Bank of America

[BigSqwert]

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How Theresa Hatt Caused The Financial Crisis

By Zachary Roth - February 6, 2009, 11:23AM

 

Last month, Theresa Hatt died at 52, after a brief struggle with cancer.

 

Hatt, who lived in Portland, Maine, and worked for the city of Scarborough, had had several credit cards in her name. So, shortly after her death, Hatt's son, Paul Kelleher, began the sad task of calling his mother's creditors, to inform them of her passing.

 

The calls were uneventful, if depressing, until Kelleher got to Bank of America. Here is how he says his conversation with a representative of the company's estates unit went:

Paul

K

elleher: Ye

s

, I'm calling to inform you that my mom died on the 24th of January.

 

Ban

k

of America E

s

tate

s

repre

s

entative: I'm

s

orry. Oh, it loo

k

s

li

k

e

s

he never even mi

s

s

ed a payment. That'

s

too bad. Well, how are you planning to ta

k

e care of her balance?

 

P

K

: I'm not going to.

S

he ha

s

no e

s

tate to

s

pea

k

of, but you

s

hould feel free to ju

s

t go through the

s

tandard probate procedure. I'm certainly not legally obligated to pay for her.

 

BOA: You mean you're not going to help her out?

 

P

K

: I wouldn't be helping her out --

s

he'

s

dead. I'd be helping you out.

 

BOA: Oh, that'

s

really not the way to loo

k

at it. I

k

now that if it were my mother, I'd pay it. That'

s

why we're in the ban

k

ing cri

s

i

s

we're in: ban

k

s

having to write off defaulted loan

s

.

"I lost it there," Kelleher, a mild-mannered 30-year-old who lives in Brookline, Mass., where he works remotely for a Washington DC-based non-profit, told TPMMuckraker. When pressed, he said, the estates rep backed off that last claim, but only a little, continuing to suggest that cases like his mothers had played a role in the financial crisis.

 

The rep's apparent intention, as Kelleher described it, was to mislead him into believing that he was obligated -- at first legally, then, failing that, morally -- to cover his mother's debt (which, in any case, was not large: she had had a $1000 limit on her card). Of course, Kelleher was sophisticated enough to know that's not true. But how many other less savvy callers in similar situations, he wondered, might respond to the rep's breezy "how are you planning to take care of her balance?," with a confused "I guess I'll mail in a check"?

 

And what bothered Kelleher as much as the estate rep's insensitivity, not to mention her apparent effort to deceive, was the impression he got that she wasn't winging it.

 

"It seemed rote," Kelleher said. "It was too naturally delivered to have been a misstatement."

 

That impression was strengthened when Kelleher eventually spoke with the rep's supervisor, Eric Davis. Kelleher said that when he recounted his conversation with the rep, Davis apologized -- for what, exactly, it was unclear -- but told him: "That's not how she meant it."

 

From his conversation with Davis, said Kelleher, "it sounded like [the rep's approach] was encouraged."

 

How strongly encouraged, we wondered? And how common was this particular rep's approach? So we tracked down a former rep for Bank of America's collections unit. And according to the former rep, Kelleher's interlocutor was doing just what she was told .

 

The former rep, who worked until quite recently at B of A's Belfast, Maine-based collections unit, described for TPMmuckraker a system in which staffers responsible for making collections were routinely encouraged to mislead customers or those calling on their behalf, and were financially incentivized to do all they could to get payments.

 

Kelleher's reported conversation, the former rep said, "sounds like how I would have attempted to collect" in such a situation. "I would have asked: 'How do you plan on paying for this?'"

 

The rep said that employees were encouraged to walk right up to the line of actively misleading a caller about the consequences of non-payment. "As long as you don't get caught [lying]," the former rep added, "there's no really no punishment." The former rep did not work in the estates unit, but confirmed, based on direct knowledge of B of A's practices, that it operates similarly to the former's rep's own unit.

 

The former rep said that employees responsible for collections receive "feedback" about their phone performance from managers who monitor the calls. (When you hear "this call may be monitored for quality assurance purposes", the "quality assurance" oftentimes isn't quality of service from the customer's perspective -- it's quality of performance from the rep, who's being trained to be as effective as possible at extracting money from callers.)

 

The former rep added that if a manager had listened to the performance of Kelleher's rep, he would likely tell her: "Good job!" By contrast, if he had heard the rep failing to make any serious effort to convince Kelleher to pay his mother's debt, he would have told her "that was not a good 'listening score,'" -- the term gets at the precision with which a rep's phone performance is monitored -- and would have encouraged her to take a tougher approach.

 

There are also more direct ways to ensure that collections agents play hardball.

"We were obligated to collect 45 percent of the debt that rolled in to us," said the former rep, adding that that figure fluctuated. Employees who consistently failed to meet that baseline might be fired. "People lost their jobs all the time for non-performance," the former rep added.

 

And there were bonuses of us as much as $5000 a month for reps who successfully brought in a certain percentage of "collectible money", said the former rep, using the industry's cold-blooded jargon.

 

What's the larger point here? Well, here's one: When the automakers were asking Washington for a bailout recently, there was a lot of talk about insisting on conditions -- like requiring that they build more fuel-efficient cars -- that would be in the national interest. Bank of America and its competitors have already taken billions in taxpayer dollars. So it seems logical to insist on a similar set of public interest conditions -- and the industry's range of deceptive and rapacious lending practices seems like a natural place to start.

 

Neither Eric Davis, the B of A supervisor, nor B of A's public relations office immediately responded to a request for comment.

Edited February 6, 2009 by BigSqwert

[bmags]

Why is this man ruining our economy?

[Soxbadger]

Be careful with all debt collectors. They often buy "bad debts" for pennies on the dollar, knowing that they are not enforceable, but hoping that you will fall for it.

 

 

[Texsox]

That does lead to a serious question, and one I had some experience with. Someone dies with unsecured debt *and* some money in which to pay off the balance. It seems like the estate should cover the deceased debts before dividing up the property.

[DukeNukeEm]

What kind of selfish b**** just goes off and dies of cancer like this?

[Soxbadger]

That does lead to a serious question, and one I had some experience with. Someone dies with unsecured debt *and* some money in which to pay off the balance. It seems like the estate should cover the deceased debts before dividing up the property.

 

If the estate was probated the creditors should have filed a notice of claim against the estate.

 

Also many wills specifically state that first the estate must pay off all debts before it can pay out any of the rest of the estate.

[Texsox]

What kind of selfish b**** just goes off and dies of cancer like this?

 

She didn't believe "Yes We Can!"

[bmags]

"Oh, it looks like she never even missed a payment. That's too bad. "

 

that's the best part.

 

Yes, ma'am, that was my mother's best quality. When she died, I thought to myself, damn! The streak is over! She's going to miss a payment!

[Soxbadger]

She wont be getting those free upper deck White Sox tickets for perfect payments.