Bank of America Under Fire Again – thanks to WikiLeaks

December 3, 2010 1 Comment »

As if the robo-signing scandal wasn’t enough, on November 30, 2010, a story involving WikiLeaks became front page financial news that has the potential to once again threaten the existence of some of Wall Street’s most storied institutions.

The Story

In 2009 a barely publicized interview appeared in Computer World magazine. In it, WikiLeaks founder Julian Assange stated that they were in possession of 5 GB of executive memorandum from a major American bank. At the time, this was not seen as a credible news story. While this would undoubtedly be a front page story today, in 2009, when the interview took place, things were different.

First, the interview didn’t appear in a financial magazine that is tracked by banking professionals or investors. Instead, it was published in a computer magazine so the credibility of the claim was disputed and the audience may have been, for the most part, disinterested.

However, once WikiLeaks posted hundreds of thousands of government documents in 2010 related to the Iraq and Afghanistan conflict, they became a source for hard to find secret documents and as a result, are now a well publicized outlet for this sort of discrete information. So at the time, most Americans didn’t even know the site existed – much less realize what is was going to accomplish. These two reasons kept this interview from being publicized in the mainstream media until now.

In November of 2010, Assange was interviewed on an unrelated subject by Forbes, reported Andy Greenburg. During that interview, Assange said that tens of thousands of documents would be revealed in early 2011 that contain unethical actions which, according to Assange, could bring down “a bank or two”.

Downfall of the Banks?

Since 2008, the banking sector has continued to dominate the newswire headlines and not in a positive way. First came TARP, then executive bonuses, and most recently the robo-signing scandal. While the “too big to fail” doctrine is still alive and well in the eyes of the government which will probably continue to shield the larger banks, smaller regional banks, where many consumers have their money, could be seized by the Federal Deposit Insurance Corporation should the worst case scenario play out.

Depending on the severity of the information that will soon be revealed, any major revelation could put severe Wall Street pressure on the banking sector which, in turn, could send the economy in to another recession. This, according to a leading economist, is a worst case scenario. In other sectors, something like WikiLeaks would be a much more benign event but the banks, in the middle of numerous high dollar lawsuits, are under severe financial, public and political strain.

What Should You Do?

Nothing. The FDIC insures your deposited funds up to $250,000 and since this information is at least 14 months old, some believe that the documents will be nothing more than yesterday’s news. In addition, a Bank of America spokesperson said that there is no evidence that any executive hard drives have been stolen. Although any additional lawsuits could spell disaster for the smaller banks, the newest scandal may end up not being a scandal at all.

Just like with their revelation of government documents, WiliLeaks is in control of this news story and for now, the average consumer can only sit back and wait.

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  • Jeff

    This guys a dbag