Amid news of Wells Fargo’s latest scandal (if you’re keeping track, it involved uncovering evidence employees opened an additional 1.4 million unauthorized customer accounts, adding to the 2.1 million we already knew about), analysts are not holding back with predictions about the bank’s future.
Chances are slim-to-none any of those sitting in corporate high rises are going to actually be held to account in a criminal court of law (hasn’t happened to any meaningful degree since the Reagan-era’s savings-and-loan crisis). In fact, none of those folks paid anything above six figures are likely to lose any pay at all over this. Sure, the bank will pay their multi-million dollar fines and some refunds, but these amounts – impressive as they sound – don’t go far enough in affecting the bank’s bottom line.
The one exception could be – maybe – if consumers have finally lost confidence in the bank. That appears to be beginning. The Street reported on analyst from Berenberg says investors should now sell Wells Fargo stock, rather than hold it, citing the bank’s loss of its competitive advantage. The bank’s stock has dropped about 7 percent this year, compared to its biggest rivals, which all reported solid gains of between 5 and 14 percent.
Meanwhile, renowned CNBC pundit and former Wall Street trader Jim Cramer referred to the addled bank as “rogue.” After the revelation that at least 3.5 Wells Fargo accounts had been opened without customer permission, Cramer commented publicly on the matter, repeatedly using that word and requesting another Congressional inquiry on the bank’s practices. He backed Sen. Elizabeth Warren (D-Mass.) in her raising questions about why the financial institution’s board of directors had yet to be dismissed.
The bank’s CEO has conceded to “unacceptable sales practices,” noting it has fired more than 5,000 employees and is working to rectify the consumer rights violations with affected customers. But it’s likely this is just the tip of the iceberg. That’s because in addition to the unauthorized account scandal, Wells Fargo has also come under fire in recent years for:
- Force-placing auto insurance on more than half a million customers, 20,000 of which had their cars repossessed and their credit tarnished due to the bank’s actions;
- Evidence of retaliation against corporate whistleblowers. The bank’s CEO conceded some employees may have faced retaliation for calling the company’s ethics hotline to report objectionable behavior. Usually, some other reason – i.e., lateness – was concocted to justify the firing, as bank officials are likely well aware that suppressing whistleblowers is illegal under the Dodd-Frank and Sarbanes-Oxley statutes.
- Skirting watchdogs. The Wall Street Journal reported that bank branch managers and employees were often given 24-hour notice before internal watchdogs were slated to inspect and investigate account validity and integrity, presumably giving workers enough time to shred any evidence that could be incriminating.
- Improperly charging customers late fees to extend their promised interest rates – even when those delays could be pinned on the bank. The scandal was reported by ProPublica earlier this year.
- Imposing unauthorized and unnecessary warranties on home mortgages, though a third-party warranty provider. The bank stopped working with the firm in 2012, but it’s unclear exactly how many consumers rights violations occurred in the course of these practices.
Still, some analysts say the latest revelation could ultimately turn out to be good news for the bank. One commentator told CNBC that such revelations may force more transparency, as that will be the only way moving forward to restore consumer confidence.
If you’re battling debt collection in Miami or the surrounding areas contact Jacobs|Keeley 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.
Jim Cramer calls Wells Fargo a ‘rogue’ bank, Aug. 31, 2017, MarketWatch
More Blog Entries:
Report: Wells Fargo Imposed Home Warranties on Unsuspecting Mortgage Customers, Aug. 22, 2017, Miami Consumer Rights Attorney Blog