Newsplaining

Definition of insanity
     As most of you may already know, or may have just become numb to, the banking industry was up to its usual shenanigans with innocent peoples’ livelihoods last week.
     Wells Fargo, the juggernaut banking entity, was fined a whopping $185 million dollars by the Consumer Financial Protection Bureau, its largest penalty to date. The bureau was formed in 2011.
     Wells Fargo, who prided itself on shying away from risky financial investments such as those that caused the mortgage crisis of 2008, was found to have been doing the opposite of what made it so solvent during one of the toughest economic crises since the Great Depression.
     It was discovered by the bureau that Wells Fargo had fraudulently opened approximately 1.5 million bank accounts and applied for 565,000 credit cards without the knowledge or consent of consumers. Through transcripts of investigations, Wells Fargo had an incentive policy that rewarded employees for “cross-selling —” a fancy term for offering additional services.
     Employees would take funds from a consumers bank account and move portions of it into a new account that the employee had made. The account would then count as a new sale for the employee, who would receive a fiscal reward. Most consumers were unaware of the accounts until they were charged fees for the account in question.
     Some employees applied for credit cards in consumers’ names, to count as a sale, while also racking up interest payments for the bank on an unpaid card. The strategy used by Wells Fargo isn’t new to the company. It’s a widely held philosophy among retail bankers that getting new customers is hard; it’s a better strategy to sell current consumers different services. They would have gotten away with it too, if they just asked people first.
     Wells Fargo hired an external investigation unit to examine its accounts from 2011-2015, which is when the 1.5 million accounts were manufactured, but it didn’t count on being discovered by the CFPB. CEO John Stumpf even mentioned in interview transcripts that the company wasn’t going to report its findings because of a risk to shareholders. Senator Elizabeth Warren offered scathing remarks to the CEO, demanding that he resign from his position and be investigated by the Securities and Exchange Commission for fraud.
     As a way to soothe public outcry, Wells Fargo is going to pay approximately $2.6 million in refunds to consumers, which averages out in payments of approximately $25. Wells Fargo has 40 million customers according to the New York Times. Wells Fargo has also fired 5,300 employees, from tellers to managers, that could have been involved.
     Does this sound new to anyone?
     Pardon my sarcasm regarding theft over $2.6 million, and the damage it’s done to hard working Americans, whose credit score were wrecked and were charged fees for services they didn’t agree to, but were liable for anyway; but doesn’t this sound like something that’s happened before?
     Banking entity commits fraud with consumer money and betrays their trust. Company tries to hide it but ultimately gets caught. Company’s CEO testifies before a committee. Elizabeth Warren delivers a speech for highlight reels about how bankers should be held accountable. Company fires employees while CEOs and top executives continue as normal and are forgotten about.
     Since 2008, the following banking scandals have taken place:
     Wells Fargo paid $175 million for discriminating against Hispanic and black borrowers — the result was 34,000 people paying higher interest rates than they qualified for.
     JPMorgan Chase lost $2 million that it was saving in the event that the economy dipped, again — the result was $6 billion lost from the trade.
     TD Bank paid $52.5 million to the SEC and the Office of the Comptroller for a its involvement in a ponzi scheme of $1.2 billion.
     These are just some of the few. If you have the stomach for it, you can merely search the internet for more scandals. The point of this is that banking in America has been a no rules game since the repealing of the Glass-Steagall act under President Bill Clinton, allowing for banks to become too big to fail. So big, that playing with Americans’ moneys on trades that take milliseconds to complete, partaking in incredibly risky practices, approving high risk loans and discriminating/hoodwinking the average consumer are non-fireable offenses.
     No CEO from the 2008 financial crisis have seen the walls of a prison cell, nor have faced any personal penalty from actions that crippled the economy and robbed Americans blind. Too big to fail is also too wrong to punish.
     How many more scandals will it take? How many speeches from Elizabeth Warren, all saying the same thing — that there’s no reason millionaire CEOs face zero federal or economical punishment for stealing money or collapsing the economy?
     There’s the age old saying that the definition of insanity is doing the same thing over and over again, expecting different results. We set up the CFPB in 2011 to protect consumers. The bureau is Batman, in that it can save people from peril, except the peril has already happened, and Batman is incapable of catching the bad guy. He’s fighting a battle that’s always losing. $175 million is a lot of money to the average American, but to Wells Fargo — the company, not its executive staff — $175 million is spare change. Remember, it has 40 million accounts not including its own investments. The same goes for any other banking giant.
     Our society allows these entities to wreck lives, be told they were wrong, then let free to repeat. When is enough, enough? Will it take another 2008? A crash of the auto-loan market?
     You, hardworking American, will face jail time if you steal money from the company you work for, and will also lose any chance of getting another job. Why do we let these too-wrong-to-punish folk get away with it?