Oct 3, 2016
In early September, the Consumer Financial Protection Bureau announced that Wells Fargo had agreed to pay 185 million dollars to settle claims against it. The bank pressured employees to open unneeded accounts for customers, order credit cards without customers’ permission, forge client signatures on paperwork, and open up fake e-mail accounts.
The scale of the fraud is vast. Between 2011 and 2015, Wells Fargo admitted that it had pressured its employees to open roughly 1.5 million bank accounts and apply for 565,000 credit cards that had not been authorized by customers. If the employees didn’t do this, management fired them.
And for what? So that bank executives could create the illusion that business was growing, and therefore pump up the bank’s stock price. This can only enrich big stockholders, as well as top bank executives, whose compensation is to a great extent based on the price of the company stock.
Wells Fargo also hit customers with extra fees and penalties on bank accounts and credit cards that they had never agreed to or authorized. And when they didn’t pay these fraudulent fees and penalties, or were just late, the bank punished them with credit downgrades, costing them a lot more money.
Wells Fargo, the second largest bank in the world by some measures, controlling two trillion dollars in assets, was carrying out a blatant consumer rip-off, similar to what the banks pulled during the subprime housing bubble. Just like during the subprime bubble, the government authorities and all of the regulators of the banks, from the Treasury Department to the Federal Reserve, turned a blind eye to it – even though there were plenty of whistle blowers amongst the employees, who came forward and reported what was going on.
Bank customers who tried to sue Wells Fargo failed. The judges threw all legal suits out – refusing to even hear them, claiming that the courts had no jurisdiction, because bank customers had to go to arbitration set up by ... Wells Fargo, itself!
Make no mistake: all this was going on right out in the open. The Los Angeles Times even ran an expose of Wells Fargo in December 2013. But there was no follow up.
Finally, last year, the City Attorney of Los Angeles announced that he was suing Wells Fargo for fraudulent practices. And federal regulators finally stepped in. The regulators now let Wells Fargo pretend that it is cleaning house by firing low-level bank employees, mainly bank tellers, who earn about $12 per hour. Eventually, Wells Fargo fired 5,300 low-level bank employees – scapegoats for the real crooks at the head of the company.
Since then, the politicians of both parties have jumped on the bandwagon. In response, the Wells Fargo Board of Directors announced that it was taking back 41 million dollars in compensation already granted to its CEO John Strumpf over the last five years.
What a farce. Poor Strumpf will be left with “only” 60 million dollars in pay for those five years. He will be able to fall back on another 200 million dollars in stock that the bank had already rewarded him. Compare that to the 5,300 fired employees, who were left with nothing.
None of this is an oversight – it’s just how the whole parasitic economic system functions. The entire capitalist class is one big vampire sucking blood out of society.