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Wells Fargo Hit With 'Unprecedented' Punishment Over Fake Accounts (cnn.com)
An anonymous reader quotes CNN:
The Federal Reserve has dropped the hammer on Wells Fargo, [handing] down unprecedented punishment late Friday for what it called the bank's "widespread consumer abuses," including its notorious creation of millions of fake customer accounts. Wells Fargo won't be allowed to get any bigger than it was at the end of last year -- $2 trillion in assets -- until the Fed is satisfied that it has cleaned up its act. Under pressure from the Fed, the bank agreed to remove three people from the board of directors by April and a fourth by the end of the year. It is the first time the Federal Reserve has imposed a cap on the entire assets of a financial institution, according to a Fed official. "We cannot tolerate pervasive and persistent misconduct at any bank," outgoing Fed Chairwoman Janet Yellen said in a statement. Friday was her last day on the job....
Wells Fargo admitted that its workers responded to wildly unrealistic sales goals by creating as many as 3.5 million fake accounts. The bank has also said it forced up to 570,000 customers into unneeded auto insurance... About 20,000 of those customers had their cars wrongfully repossessed in part due to these unwanted insurance charges. In August, Wells Fargo was sued by small business owners who say the bank used deceptive language to dupe mom-and-pop businesses into paying "massive early termination fees." The company was in the headlines again in October for charging about 110,000 mortgage borrowers undue fees.
One U.S. congressman argued that the harsh penalty "demonstrates that we have the tools to rein in Wall Street -- if our regulators have the guts to use them."
Wells Fargo has also spent $3.3 billion on legal bills in just the last three months of 2017.
Wells Fargo admitted that its workers responded to wildly unrealistic sales goals by creating as many as 3.5 million fake accounts. The bank has also said it forced up to 570,000 customers into unneeded auto insurance... About 20,000 of those customers had their cars wrongfully repossessed in part due to these unwanted insurance charges. In August, Wells Fargo was sued by small business owners who say the bank used deceptive language to dupe mom-and-pop businesses into paying "massive early termination fees." The company was in the headlines again in October for charging about 110,000 mortgage borrowers undue fees.
One U.S. congressman argued that the harsh penalty "demonstrates that we have the tools to rein in Wall Street -- if our regulators have the guts to use them."
Wells Fargo has also spent $3.3 billion on legal bills in just the last three months of 2017.
Finally we find out how big a company has to get before the government cares about abuses of power:
*puts pinky to corner of mouth*
TWO TRILLION DOLLARS
Back in the day, they started charging me a "check image" fee of 30 cents per check, for the luxury of having them use printer toner on my monthly statement. Of course, I had not requested that they start including check images on my statement, but that's another issue.
When I called to complain, the nice CSR told me should would waive this month's fee. However, she said it would take 3-4 months for the request to discontinue check images to make it through their system, so I could expect to continue to see additional charges going forward. Of course, she was unable to waive those future fees, so she said I'd have to keep calling back monthly to get those canceled.
I politely told her that the next time I called it would be to close the account. Magically no future fees showed up on my statement. A modern day banking miracle!
Bullshit. Revoke their charter.
When banks merge, they're sometimes forced to transfer some of their customers to other banks. Take all of Wells Fargo's customer accounts and do that, parcel them off to other banks. Sell off the assets and loans to other banks. Take the proceeds, and any remaining liabilities and put them in a government owned "bad bank" to close out Wells Fargo's business.
Take the bank records and hand them to the justice department and state AGs, have them start combing through for fraudulently opened accounts, find the bankers who opened the accounts and charge them with fraud and identity theft. Sure, the executives and managers are responsible (and should be charged and imprisoned) for creating a criminal environment and doing nothing to stop it, even encouraging it - but the individual bankers are still responsible for fraud and should be held accountable with prison time.
Finally - nothing for the investors, they invested in a criminal organization, they voted for a criminal board, and so they get nothing. All Wells Fargo stock is cancelled. All assets and proceeds from sales go to the aforementioned "bad bank".
It's all doable, it's all possible. For my money, Wells Fargo will try to somehow weasel out of this penalty. First they'll try to get a Fed chairman appointed who will drop the penalty. Then, when that doesn't work, they'll try to hide assets and continued criminality in shell companies and subsidiaries. In about a year when that comes to light, maybe we'll finally see a big bank go down.
In the meantime, if you're trusting your money to Wells Fargo, Bank of America, Chase, HSBC, Citibank, or any of the other big banks, stop. Go find a bank that won't charge you a monthly fee, won't charge $35 for an overdraft, and isn't trying to defraud you. They're out there, they're not difficult to find.
The right to protest the State is more sacred than the State.
And if they sell the shares, with incumbent overall loss of asset value, then those with more shares in the bank are punished further. But maybe not far enough.
Wells Fargo is still fighting suits from the 2008 meltdown to this day, and Wells Fargo was part of the problem: fraudulent lending. None of this is new, it's just gone further berserk. Only rarely is there a bad reputation in banking, and Wells Fargo has one. But they don't care, and I doubt they ever will.
---- Teach Peace. It's Cheaper Than War.
My point is, if things like this can happen, then it isn't yet regulated *enough*. Companies have long proven they will find any way to take advantage, legal or not, as long as the penalty is worth the reward. Therefore regulation cannot leave any opening.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
Regulations mean jack shit if overstepping them isn't fined in a way that makes those that overstep them rethink that option. If I make 1000 bucks breaking a law and the possible fine is 100 bucks, don't expect me to follow the law. If the fine is lower than the revenue, it's not a fine, it's part of the calculation.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.