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
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

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!