Buffet: Bank Woes Like Cockroaches – Never Just One
Spotting a single cockroach scurrying across the kitchen floor when you flip the light on is disconcerting enough. What’s even worse is the knowledge there are almost certainly more you can’t see, lurking in dark crevices, part of a systemic problem (of your own creation or otherwise). The same is true of the consumer rights violations uncovered at Wells Fargo. As billionaire investor Warren Buffet recently commented to CNBC, Wells Fargo’s recent woes are indicative not just of issues within that institution, but are likely reflective of more widespread problems within then banking industry as a whole. When this issues are spotlighted – as is currently being done with a third-party review of the bank’s most recent sales scandal – we’re likely to be seeing more of the same. Even the bank’s CEO in an internal message warned workers to brace for the potential onslaught of negative headlines as the independent review nears a close.
Buffet commented that anytime an organization with thousands of employees is heavily scrutinized, issues will be uncovered. This is especially true when there have already been notable systemic problems. Such issues highlight the culture of a place, which can set the tone for other shady practices. The independent probe came in response to a scandal involving employees who opened thousands of fraudulent consumer accounts. The catalyst, reportedly, was intense pressure to reach aggressive sales goals. Employees were given incentives that linked employee income to the volume of new accounts opened, a practice the bank has promised has ended. The Consumer Financial Protection Bureau slapped the bank with a $185 million penalty a year ago.
Still, because the independent review expanded the time frame during which these unauthorized accounts were opened (from 2009 through 2016), the number of consumer rights violations uncovered spiked significantly. Already, there are two million unauthorized deposit and credit card accounts that we know were created since 2011. The new review, according to USA Today, identified another 1.4 million potentially unauthorized accounts.
To date, the bank has paid more than $5 million in customer refunds and/or payments as a result of the debacle.
The bank was also the target of a class action lawsuit regarding unauthorized accounts dating back to 2002. It also involved consumer rights violations through shady retail practices. That lawsuit was settled just this year for $142 million.
A spokesman for the bank insists it is trying to do all it can to “make things right” for its customers. But keep in mind: Many of these individuals had no idea these accounts had been opened. They had no idea they were being charged fees. Their credit scores were affected. The bank says it intends to issue another $2.8 million at least in new refunds based on some of the new information coming to light.
The bank has reportedly fired 5,300 employees and managers over the course of the last five years who were involved in the action, which represents just 1 percent of the bank’s workforce.
Wells Fargo is the country’s third-largest bank, as well as the biggest mortgage lender in the U.S. Given what these recent probes have uncovered, it may be time to more closely scrutinize other banks’ practices too.
If you’re battling debt collection in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday at 5 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.