Wells Fargo & Co (WFC): The Obama Administration Overreach No One Is Talking About

Page 1 of 2

Everyone’s talking about how the National Security Agency is collecting the metadata on all calls made within the United States and overseas from telecom giant Verizon Communications Inc. (NYSE:VZ). And just weeks ago, the country was a-buzz with news that the Department of Justice seized the telephone records of Associated Press journalists in pursuit of administration leakers.

What no one seems to be talking about is something just as unsettling: the DOJ trying to justify continuing prosecution of financial wrongdoing because of the U.S. war in Afghanistan.

Wells Fargo & Co (NYSE:WFC)

What’s war got to do with it?
Two months ago, The Wall Street Journal broke the news that Justice is citing a 1948 wartime act in an attempt to prosecute banks for financial wrongdoing after the traditional statutes of limitation have run out: typically five years. It’s called the Wartime Suspension of Limitations Act, and it “gives prosecutors unlimited time to go after alleged fraud during times of war.”

As an example, this past December, the DOJ sued Wells Fargo & Co (NYSE:WFC) for mortgage-related loan fraud. According to The Journal, by the time the suit was filed, “the statute of limitations had run out on much of the alleged wrongdoing.” There’s been no decision yet in the case, and Wells said the allegations had nothing to do with the war in Afghanistan.

The federal government has invoked the WSLA more times in the first four years of the Obama administration than it has since the mid 1960s.

I can’t recall
What does this mean for banks and their shareholders? If the DOJ can ignore statutes of limitation, the sky’s the limit, potentially, as far as crisis-related financial wrongdoing is concerned, along with the consequent fines and payouts.

And if Wells Fargo & Co (NYSE:WFC) — traditionally one of banking’s cleanest operators — is finding itself under the Justice Department’s prosecutorial gun, how long before the country’s other big banks find themselves in the same position? All of them got their hands dirty in the housing boom, to one degree or another.

Statutes of limitation are put in place for a reason: There’s a limit to how far out from a crime prosecutors can operate before evidence trails and participants’ memories get too shaky to be reliable. How accurate could you be if I asked specific details about a work project you were involved in five years ago? How about last year? What if I asked you what you had for dinner last Tuesday?

And the war in Afghanistan has nothing to do with the kinds of financial wrongdoing the DOJ is pursuing Wells Fargo for. Laws like the WSLA were designed to deal with crimes like wartime contracting, as noted above. But even in times of war, these kinds of suspensions are dubious and dangerous — they can very easily lead to overreach and abuse, even if well intentioned.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!