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Wherever money changes hands, crooks and embezzlers arc sure to be close by. What many bankers fail to realize is that the crook or embezzler is often a colleague, a boss or even an owner. In other words, an "insider."
We like to think that banks are immune to insider abuse--that bankers are pillars of the community. After all, if you can't trust a banker, whom can you trust? Of course, the vast majority of bankers can be trusted.
Unfortunately, however, the banking industry is vulnerable to insider abuse. And it is often the most trusted employees who perpetrate the greatest fraud. We are reminded of the following anecdote:
A man met a banker. Trying to establish a friendly relationship with the banker, the man said, "I used to know Mr. Jones, who was with your bank. I understand he is a tried and trusted employee...."
The banker immediately assumed an air of cold unfriendliness.
"He was trusted, yes; and he will be tried, too--if we're fortunate enough to find him."
Insider abuse currently accounts for more than half of all bank fraud and embezzlement cases investigated by the FBI. It has also been identified as a contributing factor for a significant percentage of the nation's bank failures. Surprisingly, these statistics hold true in bad times and in good times.
In fact, an FDIC study of the 67 failures that occurred from 1960 through 1974--a period of general prosperity such as the one we are …