Tag: wells fargo
JPMorgan Chase Tower

Banker Robbery And Corporate Mediocrity Add Up To Grand Larceny

Exciting news from Wall Street: Our wealth markets are booming!

For the 15th month in a row, everything from the Dow Jones Average to gold prices to bank stocks are rocketing to new records, showering us with wealth from above. Oh ... wait. Maybe you're one of the majority of workaday Americans who don't own stocks or gold, so maybe you're not celebrating Wall Street's big boom. But just chill, because conventional corporate wisdom assures us that the wealthy will invest their good fortunes in enterprises that someday, somewhere will create jobs and eventually will produce trickle-down gains for everyone.

Excuse me for rudeness, but let's take a peek at how those who're reaping today's big-buck bonanza are actually investing that wealth. Surprise — they're largely putting the increase into schemes that further benefit them ... not you!

Consider Wall Streeters themselves. While workers, Main Street businesses, poverty groups, et al. have been knocked down during the past several months, the big banks have been making money like ... well, like bankers. Just since this January, their stock prices have zoomed up by 28 percent. So, how are these moneyed elites spending this windfall? Not by making job-creating investments, but by simply giving the money to their own shareholders, including their own top executives — nearly all of whom are already among the richest people on Earth.

The main way they do this is through a sleight of hand called a "stock buyback." The honchos simply cash out the bulk of that 28 percent increase in the value of the banks' stock price, using that money to repurchase their banks' own stock from lesser shareholders. Hocus-pocus, this manipulation artificially pumps up the value of the stock these insider shareholders already own — making each of them even richer than rich, although they've done absolutely nothing to earn this increased wealth.

It's not a small scam. JPMorgan Chase is now sinking $30 billion into buying its own stock. Wells Fargo is shifting $18 billion into the scheme, and Bank of America is throwing $25 billion into its buyback. Hello — Wall Street bankers are the biggest robbers in America.

Most people believe the American economy is being rigged by and for big bankers, CEOs, and other superrich elites, because ... well, because it is!

With their hired armies of lawmakers, lobbyists, lawyers and the like, they fix the economic rules so ever more of society's money and power flow uphill, from us to them. Take corporate CEOs. While 2020 was somewhere between a downer and devastating for most people, the CEO class made out like bandits. Indeed, last year, the three top paid corporate honchos in America pocketed personal paychecks of $211 million, $414 million, and $1.1 billion.

Are they geniuses, superproducers or what? What. All three of their corporations ended 2020 with big financial losses and declining value, so how can such mediocrity produce such lavish rewards? Simple — rig the pay machine.

Today's corporate system of setting compensation for top executives is a flimflam disguised as a model of management rectitude. On its face, the system ties the chief's pay to the success of the business. "Pay for performance," it's called — the CEO does well if the company does well. Good theory!

But their trick is in narrowly defining "doing well" to exclude doing good — i.e., treating workers, consumers, the environment, et al. fairly. Thus, rewarding the Big Boss is rooted in nothing more substantial or productive than the sterile ethics of monetary selfishness.

Even implementing that shriveled ethical standard is a scam at most major corporations, because the standard of financial performance that the chief must meet to quality for a huge payday is set by each corporation's board of directors. Guess who they are? Commonly, board members are the CEO's hand-picked brothers-in-law, golfing buddies, and corporate cronies. So, they set the bar for winning multimillion-dollar executive paychecks so low that a sack of concrete could jump over it.

Well, insist these flimflammers, it's the corporate shareholders who are the ultimate stopgap against CEO greed. These "owners" can just vote "no" on any executive pay they consider excessive. Nice try, but even "shareholder democracy" is rigged — corporate rules decree that votes by shareholders are merely "advisory," meaning top executives can simply ignore them, grab the money and run. The system is fixed ... and we need to break it!

To find out more about Jim Hightower and read features by other Creators Syndicate writers and cartoonists, visit the Creators webpage at www.creators.com

Despite Pandemic Pressures, Big Banks Screwed Consumers On Overdrafts

Despite Pandemic Pressures, Big Banks Screwed Consumers On Overdrafts

Reprinted with permission from Daily Kos

Last year was a difficult one for millions of people in the United States.

It was not so difficult for big banks, and one of the ways the banks raked in revenue was by hitting struggling people with overdraft fees.

During the final quarter of 2020, when the coronavirus pandemic was battering the country, JPMorganChase, Bank of America, and Wells Fargo each took in more than $300 million in overdraft fees alone. Those fees are slapped on people who are by definition struggling, and banks often use strategies to maximize the number of fees people pay, like ordering transactions so that the biggest amounts go through first, which lets them charge fees on more, smaller transactions. And it's no thanks to the banks that it wasn't much, much worse—COVID-19 relief from the government protected many people from the worst.

Around one in three checking accounts has at least one overdraft a year, and five percent of checking account holders have 20 or more overdrafts a year, accounting for more than 60 percent of overdraft fees. In 2020, the average overdraft fee was over $33. Many of these fees are triggered by debit card transactions for less than $25 that are repaid within three days.

This is an ongoing story—bank overdraft fee policies have been terrible for years. But it took on new dimensions during the pandemic, with sky-high unemployment creating a financial emergency for so many people.

"Banks could've capped overdraft fees for a certain number of months, or had no fees during the pandemic, but they didn't want to give up a dollar of overdraft revenue in any formal way," Rebecca Borné, senior policy counsel at the Center for Responsible Lending, told The American Prospect's Alexander Sammon. "So what we see now is a return to business as usual, where our largest banks each took over a billion dollars out of the checking accounts of people during one of the worst years in our history. It's a gobsmacking amount of money."

It would have been much worse without COVID-19 relief bills, from the CARES Act to the American Rescue Plan. Check out how Google trend data on searches for "overdraft" tracked the passage of those laws:

OverdraftandGoogleSearches1.png

After each round of relief payments, you see searches for "overdraft" drop. Because the banks weren't interested in going easy on people being hammered by a once-in-a-century pandemic and the accompanying economic devastation.

Consider it one more reminder that what we need are regulations and laws to protect consumers. There are two prime ways that could happen on this issue. Early in the pandemic, Sens. Cory Booker (D-NJ) and Sherrod Brown (D-OH) proposed legislation to crack down on overdraft fees during the COVID-19 emergency, banning them altogether for the duration of the emergency and preventing banks from reporting overdrafts to credit reporting agencies—but that didn't get passed. Booker and Rep. Carolyn Maloney (D-NY) have other legislation on overdraft abuses more generally, but as always, there's that Senate filibuster problem blocking progress.

Under President Biden, though, the Consumer Financial Protection Bureau (CFPB) could do a lot more protecting consumers than the agency did under Donald Trump. Biden's nominee to head the CFPB, Rohit Chopra, hasn't yet been confirmed, but he's known as a strong consumer advocate. He could regulate the practice, which is extraordinarily abusive even in non-pandemic times.

Here’s Another Disgraceful Way Wells Fargo Took Advantage Of Its Customers

Here’s Another Disgraceful Way Wells Fargo Took Advantage Of Its Customers

Reprinted with permission from ProPublica.

Wells Fargo, the largest mortgage lender in the country, portrays itself as a stalwart bank that puts customers first. That reputation shattered in September, when it was fined $185 million for illegally opening as many as 2 million deposit and credit-card accounts without customers’ knowledge.

Now four former Wells Fargo employees in the Los Angeles region say the bank had another way of chiseling clients: Improperly charging them to extend their promised interest rate when their mortgage paperwork was delayed. The employees say the delays were usually the bank’s fault but that management forced them to blame the customers.

The new allegations could exacerbate the lingering damage to the bank’s reputation from the fictitious accounts scandal. Last week, Wells Fargo reported declining earnings. In the fourth quarter, new credit card applications tumbled 43 percent from a year earlier, while new checking accounts fell 40 percent.

“I believe the damage done to Wells Fargo mortgage customers in this case is much, much more egregious,” than from the sham accounts, a former Wells Fargo loan officer named Frank Chavez wrote in a November letter to Congress that has not previously been made public. “We are talking about millions of dollars, in just the Los Angeles area alone, which were wrongly paid by borrowers/customers instead of Wells Fargo.” Chavez, a 10-year Wells Fargo veteran, resigned from his job in the Beverly Hills private mortgage group last April. Chavez sent his letter to the Senate banking committee and the House financial services committee in November. He never got a reply.

Three other former employees of Wells Fargo’s residential mortgage business in the Los Angeles area confirmed Chavez’s account. Tom Swanson, the Wells Fargo executive in charge of the region, directed the policy, they say.

In response to ProPublica’s questions, Wells Fargo spokesman Tom Goyda wrote in an email, “We are reviewing these questions about the implementation of our mortgage rate-lock extension fee policies. Our goal is always to work efficiently, correctly and in the best interests of our customers and we will do a thorough evaluation to ensure that’s consistently true of the way we manage our rate-lock extensions.” Through the spokesman, Swanson declined a request for an interview.

Wells Fargo’s practice of shunting interest rate extension fees for which it was at fault onto the customer appears to have been limited to the Los Angeles region. Two of the former employees say other Wells Fargo employees from different regions told them the bank did not charge the extension fees to customers as a matter of routine.

Three of the former employees, who now work for other banks, say their new employers do not engage in such practices.

Here’s how the process works: A loan officer starts a loan application for a client. That entails gathering documents, such as tax returns and bank statements from the customer, as well as getting the title to the property. The loan officer then prepares a credit memo to submit the entire file to the processing department and underwriting department for review. The process should not take more than 60 or 90 days, depending on what kind of loan the customer sought. During this period, the bank allows customers to “lock in” the quoted interest rate on the mortgage, protecting them from rising rates. If the deadline is missed, and rates have gone up, the borrower can extend the initial low rate for a fee, typically about $1,000 to $1,500, depending on the size of the loan.

Wells Fargo’s policy is to pay extension fees when it’s at fault for delays, according to Goyda. Yet in the Los Angeles region, the former employees say, Wells Fargo made customers pay for its failures to meet deadlines. The former employees attributed the delays to the inexperience and low pay of the processing and underwriting staff. In addition, to keep costs down, the bank understaffed the offices, they say.

“The reason we were not closing on time was predominantly lender related,” said a former Wells Fargo employee. When a loan officer asked the bank to pick up the extension fee, “it didn’t make a difference if” the written request “was a one-liner or the next War and Peace,” said the former employee. “The answer was always the same: No. Declined. ‘Borrower paid,’ never ‘Lender paid.’”

Anticipating that it couldn’t close on time, the bank adopted a variety of strategies to shift responsibility to customers. The “most blatant methods of attempting to transfer blame onto customers for past and expected future delays,” Chavez wrote, included having loan processors flag “the file for ‘missing’ customer documentation or information that had already been provided by the borrower.” The customers would have to refile, blowing the deadline.

Sometimes loan officers would ask customers to submit extra documents that Wells Fargo did not need for its initial assessments, burdening them with paperwork to ensure they wouldn’t meet the deadline. On occasion, employees built in a cushion, quoting a higher fee at the beginning. That way, they didn’t have to go back to tell the customer about the extra fee at the end.

One employee says he complained to Swanson’s boss about the situation but upper management referred the problem back to Swanson. The employee’s immediate manager then scolded him.

Swanson told co-workers that he personally took a hit if the bank paid out too many extension fees, two of the former employees recall. “Swanson would be very upfront that his bonus is tied to extension fees,” says one. The other former loan officer says, “During meetings, the branch was told extensions were costing the branch money.”

Swanson, an 18 year veteran of the bank, has faced criticism before that he sought profits at the expense of customers. In 2005, customers in Los Angeles sued Wells Fargo for racial discrimination. They contended that Swanson prohibited loan officers in minority neighborhoods from using a software program that gave them the ability to offer borrowers discounted fees. He allowed loan officers to use the same program in white neighborhoods, where residents paid lower fees as a result. Believing that minority borrowers did not shop around for mortgages, Swanson contended Wells Fargo did not need to offer the discounts in their neighborhoods since the bank faced less competition, according to witness testimony at trial.

In 2011, a Los Angeles Superior Court jury found that Wells Fargo intentionally discriminated on a portion of the loans in question and awarded plaintiffs $3.5 million, a decision that was upheld on appeal. With interest, the payout rose to just under $6 million. “The verdict in the case was not in line with the law and the facts, and there was no evidence that class members paid a higher price than other similarly situated borrowers,” Goyda said. Nevertheless, he added, the bank decided to pay the judgment rather than pursue additional appeals.

“Swanson runs that place,” said Barry Cappello, who co-tried the case against Wells Fargo with his partner Leila Noël. “He is the man. They do what he wants done. Despite the lawsuit and the millions they paid out, the guy is still there.”

Shifting extension fees onto borrowers may amount to just poor customer service, rather than a regulatory violation. Still, if it is widespread and systematic, the bank could be running afoul of banking laws that ban unfair or deceptive practices, regulators say.

For a couple of years around 2011, when Wells Fargo was originating a heavy volume of mortgages, the bank made a decision to pay all the extension fees, spokesman Goyda said. But, around 2014, it reverted back to its traditional policy of paying fees only when it’s at fault.

Chavez says that the problems began in earnest that year and persisted as of the time he left last April. The precise value of the improperly assigned extension fees in the Los Angeles region is unclear. Chavez and another employee estimate they ran into the millions. One of the former employees estimates a quarter of the mortgages at his branch had to be extended. By that measure, if a loan officer did $100 million in loans in a year, those mortgages would rack up about $62,000 in extension fees. The Beverly Hills office alone did around $800 million to $1 billion in underlying mortgages, generating at least half a million dollars in extension fees, the employee estimates. Swanson’s region has 19 branches.

Some customers resented having to pay the extension fees, and took their business elsewhere. After one mortgage application faced a delay, a Wells Fargo assistant vice president in Brentwood named Joshua Oleesky called to tell the customer that he had to pay an interest rate lock extension fee. The customer balked, blaming the bank for missing the deadline. Oleesky “started interrogating me on why Wells Fargo was responsible for the delay,” the customer wrote in a June 29, 2015, letter of complaint to Michael Heid, then president of Wells Fargo Home Lending. (He cc’d John Stumpf, Wells Fargo’s former CEO, who was ousted after the fictitious accounts scandal.) The customer went with another bank for the mortgage. Through the Wells Fargo spokesman, Oleesky declined comment.

According to the customer, Heid didn’t answer the letter.

IMAGE: A Wells Fargo branch is seen in the Chicago suburb of Evanston, Illinois, February 10, 2015. REUTERS/Jim Young

Wells Fargo: Stumpf Was Only The Tip Of Corporate Rot

Wells Fargo: Stumpf Was Only The Tip Of Corporate Rot

Just when you thought that Big Banker greed surely bottomed out with 2008’s Wall Street crash and bailout, along comes Wells Fargo, burrowing even deeper into the ethical slime to reach a previously unimaginable level of corporate depravity.

It’s one thing for these giants of finance to cook the books or defraud investors, but top executives of Wells Fargo have been profiteering for years by literally forcing their employees to rob the bank’s customers. Rather than a culture of service, executives have pushed a high-pressure “sales culture” at least since 2009, demanding that front-line employees meet extreme quotas of selling myriad unnecessary bank products to common depositors who just wanted a simple checking account. Employees were expected to load each customer with at least eight accounts, and employees were monitored constantly on meeting their quotas — fail and they’d be fired.

That’s why the bosses’ sales culture turned employees into a syndicate of bank robbers. The thievery was systemic, and it was not subtle: Half a million customers were secretly issued credit cards they didn’t request; fake email accounts for online services were set up without customers’ knowledge; debit cards were issued and activated without telling customers; depositors’ money was moved from one account to another; signatures were forged — and, of course, Wells Fargo collected fees for all of these bogus transactions, boosting its profits.

This is not a case of a few bankers gone rogue, but of a whole bank gone rogue, rotting from the head down. Some stories of corporate villainy make me throw up my hands in astonishment. But this one is so putrid it makes me literally throw up.

The sorry, still-evolving saga of Wells Fargo systematically stealing from its small depositors is a gag-inducing story of executive-suite greed. Start at the very top, with CEO John Stumpf, who claimed at a recent Senate hearing on the scandal to be shocked and “deeply sorry” that thousands of his employees had been opening bogus accounts in the names of non-English-speaking and elderly customers.

Just when you thought that Big Banker greed surely bottomed out with 2008’s Wall Street crash and bailout, along comes Wells Fargo, burrowing even deeper into the ethical slime to reach a previously unimaginable level of corporate depravity.

It’s one thing for these giants of finance to cook the books or defraud investors, but top executives of Wells Fargo have been profiteering for years by literally forcing their employees to rob the bank’s customers. Rather than a culture of service, executives have pushed a high-pressure “sales culture” at least since 2009, demanding that front-line employees meet extreme quotas of selling myriad unnecessary bank products to common depositors who just wanted a simple checking account. Employees were expected to load each customer with at least eight accounts, and employees were monitored constantly on meeting their quotas — fail and they’d be fired.

That’s why the bosses’ sales culture turned employees into a syndicate of bank robbers. The thievery was systemic, and it was not subtle: Half a million customers were secretly issued credit cards they didn’t request; fake email accounts for online services were set up without customers’ knowledge; debit cards were issued and activated without telling customers; depositors’ money was moved from one account to another; signatures were forged — and, of course, Wells Fargo collected fees for all of these bogus transactions, boosting its profits.

The silver-haired bank chief assured senators that he and other top bosses knew nothing about this mass breach of the bank’s code of ethics, blaming low-level employees and firing 5,300 of them. But John, John, John: First, weren’t you the one squeezing those employees relentlessly to push customers into multiple accounts? Second, how could you possibly not notice a huge crime spree that rampaged throughout your bank’s branches for seven years? Third, what about all those calls that honest employees made to your “ethics hotline” taking place every day? And, fourth, while you now cravenly blame your $12-an-hour employees for this bank-run mugging operation, it turns out you read about it in a 2013 expose by The Los Angeles Times. Why didn’t you stop it then?

Stumpf didn’t act because he was busy stuffing his own pockets with the loot, hauling off more than $100 million in personal pay in the last four years alone. What a deal: Workers are pressured to rob customers, then they get fired, while the boss of the caper grabs a fortune and protects all the higher ups — and he expected to get away with it all by making a non-apology to some senators. [Editor’s note: Stumpf resigned from Wells Fargo, effective immediately, on October 12.]

But the chief is not the only one who should be held accountable at Wells Fargo. Where were its board members, who are empowered and duty-bound to set, monitor, and assure ethnical corporate behavior from the top down? For seven years, this 15-member board of governance sat idle, apparently incurious about their corporation’s flagrant, widespread thievery, even after the report by the LA Times exposed it. Far from investigating and clamping down, the board kept shoving multimillion-dollar bonuses at Stumpf and other top executives. This is a powerhouse board, made up of top executives from other corporations, former government financial officials and big-time academics. And they are extremely well-paid to be diligent, getting up to $400,000 a year to keep Wells Fargo honest.

What’s at work here is the ethical rot that now consumes America’s entire corporate system — a system that steals from the many to further enrich the few, buying off the integrity and vigilance of those who run it. Excuse me, but I have to go throw up now.

To find out more about Jim Hightower, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate webpage at www.creators.com.

IMAGE: Wells Fargo CEO John Stumpf testifies before the House Financial Services Committee on Capitol Hill  in Washington, DC, U.S. September 29, 2016. REUTERS/Gary Cameron