Wells Fargo fined $1.7B for criminally gouging 16 million customers (but no one is going to jail)
In conservative dreams, unfettered capitalists operating in an unregulated free market create Edenic economic growth. However, this vision of fiscal exuberance ignores the inevitable pain suffered by the average citizen. The reality of this laissez-faire philosophy is a predictable nightmare — as millions of Wells Fargo customers discovered after being victimized by bonus-hungry corporate bandits.
The Consumer Financial Protection Bureau (CFPB) revealed that Wells Fargo was nothing more than a criminal enterprise run out of corporate offices. According to the bureau, Wells Fargo repeatedly misapplied loan payments, wrongfully foreclosed on homes, illegally repossessed vehicles, incorrectly assessed fees and interest, and charged surprise overdraft fees.
The moral corruption of the company´s management was so pervasive and its effects so widespread the CFPB ordered Wells Fargo to pay a $1.7 billion civil penalty on top of the more than $2 billion to compensate consumers.
That sounds like an astronomical sum. It is not.
In fiscal 2022, Wells Fargo booked a gross profit of $74.9 billion. In 2021, they made $78.5 billion. The total fine and compensation Wells Fargo has to fork over — $3.7 billion — represents just 2.5% of its gross profit over those two years. Once the company´s accountants and tax lawyers wash the cost through its tax returns and wring out the last cent of deductibility, the penalty will be a rounding error.
And, most importantly, no one is going to jail.
Can you imagine how successful the FBI´s campaign against organized crime would have been if the only penalty the Feds used was assessing fines? Al Capone´s demise was not a result of the $50,000 penalty he paid for tax evasion. It was due to the 11-year sentence.
America´s criminal justice system is a feather bed for the rich and a concrete box for the poor. If a mugger steals your wallet, they go to jail. If a corporate exec steals your house, they remain free to go to church every Sunday. It is impossible to describe the logic that looks at an illegal $2 billion wealth transfer (aka theft) and sees no felonies. How can such rapacity occur without anyone being criminally liable?
This latest customer abuse is not Wells Fargo´s first rodeo. Just 2 years ago the company paid $3 billion to restitute customers damaged by a company practice, in operation between 2002 and 2016, of pressuring employees to meet unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers’ identities.
Since 2000, these leg-breakers have paid over $22 billion in penalties for 229 instances of bad behavior. And they are not alone. In the same time frame, Bank of America has paid out over $83 billion in penalties. JP Morgan Chase has paid $36 billion. And so on.
Sixteen companies have paid more than $10 billion in penalties each. And over 100 have paid more than $1 billion. (For the complete list, click here: Shit companies that put profits over people)
Greed caused the 2007/2008 financial crisis. Financial chest beaters threw money at increasingly exotic financial instruments that lacked the solidity of even cryptocurrency. The prevailing philosophy was ¨don´t be the sucker holding the bomb when the timer hits zero.¨ And when the mortgage-backed securities chimera evaporated, $30 trillion of global wealth was gone. Millions lost their homes and jobs. Home equity disappeared. And retirement accounts imploded.
The debacle was entirely due to human error — but it was no accident. And yet no single bank CEO went to jail.
It gets worse. For Republicans, even no punishment was too much punishment. The CFPB (created by the Obama Administration to protect the consumer in the wake of the Great Recession), came under vitriolic attack by the GOP. Rep Jeb Hensarling (R-Tex.) summed up Republican complaints about the CFPB by calling it a “rogue agency.” The Republican´s real beef with the agency is that it hurt bank profits.
They made abolishing the CFPB part of their 2026 platform. And when the GOP gained Congress and the Presidency in 2017, Trump installed Mick Mulvaney, his Budget Director, as the Bureau´s Director. Mulvaney, who had called the CFPB a¨sad, sick joke¨ cut off its funding, scaled back its investigations, and overturned its rules protecting the very poor from payday loan sharks.
Fortunately for the citizens, the Republican assault on the bureau has been largely beaten back. In June 2020, the Supreme Court found the agency was constitutional — except for the rule that created a single-director leadership removable only for cause.
The financial industry provides the starkest evidence that Republicans have no interest in the welfare of the average American. The GOP has repeatedly shown itself hostile to fiscal prudence and measures limiting the opportunity for banks to cause havoc. In 1999 The Gramm-Leach-Bliley Act (three Republicans) overturned the 1933 Glass-Stegall Act, which had limited bank adventurism.
The Republicans compound their disregard for the consumer by using the consumer´s tax dollars to bail out banks that fail due to their own recklessness. Banks whose business plan is to gouge their customers. And who spend millions every year to save billions on their taxes.
There are so-called victimless crimes. The financial industry, protected by their congressional poodles, on the other hand, is an example of an ongoing crime where there are plenty of victims — but no chargeable criminals.