The following editorial from The Columbian (Vancouver, Wash.) does not necessarily reflect the view of The Spokesman-Review’s editorial board.
Among other things, the scandal surrounding Wells Fargo reinforces the need for the Consumer Financial Protection Bureau.
Last week, the nation’s largest retail bank was hit with $185 million in fines for creating about 2 million fraudulent accounts in the names of customers who were not aware of those accounts. Driven by bonuses for reaching sales goals, thousands of Wells Fargo employees created accounts, including for credit cards, unbeknownst to the people whose names were on them. Often, fake email addresses would be established, money would be transferred from existing accounts to the new ones, and service fees would be hidden on the bills sent to customers.
If regulators are accurate in their accusations, the actions of Wells Fargo are among the most egregious imaginable for a bank. But for those who otherwise maintain some modicum of faith in big banks, there is this additional nugget: Wells Fargo officials say they have fired some 5,300 employees in recent years because of such actions, but the executive who oversaw the community banking division, Carrie Tolstedt, is walking away later this year with a $125 million retirement package.
It is notable that a bank the size of Wells Fargo could engage in such practices over a number of years without the federal government pursuing criminal prosecution. For those who buy into the notion that the system is rigged against average people, the Wells Fargo scandal serves as proof.
The fine issued to Wells Fargo will pay $100 million to the Consumer Financial Protection Bureau, $50 million to the city and county of Los Angeles, and $35 million to the federal Office of the Comptroller of the Currency. Considering that Wells Fargo has a market valuation of about $250 billion – the most of any retail bank – the penalties amount to little more than a slap on the wrist.
Meanwhile, the issue brings to light important discussions about the oversight of financial institutions. In the wake of the Great Recession and the bank manipulations that contributed to it, U.S. Sen. Elizabeth Warren, D-Mass., conceived the Consumer Financial Protection Bureau.
But Republicans routinely have decried oversight of those firms. In May, Donald Trump said he would ease regulations that have “made it impossible for bankers to function.” When he was a presidential contender, Sen. Ted Cruz, R-Texas, introduced legislation to abolish the Consumer Financial Protection Bureau, calling it “a runaway agency” that “does little to protect consumers.” And Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, has frequently targeted the bureau.
Meanwhile, the Consumer Financial Protection Bureau has taken aim on predatory lenders, for-profit colleges, credit card issuers and credit-reporting agencies.
What makes the Wells Fargo scandal so untenable is that it targeted accounts that easily could be overlooked. Which begs the question: Who is looking out for consumers?
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