Navient, JPM, And Western Union Are Today's Corporate Criminals

It’s time for today’s roundup of corporate criminals. Like Trump’s nominees ethical problems, this is also becoming a daily feature. Let’s start the day with Navient, the largest servicer of student loans in the country. The company handles about $300 billion in student loans that effect one-quarter of all students with loans. A lawsuit filed by federal regulators and states attorneys general accuses Navient of basically misleading and defrauding students in almost every part of the loan servicing process in order to maximize its profits.

Navient steered borrowers away from income-based repayment plans that would have significantly lowered the borrowers’ costs and incentivized their employees to do so, reminiscent of the massive Wells Fargo fraud. It mislabeled injured military veterans’ credit reports with defaults even though their federal loans were legally discharged because of their disabilities, potentially preventing those veterans from subsequently getting mortgages and other loans. They mishandled regular loan payments and hid critical information from borrowers by burying it in the fine print. And, not surprisingly, Navient is also a serial offender. According to the Times, in 2014, the DOJ and the FDIC “fined Navient for illegally overcharging military members. The company, officials found, flouted the Servicemembers Civil Relief Act, a federal law that protects active duty military members, requiring lenders to reduce interest rates on any loans to 6 percent.” The federal party to this suit against Navient is, of course, Elizabeth Warren’s brainchild, the CFPB. According to the head of the CFPB, Richard Cordray, Navient “used shortcuts and deception to illegally cheat struggling borrowers out of their rights to lower payments. These unlawful practices have cost student loan borrowers across the country both heartache and money.” It is this type of agreesive action against the serial offenders in the financial industry that has the GOP and its Wall Street allies up in arms and has apparently made Cordray and the CFPB a target for elimination by the Trump administration.

Our next stop is another serial offender, JPMorgan Chase (JPM). The financial behemoth settled a $55 million suit that alleged it essentially red-lined Hispanic and African Americans in its mortgage business. This is a result of an investigation that focused on racial bias in the setting of rates on mortgage and auto loans by the financial industry. A similar suit against another serial offender, Wells Fargo, was settled in 2012 for $175 million. On average a black or Hispanic borrower paid over $1,000 more that their white counterparts for a typical mortgage in the first five years of the loan. Since JPM was not the originator of the loan, they had just enough separation from the process to settle the suit without admitting any guilt.

We have come to expect criminal behavior from all sorts of financial firms and the small fines like the one just imposed on JPM are merely the cost of doing business. But today we have new entrant, Western Union. The world’s largest money transfer company agreed to pay a $565 million fine for turning a blind eye to money laundering and fraud for over a decade. The company actually admitted to “aiding and abetting wire fraud” by essentially letting known fraudsters and scammers illegally wire money and avoid federal anti-money laundering rules. According to the complaint, the company received over 500,000 complaints about fraud over the eleven year period that these violations were taking place. Western Union employees knew that many fraudulent transactions were taking place but did nothing to stop them. According to the US Attorney who brought the case, “Western Union is now paying the price for putting profits ahead of its own customers”. Since Western Union’s revenue for the year based on its quarterly earning is going to be somewhere around $6 billion, I’m wondering whether the company is really paying much of a price at all.

I know I sound like a broken record but until individual executives within these firms actually fear spending some real time in a real jail, this kind of blatant corporate criminality will just continue, interrupted only by paying a fine that will be considered the cost of doing business.