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8 min read

Why Do Fellow Bankers Give Wells Fargo a Free Pass?

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Wells Fargo has been busy assaulting the reputation of bankers—and bizarrely, bankers don’t seem to care. Not even a little bit. Seriously, Wells has been exposed for loudly and publicly brutalizing its customer base, and we trusted industry players sheepishly shrug it off with an, “Ah, that’s just Wells being Wells…”

In just the past two years, the San Francisco giant has revealed a mind-blowing pattern of deceptive business or unfair practices entirely focused on earnings at the expense of the bank’s own customers. With such a pattern, where has the outrage been? Why so quiet, American Bankers Association and other trade groups? You’re supposed to be “the united voice of America’s banks,” but you have appeared indifferent to Wells’ threat to the industry’s reputation.

CRA. GLBA. CFPB. Dodd-Frank. Name the rule, reg or newly formed regulator, and the common bond is that they were all born out of bankers not policing their own industry. A few big banks make hay out of pushing the limits of good taste, and the rest of the industry pays for it. When are we going to police the big boys for bullying their customers with market share leverage and damaging our reputation in the process?

If bankers still feel a “family” affinity to Wells, let’s look at a timeline since 2016 well documented by Yahoo! Finance and CNN:

  • September 2016 – In the ultimate cross-sale, Wells Fargo created two million bogus accounts without customer consent. (Admittedly, it is a way to keep the you want fries with thatbranch staff busy.) That cost Wells an initial $185 million in fines and another $142 million in a class action suit, followed in May 2018 with another $480 million in settlements for related securities fraud.
  • September 2016 – That same month, Wells is busted for wrongfully repossessing the cars of hundreds of military members, some of whom were reportedly deployed overseas at the time. That cost the bank another $20 million in fines and $10 million in restitution. Wells hit the Trifecta on this one:
    • Stealing money and cars? Check!grand theft auto
    • ….from customers? Check!
    • ….who are deployed in the military? Check!
  • March 2017 – Wells failed the OCC community lending test, the Feds uncovering “violations across multiple lines of business within the bank” and “significant harm to customers.” Significant harm to customers. We’re not talking about a little dirty pool with Citibank or some underhandedness with Bank of America. No, we’re talking about their own customers as those hurt yet again.
  • February 2018 – The Feds, for the second time in less than 18 months, put the hammer down on further growth at the bank, this time due to Wells’ weaknesses in “responding to one billion dollarswidespread consumer abuses and compliance breakdowns.”
  • April 2018 – Wells agrees to cough up $1 billion in settlements for abusing its auto loan customers (insurance cross-sell) and mortgage customers (rate lock trickery).
  • May 2018 – This one still makes me giggle. Wells releases a new ad campaign with an emphasis on earning back trust and refocusing on the customer. I get the motivation, but it just feels like high comedy to me.

And AFTER the ads:

  • May 2018 – Wells admits to The Wall Street Journal that it altered business customer data while trying to address an anti-money laundering compliance consent order. Wells quickly points to this issue being unearthed internally as evidence that its new commercials are spot on.
  • June 2018 – Wells gets caught pushing investment customers to trade fee-laden products that “were never meant to be actively traded.” That cost Wells a $4 million fine with the SEC and another $1 million in restitution.
  • August 2018 – Wells finally gets punched in the gut for its significant role in the housing crisis with a $2.1 billion fine.
  • August 2018 – Wells has to set aside $8 million to compensate customers who were improperly turned down for loan mods, including 400 wrongful foreclosures.
  • Oct 2018 – Wells agrees to pay $65 million in a settlement with the New York attorney general for failure to report issues with cross-selling practices to investors.

And there are multiple accusations, lawsuits and documented chicanery I didn’t even bother to mention. The pattern of the past two years is beyond what any banker could have imagined.

Wells has singlehandedly shined a light on bad banking practices towards consumers for two years straight. Bankers should be historically pissed off and insulted. Yet, it’s pretty quiet out there from bankers when it comes to outrage over Wells Fargo.

wells fargo meme

Notably, the ABA, Consumer Bankers Association and other trade groups should be way out in front of this, leading the charge to protect the reputation of banks that choose to “make things right” for customers day in and day out long before Wells made it a scandal recovery tagline.

Bankers shouldn’t kid themselves that the brand and reputational damage has only accrued to Wells. At least to some extent, all bankers will get lumped into the “cheating, money-grubbing banker” reputation every time a new Wells Fargo headline hits the papers. The threat from regulation, credit unions, the Farm Credit system and data security combined pales compared to what a reputation for mistrust could do to our industry.

As an industry that lives and breathes on customers who entrust banks with their hard-earned money, bankers should be more outraged, punishing and loud in calling out Wells not as a closely regarded “victim,” but as a bad actor that will not be welcome in the industry if its leaders ever sense a sniff of this dishonest B.S. again.

That’s my shot over the bow, and yes, I do feel better.





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