The city of East Orange in northern New Jersey has pulled public funds from Wells Fargo & Co. after lawmakers accused the bank of engaging in predatory-lending practices and exacerbating the city’s foreclosure crisis.
City officials said Wells Fargo holds 13% of the 439 mortgages currently in foreclosure in East Orange. City councilman Chris James said the bank forced people from their homes and then let the vacant properties fall into disrepair.
“We can’t have the city’s money, that’s from hard working people’s taxes, in this system,” said Mr. James, a Democrat who led the divestment push. Mr. James also pointed to Wells Fargo’s investment in the controversial Dakota Access Pipeline and last year’s revelation that bank employees had opened more than 2 million unauthorized deposit and credit card accounts to meet ambitious sales goals as additional reasons for cutting ties with the company.
NEP’s Bill Black appears on The Real News and explains how the Wells Fargo scandal is emblematic of the bank’s corporate culture and that the fined executives are only scapegoats. You can view the video with a transcript here.
Source: New Economic Perspectives
A number of public pension funds have come out against directors on Wells Fargo & Co.’s board, just days ahead of the what is shaping up to be a contentious annual shareholder meeting for the embattled bank.
New York City’s Office of the Comptroller, which oversees pension funds that own about 11.5 million shares or about 0.23% of Wells Fargo shares outstanding, said it would oppose re-election of 10 out of 15 of the San Francisco bank’s directors. That includes the bank’s nonexecutive chairman, Stephen Sanger, plus all but two members of the board’s risk, audit and human-resources committees.
Additionally, California State Teachers’ Retirement System, or Calstrs, said it voted its 11.6 million shares against nine board members, including Mr. Sanger.
There were multiple red flags and missed signals at the OCC for years, the bank’s main regulator, the report said.
Most tellingly, bank examiners assigned to review Wells Fargo were aware of approximately 700 whistle-blower complaints related to “gaming of incentive plans” when they met with senior managers of the San Francisco-based bank in January 2010, the report said.
Carrie Tolstedt, who at the time headed the community banking division that was ground zero for the scandal was dismissive of the complaints, attributing them to a corporate culture that encouraged valid claims “which are then investigated and appropriately addressed,” the report said. Tolstedt also said the bank’s sales incentive programs were capped at 10% to 20% of bank workers’ total compensation “to keep motivation in check.” Tolstedt no longer works for the bank and has had to give back millions in compensation in connection with her role in the scandal.
According to the report, there was “no evidence that examiners required the bank to provide an analysis of the risks and controls, or investigated these issues further to identify the root cause and the appropriate supervisory actions needed.”
Additionally, Wells Fargo’s board of directors received regular reports dating back to 2005 indicating that the highest volume of internal ethics complaints at the bank involved “sales integrity violations.” The OCC’s Wells Fargo team received the same reports as early as 2010. However, the report said records don’t “indicate examiners investigated the root cause.”
A federal regulator on Wednesday criticized its oversight of Wells Fargo’s sales practices, saying it failed to act quickly enough once it learned of problems at the San Francisco bank.
In a report, the Office of the Comptroller of the Currency said it knew of issues with sales practices at Wells since at least 2010 – six years before the scandal would erupt in September with $185 million in fines from OCC and other authorities. Despite information OCC possessed, including complaints from the bank’s own ethics line, the regulator failed to investigate “root causes,” the report said.
The OCC “missed opportunities to address concerns with unsafe or unsound sales practices in the (Wells Fargo) community banking division earlier,” says the internal report, “Lessons Learned Review of Supervision of Sales Practices at Wells Fargo.”
A former executive at Wells Fargo claims in a lawsuit that the bank fired her because she refused to participate in a scam like the bank’s well-publicized fake account scandal, which led to a $185 million fine after more than 5,000 of the bank’s former employees opened more than 2 million potentially unauthorized accounts to get sales bonuses.
NJ.com has the details:
Melinda Bini, a former assistant vice president and regional private banker at the Highland Park bank’s branch, says in a recent lawsuit that supervisors instructed her to manipulate accounts and sell banking products or investments that were not the customers’ best interest or without their knowledge.
The lawsuit, filed in Middlesex County Superior Court on April 5, names Wells Fargo and three local bank supervisors.
The Franklin Park woman accuses her former superiors in the suit of running or knowing about alleged banking and investment fraud scheme at the local branch.
In an insightful song about outlaws, Woody Guthrie wrote this verse: “As through this world I travel / I see lots of funny men / Some’ll rob you with a 6-gun / Some with a fountain pen.”
The fountain pens are doing the serious stealing these days.
For example, while you’d get hard time in prison for robbing a bank at gunpoint, bankers who rob customers with a flick of their fountain pens (or a click of their computer mouse) get multimillion-dollar payouts.
They usually escape their crimes unpunished — but not unscathed. After all, it’s their constant, egregious, gluttonous thievery that’s made “banker” a four-letter word in America, synonymous with immoral, self-serving behavior.
For example, Wells Fargo, our country’s biggest consumer bank, has gotten away with paying some fines for stealing millions of dollars from customers in its notorious “fake accounts” scheme.
But it hasn’t escaped the wrath of the Sisters of St. Francis of Philadelphia.
This feisty order of nuns, which holds a block of Wells Fargo stock, is infuriated by the rank immorality of its bank’s executives. The sisters are pushing a shareholders’ proposaldemanding a full accounting of the “root causes” of the malicious fraud perpetuated on vulnerable depositors.