Bernanke's other banking problem: Identity theft
Aug 26th 2009 5:10PM
Updated Dec 4th 2009 12:37PM
Some critics of recently reappointed Federal Reserve Chairman Ben Bernanke argue that he was too slow to realize that the financial system was teetering on the brink of collapse during 2008. But Bernanke might have had another, more personal banking issue on his mind at the time, Newsweek reports: his wife Anna's purse was stolen in August 2008, and the thieves used its contents to access the couple's joint checking account.
A court affadavit filed in June shows that 10 people are charged in the fraud, which used the Bernankes' bank account to inflate the value of other accounts that then had money withdrawn from them. The 22-page document identifies a victim known as "B. B.," who had $900 stolen from his account, but another complaint against one of the alleged members of the ring used Ben Bernanke's full name.
The thefts affected more than 500 people in Washington, D.C., and Chicago, where the ring operated. Anna Bernanke reported that her purse was stolen from a D.C.-area Starbucks (SBUX) coffee shop.
The Bernankes are hardly alone in their conundrum, according to the Identity Theft Resource Center, which estimates that identity theft costs consumers and businesses more than $55 billion annually. Some 650,000 complaints of identity theft are registered annually, another source reports. Concerns about the crime have dramatically increased in recent years, as the amount of personal information stored online -- and vulnerable to hackers or security breaches -- has grown with online commerce.
The ringleader of the thefts was a 52-year old Maryland man, Clyde Austin Gray Jr., who has pleaded guilty in the scheme, which cost 10 banks $2.1 million. And as Bernanke would know, that's money the banks can ill afford to see walk out the front door.But here's a question: Why would Bernanke -- who, as Fed Chairman, could be given extraordinary regulatory powers in the coming months and years -- have his account at Wachovia? Before it was saved by Wells Fargo (WFC), Wachovia was the bank that picked the top of the housing bubble to make a terrible acquisition, then tried to maintain a façade of solvency by under-provisioning for loan losses.
Let's hope it had more to do with his confidence in the FDIC guarantee than a lack of understanding about what was going on under the hood of Wachovia's pick-a-pay portfolio.
James Cullen edits and writes at CollegeAnalysts.com. He has no personal position in the stocks mentioned above.