There’s no smoke without fire as the saying goes.
BOFI Holdings, the parent of the Bank of the Internet, is in trouble. Back in April 2015 I wrote a post (I Have a Feeling This Won’t End Well) on the company after its over the top ads caught my attention. The bank also attracted attention for its fast growth and its non-traditional lending practice. The Bank of Internet was one of the hottest banking stock until recently. We saw what happened to banks in 2008-2009 after years of growing profits with weak lending practices.
Well things started to turn south for BOFI in August when they got the New-York Times’ attention. Here’s the first article on BOFI by the NYT: An Internet Mortgage Provider Reaps the Rewards of Lending Boldly
Then this week, again in the NYT, a former auditor is suing the bank. The auditor said he was fired after revealing what he believed to be wrongdoing at the bank to federal regulators and management at Bank of Internet. He contended that Bank of Internet was cutting corners as it grew at a rapid pace.
If this interest you, I also recommend reading this great Seeking Alpha article by the Friendly Bear on BOFI: The New York Times Has Only Scratched The Surface On BofI Holding…