Archive for the ‘Pushing the Envelope’ Category

Service of Pushing the Envelope: What Does it Take for a Bank to Get the Message?

Monday, December 4th, 2017

Photo: whats-thesayinganswers.com

Parents expect their kids to test them daily but is it natural for a bank, caught red-handed in one scandal, to again test a federal regulator with another cheat just a year later? I’m referring to Wells Fargo, once a stalwart bank with stellar reputation and the third largest in the US.

Last year staff, to gain bonuses, created as many as 3.5 million accounts, some fictitious, others without customer approval. In addition to the chink in its standing, this cost the bank a $35 million penalty, restitution to some customers and a freeze on executive golden parachutes. Plus the chairman was forced to resign.

What now? “A federal regulator has advised Wells Fargo & Co.’s board of directors that it is weighing a formal enforcement action against the bank over improprieties in its auto-insurance and mortgage operations,” according to Gretchen Morgenson and Emily Glazer in their Wall Street Journal article, “Wells Fargo Gets New Warning.” The regulator is the Office of the Comptroller of the Currency [OCC].

Photo: dialforloan.com

The reporters wrote: “This summer, the bank conceded in a news release that for years it had forced nearly 600,000 customers who financed their car purchases with Wells Fargo to pay for collision coverage they didn’t need. The bank said about 20,000 customers had their cars wrongly repossessed. Those customers failed to pay the improper insurance charges.”

Photo: fhmtg.com

In addition they reported: “The bank has also said it charged some customers improper fees to extend the interest-rate commitments they received from Wells Fargo on their mortgage applications. In October the bank said it is reaching out to around 110,000 customers who paid a total of $98 million in such fees, and expects refunds to be lower than that total because, the bank said, it ‘believes a substantial number of those fees were appropriately charged under its policy.’”

The OCC “gave the bank credit for identifying the irregularities in its insurance operations but characterized Wells Fargo’s management of compliance risk as ‘weak.’ The report also said the bank had underestimated the amount of restitution it owed to wronged customers.”

Does today’s business atmosphere, inspired by Washington, give signals to businesses to push the envelope and hope for the best? Recent indicators include loosening of climate regulations, and the appointment by the president of Mick Mulvaney as acting director of the Consumer Financial Protection Bureau when Mulvaney doesn’t believe in restrictions. Do the small fries in this country feel sufficiently threatened yet? Why would a bank allow its reputation to take such a beating?

Photo: cardtrak.com

 

Get This Blog Emailed to You:
Enter your Email


Preview | Powered by FeedBlitz

Clicky Web Analytics