occurring at the FDIC.
Worse yet, the FDIC used the new “pay for performance” system to systematically discriminate against minorities and those employees over 40 years of age. A class action lawsuit was filed by the NTEU once the evidence was clear the FDIC was violating civil rights of a broad class of employees. A long legal battle ensued and in the beginning of 2013, the FDIC was finally found guilty of discriminating against African Americans and those over 40. Approximately 1,000 employees are covered in the class action lawsuit. However, no compensation has been paid by the FDIC as of now.
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