Written by a former Wells Fargo employee who wishes to remain anonymous.
Wells Fargo recently made headlines for fraudulently opening more than 2 million bank and credit accounts since 2011, all without the account owner’s permission. Wells Fargo was fined $185 million to settle what amounts to a massive identity theft scam with the Consumer Financial Protection Bureau—a drop in its multi-trillion-dollar bucket. Given how widespread the scam has been, the CFPB has continued to dig through the mega-bank’s books and uncovered just how widespread its corruption and criminality has become.
Since 2011, Wells Fargo has fired 5,300 employees for allegedly opening these sham accounts, nearly 1 percent of its workforce. This number, however, does not include the many employees who were fired for refusing to defraud customers and as a result not meeting sales goals.
A percentage of those fired were licensed by Wells Fargo to sell securities and brokerage products to its customers. Regulation requires that the bank file a form, called a U5, with the Financial Industry Regulatory Authority whenever such an employee has ceased working for an institution. This includes being fired for fraudulent activity such as opening accounts without customer permission. However, as a U.S. Senate inquiry has uncovered, Wells Fargo frequently did not include detailed information as to why an employee was fired and simply stated they “violated company policy.”
This detailed information, something Wells Fargo is required by law to provide, would have exposed the sham account scandal far more quickly to bank regulators and appears to have been left out by Wells Fargo to prevent or delay prosecution. What’s worse, many licensed bankers are now claiming they were fired by Wells Fargo for raising concerns about the fake account scandal and had negative U5 forms filed with FINRA in retaliation. A negative U5 effectively blackballs someone from working in the financial services industry, as future employers will have access to the information contained in the form and will use it as a reason not to hire a potential employee.
In addition, Wells Fargo recently agreed to pay a $4 million fine to regulators over violations of the Servicemembers Civil Relief Act. This legislation provides protections to deployed service members who become delinquent on their auto loans—that is, a court order must be obtained by the bank before repossessing an automobile. The regulators allege that the bank broke the law and did not get a court order for as many as 413 separate repossessions. This means that while soldiers were risking their lives to further U.S. imperialist interests, and that includes Wells Fargo’s interests, the bank was illegally seizing the same soldiers’ cars.
Finally, Wells Fargo agreed to pay $50 million to regulators for overcharging hundreds of thousands of homeowners for home appraisals. Even worse, these appraisals were ordered by Wells Fargo when the homeowners defaulted on their loans due to clauses in the mortgage contract the borrowers signed. Typically these types of appraisals cost Wells Fargo around $50, but the borrowers, already in financial trouble due to mortgage default, would pay $95 to $120. These fees were paid to a Wells Fargo subsidiary that Wells Fargo “hired” to complete the appraisals. What’s more, these charges would not be spelled out clearly in the bills passed to the customer but would be included in a vague line item reading “other fees.”
The good news is that the workers are not taking it lying down but have filed several class-action lawsuits in response to being fired for not defrauding customers and trying to raise the alarm about the fraudulent accounts. These lawsuits demand $7.2 billion be paid to the ex-employees as compensation for ruining their careers and punishing them for doing the right thing. Many Wells Fargo employees share stories of being forced to offer credit products to customers in serious financial trouble or with multiple loans in default. When they refused to try to take advantage of those in poverty, they were fired for “insubordination” or not reaching their sales goals. Several have already attempted such lawsuits and lost, showing our legislators’ moral bankruptcy given that they would side with a company as corrupt as Wells Fargo against an employee. Now that Wells Fargo’s dirty laundry is being aired in Senate hearing after Senate hearing, it looks like the winds are blowing in favor of the working class. Don’t hold your breath, however. Given that no bankers faced jail time for their role in destabilizing the global economy in 2008, it seems unlikely the U.S. government will have the spine to prosecute and imprison bank executives over wrongly terminated employees.
The most important thing to understand as we watch the massive and widespread corruption and criminality of Wells Fargo come to light is that the banking industry is not answerable to government officials, including senators and presidents. When we saw Senator Elizabeth Warren berating Wells Fargo CEO John Stumpf for being a coward and a crook, we might be fooled into thinking that the U.S. Senate is the one in power. But when capitalism is the dominant economic model, those who own and control the capital are truly the ones in charge.
Consider this: As punishment for widespread criminality and fraud, John Stumpf was forced to retire having made nearly $250 million during his more than eight years as Wells Fargo’s CEO. For the vast majority of us, retirement is a reward that we eagerly look forward to and plan for. If I steal your identity and open up a credit card, I may face jail time and other serious consequences. For the onetime CEO of Wells Fargo, his “punishment” is to retire with fantastic wealth we can only dream of. This is capitalism. Not the pleasant dreams of “free markets” and ”innovation” but the hard reality of a system in which capital holds greater importance than justice. In which the wealthy are encouraged to engage in further fraud and crime by the guarantees that they will never be held accountable.
The total $239 million in fines is a tiny fraction of the billions of dollars Wells Fargo made by artificially inflating its sales numbers with fake accounts, exorbitant fees to the indebted, and repossession of property of those deployed abroad. So long as capitalism remains the dominant system, this is the type of world we live in. Until human needs, and not capital, are the primary concern of society, we can look forward to more CEOs setting financial bonfires and jumping to safety in golden parachutes. Having worked for Wells Fargo for more than eight years, I can say emphatically that we desperately need a system owned and controlled by working people, not a tiny cabal of bankers and industrialists. We need socialism.