Wells Fargo Bank just got hit with a $3 Billion fine on February 21. This fine was part of a settlement with federal authorities, punishing the bank for its years of illicitly opening fake accounts to fleece customer funds.
Anticipating this fine and the public blowback for such a blatantly criminal practice, Wells Fargo is embarking on a new PR campaign called “This is Wells Fargo.”
It’s as if a few words and pleasant images might “over-code” the public’s perception of the bank’s actions, diverting its attention away from the bank’s recent history and accountability--namely, that Wells Fargo illegally and fraudulently skimmed off its customers.
Now, this is Wells Fargo.
Despite the bank’s efforts toward conveying a “new me,” however, it’s current or past employees are still vulnerable to further prosecution. It’s fitting, as a new image can only be legitimately established once accountable actions have been accounted for.
Fourteen Years of Falsifying Bank Records
We have to admit, the Wells Fargo racket was amazingly bold; it’s proportions, staggering. It’s essentially organized crime without physical violence. And to think that Wells Fargo is one of the most powerful and publicly respected banking institutions. It’s as amazing as it is unethical.
As required by the settlement, Wells Fargo fessed up: they falsified bank records from 2002 to 2016. During that same period, they collected Millions in unnecessary fees and interest. They harmed or ruined customers’ credit ratings to gain profit.
All of this was deliberate, of course. So much for their “enduring vision...to help our customers succeed financially.” (This line from their About Us page still gets me; I had to quote it).
US Attorney Andrew Murray for the Western District of North Carolina:
"Today's announcement should serve as a stark reminder that no institution is too big, too powerful, or too well-known to be held accountable and face enforcement action for its wrongdoings."
The investigations don’t end there, however. No, this is just about the fake accounts and identity theft (they had to pose as their customers in order to open the fake accounts).
More investigations are underway with regard to wage theft, its treatment of whistleblowers, the way in which it harmed auto and mortgage borrowers, and several other alleged crimes against customers and employees.
A Long History of Fraud
Current and former senior executives are aware that they are subject to likely prosecution. As the settlement states, "the top managers of the community bank were aware of the unlawful and unethical gaming practices as early as 2002,” and yet many executives did everything they can to prevent this abuse from discontinuing or from getting exposed.
Instead, senior execs did what most senior execs do, they fingered individual employees for their “misconduct.” This shifts attention away from the systemic nature of their fraudulent actions. They also retaliated against whistleblowers in an effort to keep the lid on illicit institutional practices.
A Bigger Problem for Wells Fargo
In 2018, the Federal Reserve imposed a sanction on the bank, preventing it from growing its assets past the $2 Trillion mark. The asset cap hurts the bank’s ability to increase its loan activity--in turn, hitting the bank’s bottom line.
So, now Wells Fargo has a new CEO, Charlie Scharf, formerly the CEO of Visa and Bank of New York Mellon. And as part of his turnaround initiative, the bank is undergoing a public image makeover.
It’s Not Just Wells Fargo
But the main message here is that this culture of banking corruption at the expense of its customers goes beyond Wells Fargo. It’s a cultural defect--a way of viewing customers and discounting their financial well-being in pursuit of profits, sales targets, and bonuses.
Just because you have to do business with banks doesn’t mean that you should trust any bank. Remember, the banking zeitgeist is not working to fulfill your financial goals. It never has been and never will be. Not having been affected by a bank’s illicit practices is no testament to a bank’s ethics. It just means you’re lucky not to get fleeced (though most Americans are but don’t realize it, and we discuss this in our other article on how banks are bleeding you dry).
In a sense, you are on your own. And that’s what safe-haven assets are for: banks can’t monitor them, can’t steal them, and can’t access any of them that are under your own private lock and key.
In this current banking environment, who would want to entrust 100% of their assets to the safekeeping mechanisms of a bank?