Wells Fargo Must Act Big To Restore Its Credibility
It’s been nearly a year since U.S. Senator Elizabeth Warren made this memorable statement to Wells Fargo CEO Timothy Sloan:
“You enabled this fake-accounts scam, you got rich off it, and you tried to cover it up. At best you were incompetent — at worst you were complicit. Either way, you should be fired."
Warren has renewed her call for Sloan’s firing with news of another Well Fargo scandal. WFAE’s Tommy Tomlinson shares his thoughts on that scandal in this commentary.
Here’s how bad things are for Wells Fargo: Last week the bank admitted it had made a mistake that cost 400 people their homes, which led the bank to create an $8 million to fix some of the harm … and somehow, it felt like a weird sort of victory. They damaged only hundreds of lives instead of thousands! The cost was only millions of dollars instead of billions! It felt like Wells should’ve celebrated. Bought a sheet cake or something. Assuming, you know, their credit is still good.
The latest mess at Wells involves, they say, a computer glitch. The bank developed software to decide whether homeowners qualified for reduced mortgage payments or interest rates under a federal program created during the mortgage crisis. But the software crunched the numbers wrong for some people who were seeking help.
As a result, between 2010 and 2015, Wells denied help – or didn’t offer it in the first place – to about 625 homeowners. The bank ended up foreclosing on at least 400 of those homes.
So the bank has set aside the $8 million to pay those original 625 homeowners at least some of what they lost. (That comes out to $12,800 per home, although it’s not clear if that comes anywhere near matching the loss.) The whole thing might be an honest mistake. Which makes it different from some of the other mistakes Wells has made over the past few years. Those are more the dishonest kind.
Less than two weeks ago, the Justice Department fined Wells more than $2 billion for, among other things, giving false information about the terrible subprime mortgages that got repackaged with other terrible mortgages into giant terrible mortgage sandwiches that investors gladly swallowed, thinking the filling was chicken salad instead of … you know.
That comes on top of the $1 billion fine from two federal agencies over shady practices in home and auto loans. And that comes on top of the $185 million in fines over the scandal where employees opened accounts for customers who didn’t want them – or even know about them – so the employees could hit their sales goals.
So add it up: Over the past 10 years or so, Wells has managed to screw over homeowners, car owners, investors, and regular folks with bank accounts. I’m not sure who’s left. Pets, maybe?
I should say right here that I’ve got some skin in this game. I’ve got money at Wells Fargo. We have friends work for the bank. Wells is the second-biggest employer in Charlotte and the third-biggest bank in America. If Wells went down, it would be a disaster for not just our city but the whole country.
The bank is running very skillfully produced commercials, full of uplifting music and smiling faces, promising that Wells Fargo has changed. But without action, that’s just empty air.
Here’s a start: Don’t just throw a little money at those homeowners you foreclosed on. Buy them new houses worth as much as their old ones. Pay their legal fees. Help restore the credit ratings you destroyed. Go above and beyond. Because that’s the decent thing to do when you’ve done somebody wrong.
Next to maybe only a hospital, the business we put our faith in the most is the bank. Wells Fargo is like your kleptomaniac cousin who swears that if you just let him back in the house, he won’t make off with your silverware. All of us have to decide if we still trust them. But it sure would help if they give back what they took in the first place.