Tomorrow the U.S. Senate Banking Committee will hold a hearing to take testimony from Wells Fargo CEO John Stumpf and Federal regulators to understand how this mega bank was able to get away with opening more than two million fake customer accounts over a span of years. The accounts and/or credit cards were never authorized by the customer and were opened solely by employees to meet sales quotas, get bonuses or to avoid getting fired for failing to meet sales targets.
The only reason the Republican-controlled Senate is holding this hearing is because the Wells Fargo fake-account story got a lot of coverage in the media when the Consumer Financial Protection Bureau (CFPB) announced a $185 million settlement over the charges on September 8. The reason the story got a lot of media coverage is because it’s a simple story to tell: widely respected bank opens two million accounts for its customers without their knowledge or permission, sometimes illegally funneling money to the new account from the old account to generate fees.
In July of last year, when Citibank, the deposit-taking retail bank settled charges with the CFPB for $700 million for deceptively selling add-on products to credit card customers, the Senate Banking Committee yawned and did nothing. The story didn’t get major press attention because it was a complicated story to tell. Among a long list of fraudulent practices, the CFPB found that Citibank led 2.2 million customers to believe they were paying to have their credit card monitored for fraud and identity theft, “when, in fact, these services were either not being performed at all, or were only partially performed,” according to the CFPB.
The CFPB charges against Citibank came exactly two months after Citbank’s parent, Citicorp, pleaded guilty to a felony with the Justice Department in connection with the rigging of foreign currency. On the same day, another U.S. mega bank, JPMorgan Chase, also pleaded guilty to a felony related to the same crime. Both banks are more than a century old and both banks, on May 20 of last year, pleaded guilty to a felony for the first time in their history.…
Wall Street On Parade
The Debate Is Over: Banking Has Become a Criminal Enterprise in the U.S.
Pam Martens and Russ Martens
3 comments:
"Banking was conceived in inequity and was born in sin ..." a famous central banker.
Yup: total fines paid banks now total $200bn. At a rough guess that dwarfs fines paid by any other industry by a factor of 100.
Andrew: Your quote is by Josiah Stamp, governor of the Bank of England in the 1920s.
Wells Fargo crammed my mom with several accounts that she didn't open a couple years ago. But unlike many, she raised hell and Wells sent out a cleaner from their HQ and they fired everybody involved, then he went around from branch to branch in this region cleaning things up. Because of their rapid and severe response, I think they may have been aware of the problem for awhile and started cleaning it up before they notified regulators.
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