In their proposed amicus brief in the District Court case Faloney et. al. v. Wachovia, Reps. Markey, Frank and Sestak call for a restitution process that proactively identifies fraud victims and mails them reimbursement checks instead of requiring victims to return forms and file cumbersome paperwork. The court is currently considering how to structure the process for reimbursement of these fraud victims, most of whom were elderly or impaired.

Restitution will be paid out of a $125 million fund established as the result of a settlement between the Office of the Comptroller of the Currency (OCC) and Wachovia announced on April 25, 2008.  After an investigation, the OCC found that Wachovia, while handling its accounts with certain payment processors and telemarketers, "engaged in unsafe or unsound practices" and handled the accounts of these entities "as part of a pattern of misconduct that resulted in financial gain to the Bank...and a pattern or practice of disregard of the interest of consumers".    

"All the victims of this despicable scam deserve full reimbursement. Today we are asking the District Court considering the structure of the restitution process to mandate the proactive mailing of checks to all victims, rather than a plan that requires victims to file paperwork to receive compensation. Most of the fraud victims were deliberately targeted because they are elderly or disabled and without a simple process that mails out checks, there is a significant risk that, after being ripped off by these slick fraudsters, consumers could be victimized again by a complicated restitution process that thwarts widespread reimbursement. We should not let this happen," said Rep. Markey.

"The decision by the Office of the Controller of the Currency to pre-empt all state consumer protection laws regarding national banks puts the controller under a strong obligation to do more to defend legitimate consumer interests than has been done in this case," said Rep. Frank. 

"I believe that while the headline figure is high, and the settlement has been called 'one of the largest penalties ever demanded', the actual outcome is unfairly balanced in Wachovia's favor.   If the objective is, as I believe it should be, to provide fair restitution to those harmed by Wachovia's unsafe and unsound practices, this settlement will fall short," said Rep. Sestak.

When the settlement between the OCC and Wachovia was announced, Rep. Markey expressed his concerns about the structure of the restitution process in a letter to Comptroller John Dugan <available here> and received the following response from the OCC <available here>. The OCC's response notes that "if the court determines to make changes in the claims procedure, we will certainly revisit this aspect of the Agreement."

The filing by Reps. Markey, Frank and Sestak supports the request of the Faloney plaintiffs for an ‘All Writs Injunction,' stating that, "Such an order would allow this Court to assert control and ensure that [restitution] distribution is done in such a way as to maximize the return to the victims of Wachovia's conduct, consistent with the letter and spirit of both the Consent Order and OCC-Wachovia Agreement, and that whatever notices are deemed necessary, are coordinated and to the greatest extent possible consolidated so that restitution dollars can be maximized and confusion among victimized consumers minimized."

The full text of the proposed amicus is available HERE. (pdf)