Fours years after the financial crash, following a raft of domestic and international banking reforms, some would say that the world has made significant progress in reforming its troubled banking system -- but probably not Paul Boudwin. The former investment banker lost his job earlier this year when, in complying with new post-financial crash regulations, Bank of America (NYSE:BAC) let him go for a 14-year old offense that he had previously disclosed: the grievous crime of walking out on a check at Denny's.
I thought you were supposed to pay
Boudwin was hired by B of A in 2006. According to the Houston Chronicle, he worked as a wealth manager in the bank's Houston, TX office, was on track for a big bonus, and had even won a prestigious award there. But, last year, as the bank was reviewing employment records to ensure compliance with new federal regulations requiring criminal background checks, B of A spotted an arrest from Boudwin's college days for walking out on a check at Denny's.
According to Boudwin, it was all a misunderstanding. He and his buddies each thought one of the others would pick up the check. The waitress, however, didn't see things that way. She called the police, and Boudwin and his buddies were arrested. They paid a small fine, and that -- Boudwin probably thought -- was that.
The real kicker here is that Boudwin had disclosed the arrest when he was hired in 2006. It was only after new, post-crash regulations kicked in, that -- six years later -- the Denny's incident suddenly became an issue. Boudwin was held in a kind of bureaucratic limbo (or, more likely, a bureaucratic hell), while B of A tried to get him a waiver. In the end, after much back and forth but no resolution with the Federal Deposit Insurance Corporation, the bank got tired of waiting, and fired him. Boudwin is now suing B of A.
Pity the bankers, at least this one
The 2010 Dodd-Frank financial reform legislation has helped push Wall Street titans, like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), out of the highly-profitable, but highly-flammable, business of speculative trading into more stable lines of business, such as private banking and wealth management. The Basel Committee on Banking Reform has introduced new capital reserve requirements that should decrease the chances of the sort of bank runs that helped take down Lehman Brothers and Bear Stearns.
That's all undeniably good, and has likely made the world's financial system a safer place for all. But, in the world's zeal to crack down on the banks, it might have also created the opportunity for the kinds of bureaucratic nightmares that rival those found in Franz Kafka's The Castle. Unless there's more to this tale than meets the eye, Boudwin was, by all accounts, a successful employee of B of A.
For the mere fact of a seemingly immovable rule on the books, and probably, to be fair, an understaffed FDIC trying to deal with a thousand situations similar to this, B of A lost a good employee. It's also facing another lawsuit -- as if B of A and the rest of the banking industry aren't facing enough of those already.
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Fool contributor John Grgurich owns no shares of any of the companies mentioned in this column. Follow John's dispatches from the bleeding edge of capitalism on Twitter @TMFGrgurich. The Motley Fool owns shares of Bank of America. Motley Fool newsletter services have recommended buying shares of Goldman Sachs Group. The Motley Fool has a delightful disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.