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

December 4th, 2017

Categories: Banking, Cheating, Pushing the Envelope

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].

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.”

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?


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

  1. Martha Takayama Said:

    The answer to your major question about whether banks are inspired by Washington to behave like Wells Fargo, apparently with no regard for violating the law repeatedly, must be simply and unequivocally yes!

    It would seem that the prevailing distortion of any and all basic elements of our Constitution and legal system are being tested to the most extreme limits. The President’s lawyer has just said that he cannot be said to “obstruct justice”. Banks like Wells Fargo seem undisturbed by any consequences for their irresponsible and illegal actions. If the consequences of such outrageous behavior do not serve as a deterrent there is no reason for them not to “Push the envelope”.

    I am unable to understand so much of what our public is currently willing, to espouse accept and tolerate. The hypocrisy and idiocy of the current political moment as exemplified by the present government is more than I can begin to understand. It is a national embarrassment as well as a global hazard!

  2. JBS Said:

    Wells Fargo is just plain crooked. I’m thrilled that I have never had an account there. (In Minnesota, it is one of the larger banks. The other one is US Bank, which is getting more customers every day.) I don’t believe that all banks are this way. My son has a friend who discovered that he’d been taken in by the bank in several instances. Now they are telling customers like him that they can’t sue, because when they opened up an account they signed away that right, agreeing to arbitration. That makes them even more crooked in my opinion. Customers should have some recourse. I understand that there is a bill in Congress that would not allow banks (or any other business) to insist on arbitration.

  3. Jeanne Byington Said:


    In some ways we have not changed. I remember a man who admitted to voting for a NY State candidate because they shared an Italian background. That the politician may or may not have espoused positions that would–or would not–benefit him and society was irrelevant.

    Today we have a head-scratching dose of this approach in spades. Listen to men and women who call in to a local NYC radio show and you think someone has slipped alcohol in your cereal bowl and distorted your hearing. This morning a guest host claimed that he voted for the president, but had something critical to say about one of the president’s weekend tweets. He was raked over the coals by a caller who complained about “crooked Hillary” because the guest host had said that the president should get over her and drop the subject as he’d won the election. The caller continued “how can anyone say anything bad about this wonderful man with such a beautiful family.”

    I’m afraid that millions of Americans will have to suffer after the Republican tax bill takes effect before some diehards, whose rose colored glasses have distorted their vision, see that they’ve been duped. Meanwhile, I feel very sorry and sad for us all.

  4. Jeanne Byington Said:


    For the bank to be the third largest in the country, it has many customers. Scary. I knew of it years ago when a former client had a partnership with it and it was then a solid, fair and reputable bank.

    Golly. I wonder if your son’s friend could approach the Consumer Financial Protection Bureau to see if it could help out. Wells Fargo was forced to give restitution to some customers last year. This year the punishment has not yet been determined for those caught in the vice of the auto-insurance and mortgage scams, if I correctly understood the Wall Street Journal article.

  5. Lucan Said:

    Of all the changes which have affected the way we have been living our lives over the past half century, those that have occurred on the financial scene are some of the more dramatic, far fetching and least understood.

    To describe Wells Fargo as a bank today would be as archaic as calling Home Depot a hardware store. It is a complex device for marketing and delivering a vast array of financial services and products to vast numbers of consumers worldwide, just as Home Depot also markets and delivers an array of real estate related services and products similar in scope, to vast numbers of consumers everywhere.
    For me, the word ”bank” used to resonate with feelings best suggested by words such as “integrity,” and “fiduciary duty;” “safe,” “conservative,” “proper,” “responsible,” and “honest.” Indeed, in 1963, the first thing I was taught, as a management trainee on joining a bank, was that a bankers’ first loyalty must always be to his depositors. Only secondarily, was one even to think about ways to make money for the shareholders. On top of that, in an admittedly idealized way, some bankers even played a role in their clients’ lives similar to that of a family doctor or priest.

    Now, say “banker” to me and I think of John Law, the 17th century tulip mania in Holland, England’s 18th century South Sea Company bubble and the like through human history. “Modern” bankers are not really too different than the “gunslingers” and “con-artists” of centuries past, who disrupted the financial markets of their day, except that today’s batch seem to have been luckier. Many, even the most foolish of them, have been bailed out from their failed speculations by one arm of the government or another, mostly, but not always because of its “too big to fail” doctrine.

    While we, the taxpayers, ended up paying much of the cost of this debacle, at least its recent rescue has meant that Wells Fargo customers can now breathe easier. Luckily for them, this once unimportant regional California commercial bank had managed in a couple of short decades, to explode into a far “too big to fail” financial juggernaut and got itself saved.

    There is nothing fair or pleasant about this tale of woe, but we have heard it all before. Maybe someday we will learn.

  6. Jeanne Byington Said:


    I rarely if ever look back with rose colored glasses to the “good old days,” that most often were really good for a few with access for others severely limited by birth and background.

    Yet reading your description of what banks used to be is much like watching a 1950s flick about a small town on Turner Classic Movies. How far we’ve come from admiring “integrity,” and “fiduciary duty;” “safe,” “conservative,” “proper,” “responsible,” and “honest” where a banker’s loyalty was to the depositors. To many today these words and that concept scream “SUCKER!”

    How far we’ve come in many ways and yet how behind we are in so many others.

    As you note, scofflaws have always existed, but how wonderful it must have been to work in an atmosphere that you describe. May we do what you suggest–learn from the past. Fingers crossed.

  7. Debbie Kunan Said:

    Debbie wrote on Facebook: Greed never goes out of style. It is the weakness of human nature that we are forced to address in every generation and every administration.

  8. Jeanne Byington Said:


    True, but it hasn’t been this blatant and out of balance for a long while.

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