Taking On Criminal Activity In Banks

The Record ( — September 30, 2016

The Record

The anger directed at Wells Fargo Bank because of its abusive behavior in creating two million fake deposit, debit and credit card accounts is understandable. Customers ended up with fees and charges for accounts and cards they did not request or know about.

Although John G. Stumpf, CEO of Wells, will forfeit his $41 million dollars in performance pay, give up his annual salary while the investigation is ongoing and be ineligible for a bonus in 2016, these concessions do not exonerate him for attempting to scapegoat or for firing the lowest-paid bank employees involved in the scandal, who were clearly trying to meet impossible sales quotas. The fact that the independent board of directors of Wells Fargo is launching an investigation into the bank's entire retail business is clearly a step in the right direction.

More significantly, Wells Fargo's failure points to a much broader and systemic industry problem that involves every other financial institution in America that has decided to put their profits before the people. Unfortunately the most recent scandal at Wells is only the tip of the iceberg.

While it is true that the action taken by the board at Wells is by far the most aggressive internal and transparent effort to police itself by a financial institution since the Wall Street debacle in 2008, it is important to remember that too few senior bank executives have gone to jail as a result of the dastardly deeds that caused the 2008 meltdown.

After the financial crisis, Congress created the Consumer Financial Protection Bureau to protect consumers from future financial scams. The bureau has already returned over $11 billion to individuals who have been scammed by financial institutions. And yet, despite this, the agency is constantly under siege by Republicans in Congress, including Rep. Scott Garrett, who represents New Jersey's 5th Congressional District.

According to Americans for Financial Responsibility, a leading national nonpartisan and nonprofit coalition of more than 200 organizations across the country working for accountability on Wall Street, just days before the Wells Fargo scandal broke, the House GOP pushed a bill to systematically undermine the Consumer Financial Protection Bureau. The bill passed the House Financial Services Committee, making it harder to expose and punish scams like the one at Wells.

Shame on those, including Garrett, who supported this anti-consumer piece of legislation.

Holding banks accountable

New Jersey Citizen Action has been working for more than 30 years to hold banks accountable for their actions and identify partners in the financial industry who want to work with us to expand access to capital and lending for individual consumers and small businesses and provide equitable banking services for all.

Wells Fargo's actions are clearly not the only misdeeds that have taken place on Wall Street and this bank is certainly not the only financial institution that has behaved poorly. The need for a strong, independent regulator to protect consumers against financial abuse is more urgent than ever. Our organization has seen firsthand persistent unethical and irresponsible practices that result from the unregulated pursuit of maximum profits.

Specifically we seek:

Our banking system is still too complex and too risky. We need a system that helps people buy and stay in their homes and invests in communities and businesses to create good jobs and strong neighborhoods. We need executive compensation that rewards long-term value creation, not excessive risk-taking, with meaningful shareholder review.

We need fair rules of the road for consumers and a strong and independent Consumer Financial Protection Bureau to set basic standards and protect all consumers from fraud and abuse.

And finally, what we don't need are members of Congress who consistently vote against the financial interests of the people of New Jersey.

Phyllis Salowe-Kaye is executive director of New Jersey Citizen Action.

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