A strange flurry of nasty press for Wachovia

It's been a bad press cycle for Wachovia. First, news broke that the North Carolina-based bank was considering pitching in to salvage the U.S.-North Korea nuclear deal by agreeing to be the transit point for a $25 million hot potato—impounded funds that no bank seems to want to take, but that are crucial for the ...

It's been a bad press cycle for Wachovia. First, news broke that the North Carolina-based bank was considering pitching in to salvage the U.S.-North Korea nuclear deal by agreeing to be the transit point for a $25 million hot potato—impounded funds that no bank seems to want to take, but that are crucial for the deal's success. Why would Wachovia want to be helpful, when its reputation could be severely damaged by accepting tainted money?

It's been a bad press cycle for Wachovia. First, news broke that the North Carolina-based bank was considering pitching in to salvage the U.S.-North Korea nuclear deal by agreeing to be the transit point for a $25 million hot potato—impounded funds that no bank seems to want to take, but that are crucial for the deal's success. Why would Wachovia want to be helpful, when its reputation could be severely damaged by accepting tainted money?

Interestingly, news broke on Friday that, along with seven other banks, Wachovia has been subpoened as part of what Bloomberg News is calling "the widest criminal investigation ever of the municipal bond market." There is no indication that Wachovia has been accused of wrongdoing yet, but according to the story, there may be some smoke there:

Federal investigators are probing whether Wall Street banks and financial advisers conspired to rig the bidding for the investments that local governments buy with some of the $400 billion raised each year by selling municipal bonds. The regulators also sought information on complex derivatives, financial products that derive their value from underlying bonds, an aspect of the investigation highlighted by the California documents.

Wachovia also got some extremely unfavorable coverage in this infuriating New York Times story about how elderly Americans are allegedly being scammed by thieves who purchase information legally from infoUSA, a company that sell consumer data:

As Mr. Guthrie sat home alone — surrounded by his Purple Heart medal, photos of eight children and mementos of a wife who was buried nine years earlier — the telephone rang day and night. After criminals tricked him into revealing his banking information, they went to Wachovia, the nation’s fourth-largest bank, and raided his account, according to banking records. […]

Although some companies, including Wachovia, have made refunds to victims who have complained, neither that bank nor infoUSA stopped working with criminals even after executives were warned that they were aiding continuing crimes, according to government investigators. Instead, those companies collected millions of dollars in fees from scam artists. (Neither company has been formally accused of wrongdoing by the authorities.)

Much more detail at the link.

Any connections to be made between these stories are left as an exercise to the reader. 

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