case study wk 3

Coleen Colombo joined the Concord (California) branch

of BNC in 2003. The small office, next to a Mercedes–Benz

dealership and a run-down Kmart, was part of a regional

group that funded some $1.2 billion worth of loans each

month. Colombo initially thrived in her job as a senior underwriter.

In a performance review, she received a top rating of

“exceeds expectations,” according to a wrongful termination

and harassment suit filed in California Superior Court on

behalf of Colombo and five other female employees.

The environment turned hostile in 2005 and thereafter,

the suit says. At that time, one fellow employee, a male

wholesaler, began bringing Colombo questionable loans with

incorrect salaries, occupations, and home values, she says. In

one instance, she claims in the suit, the wholesaler “tried to

bribe (Colombo) to allow a loan with fraudulent information

to go through.”

The bribes, known as spiffs, were common at the BNC

branch, says Sylvia Vega-Sutfin, a former wholesaler who

left the firm in 2005. The mother of four, who says she made

$16,000 a month during the boom, says that some underwriters

demanded spiffs of $1,000 for the first 10 loans and $2,500

for the next 20 loans, whether they approved the mortgages

or not. When she refused to pay them, Vega-Sutfin says, her

loan files started to go missing and the size of her commission

checks plummeted. Her bosses “said they would make

an example of me to others: ‘If you complain, this is what will

happen,’” she says.

Colombo says in her lawsuit that she e-mailed the

regional vice president for operations to report the wholesaler

who tried to bribe her. She claims the vice president brushed

off her complaints in a meeting. Colombo “left the office in

tears,” the suit says. After she returned from a short leave of

absence, the branch manager told her a coworker “wanted her

terminated for making the complaints,” Colombo claims.

Meanwhile, the wholesaler who tried to bribe Colombo

started sexually harassing her, according to the suit. The

male colleague made her feel “uncomfortable and fearful”

by “intentionally rubbing his body against hers.” Colombo

resigned from BNC in 2005. “You would have thought he was

the pimp and we were his prostitutes,” says Linda Weekes,

another underwriter who is part of the suit. “It felt like a

dirty place to work.” The case has been on hold since BNC’s

owner, Lehman Brothers, filed for bankruptcy on September

15, 2008. “We dispute the allegations made by these former

employees and will be contesting them on the merits in the

pending litigation,” says a Lehman spokesman.

The world came crashing down for wholesalers when

subprime loans started going bad. Wall Street quickly reined

in its mortgage factories, tightening lending standards, pulling

credit lines, and forcing lenders to buy back the same risky

loans it once consumed. For the thousands of wholesalers

swept up in the excitement and excess of a manic market, it

was time to find a new job.