Public bug reported:

Binary package hint: adduser

To recreate:

Set umask to 077 in /etc/profiles
(You may have to remove /home/.ecryptfs to reproduce this)

Run:
adduser --encrypt-home user

Expected behaviour: 
User is created with encrypted home directory that mounts automatically at 
login.

Actual Beheviour:
It does not work as expected. When you are asked to set the users password, it 
says:

passwd: permission denied

After this (if you let the adduser script run through) when the user
logs in they cannot view their home directory

I *think* adduser script is creating .ecryptfs for the first time as
root, with 700 permissions,. and trying to write to it as a user.

** Affects: adduser (Ubuntu)
     Importance: Undecided
         Status: New


** Tags: adduser encrypt encrypted-home

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https://bugs.launchpad.net/bugs/726588

Title:
  adduser --encrypt-home fails if umask is 077

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