New Orleans The old adage that “what goes around, comes around” applies nicely to Wells Fargo, long in our experience one of the pariahs of banking and a shameless purveyor of predatory products and lending, long a target of ACORN campaigns. Recent years have seen their corrupt culture begin to catch up with the San Francisco-based financial institution especially when they were caught creating thousands and thousands of fake accounts in their boiler rooms. When that shoe fell, others started flying as the bank seems to careen from one scandal to another, and every internal and external report seems to report the impacts as even worse than first revealed.
It is likely far from over.
In a story about the transactional exchanges between banks and universities, where various institutions negotiate semi-exclusive arrangements to have the first and best crack at students, Wells Fargo once again is coming in first when it comes to preying on students as well. In a recent Wall Street Journal report “twenty-two of the 30 highest average fees” were at schools with Wells Fargo contracts, while 20 of the 30 lowest were with Pennsylvania-based PNC Financial Services by comparison. Wells in a typically flannel-mouthed response to the reports said that their charges were higher because “some students have ‘more complex banking needs, such as sending wires or purchasing more checks.’” Who are they kidding? The markup on check purchases at banks is huge, and how many youngsters use checkbooks rather than cards? Come on! They also make beaucoup on wire transfers and remittances, so this doesn’t answer the question either.
There is a sign that the greed and fast dealing of Wells and other banks may have finally gone past the usually rubbery line drawn by the Federal Reserve with one of Janet Yellen’s final announcements as chair. Responding to Wells as a repeat offender, the Fed limited its ability to grow for the next year until it gets its act totally together, and then in an almost unprecedented move, demanded that 25% of the board be replaced this year. In a reaction to the decision during the stock market selloff, Wells lost over 9% of its value taking a $29 billion beating on its valuation, pushing it significantly behind its competitors.
Will Wells and its kind finally get the message? It’s hard to say since we’ve seen nothing but more evidence of predation from them even as their bully-boy practices have been exposed repeatedly.
If patience is running out at the Federal Reserve and on Wall Street, maybe they will finally understand why we chanted in front of their Los Angeles headquarters years ago, “Predatory Lender, Criminal Offender!”