Tuesday, October 23, 2012
New FDIC Regulations Can Cost You Your Job
Imagine you are a long-time employee in good standing with a major bank, but nearly 50 years after a minor mistake you made as a teenager, you suddenly find yourself out on the street.
Apparently, that is the story of a 68-year old employee of one of the top 3 banks in the U.S. The employee was called into the vice president’s office and terminated immediately after 7 years of successful work with the bank. The crime you ask? It seems that in 1963, the bank employee put a cardboard dime into a Laundromat washing machine. The future bank employee was arrested and spent 2 days in the county jail.
Why would a bank fire someone over such a minor infraction, committed decades ago? Turns out, the bank had no choice, thanks to new regulations passed as a result of the near collapse of the financial system in 2008. The law in question is contained in Section 19 of the Federal Deposit Insurance Act. The expanded law prohibits institutions backed by the Federal Deposit Insurance Corp. from employing anyone who spent a day or more in jail for a criminal offense. That includes, unfortunately for the employee in question here, 2 days for stuffing a cardboard dime into a washing machine in 1963. The bank faced fines of one million dollars per day if they kept the employee on staff after finding out about his conviction.
Unfortunately, rather than rooting out white collar criminals, the law has fallen mostly on lower level employees, who committed minor crimes in their youth, and lost a career when the financial institution employer found out. This scene has been repeated so often, Congress provided for a path back to employment for these workers if the crimes were small enough. However, the process is arduous with forms, hearings, and advisory panel decisions.
If you are a former employee of a financial institution who has been terminated as a result of these new FDIC regulations, contact a local employment attorney who can expedite the process of approval for the exemption to the new regulations.