This case involves US savings bonds worth $500,000 that were cashed at a bank in California without the knowledge or consent of the bond owner. The bank claimed that the owner of the bonds gave verbal permission for a coworker to come in and cash the bonds on her behalf. However, the owner of the bonds claimed she never gave this permission. The bonds were redeemed in the name of the coworker and not the bond owner. Furthermore, information that was allegedly required to be on bonds for redemption was missing. It was alleged that the bank cashed these bonds without proper identification or authority in violation of the US Department of Treasury’s regulations governing the redemption of bonds.
Question(s) For Expert Witness
- 1. Please describe your experience overseeing compliance at a commercial bank that offers savings bond redemption as a service.
- 2. What regulations must commercial banks follow when redeeming savings bonds?
Expert Witness Response E-089288
As a former President, CEO, and Director of several successful commercial banks, I was involved in the origination, approval, oversight, and implementation of bank compliance programs. First and foremost, banks must adhere to specific federal regulations regarding cashing Savings Bonds. A bank must thoroughly follow regulatory requirements for cashing savings bonds as well as to adhering to their own policies and procedures. Failure to do so may result in losses to the bank. A bank may, at its board’s discretion, institute additional controls that must be followed by the bank staff.
Expert Witness Response E-013501
As the former president and CEO of three commercial banks, I have a great deal of experience overseeing compliance and federal regulations. The bank is most likely liable for cashing the bonds in contravention of the FRB Guide to Cashing Savings Bonds. This document describes the steps that are taken when cashing in bonds. At no point in the guide is there a situation where someone can call to permit someone else to cash their bonds.