Federal regulators announced today one of the most shocking cases of financial malfeasance since the Great Recession. Thousands of Wells Fargo employees had over a period of several years created millions of phony bank accounts, into which unwitting customers’ money was transferred. With these fake accounts, the banking behemoth was able to reap additional fees from innocent Americans and individual employees were able to boost their sales figures and thereby increase their commissions. For the great majority of Americans who live under the yoke of crony capitalism rather than pull its strings, that meant even more money taken out of their pockets in fabricated fees. This of course comes on top of the socially acceptable pillage of more than $30 billion in bank fees from customers every year.
The scale of the scandal is enormous. An independent consulting firm that looked into the crisis on behalf of Wells Fargo identified more than two million phony accounts that had been created, consisting of about half a million credit card accounts and 1.5 million deposit accounts. These shocking numbers mean that a significant percentage of Wells Fargo customers were affected. Moreover, the consulting firm identified more than 5,300 employees who participated in the scam, which represents more than 1% of the bank’s total workforce. Clearly this was a widespread operation with approval from high up the chain of command rather than a few isolated incidents of wrongdoing.
This massive scandal only came to light thanks to the investigative efforts of the Consumer Finance Protection Bureau (CFPB), an agency dedicated to consumer protection in the financial industry that was created in response to the financial conniving that precipitated the Great Recession. The bank agreed to a $185 million settlement with the CFPB, representing the largest fine imposed by the agency since its creation in 2011. This historic penalty amounts to 0.2% of the bank’s annual revenue. On top of the fine the bank will have to pay $5 million in customer refunds.
CFPB has been relentlessly vilified as an example of government waste by Republicans – which is no surprise given their tight ties to the industry it is meant to police – and Sen. Elizabeth Warren’s (D-MA) leading role in creating the agency has made her a prime enemy of the financial industry. Today’s revelations, however, represent only the most recent vindication of the agency’s mission and operations, as millions of Americans would otherwise have continued to have been defrauded for the benefit of wealthy bankers.
For its part, Wells Fargo issued an almost pathetically trivialized statement, saying “We regret and take responsibility for any instances in which customers may have received products they did not request. At Wells Fargo, when mistakes happen, we are open about it, we take responsibility, and we take action.” Given the litany of obscene scandals the bank has been implicated in, however, and the fact that none of their wrongdoing has ever come to light in the absence of a federal investigation, this statement should be taken with a mountain of salt. In any case, today’s revelations and the penalties imposed on the bank represent a major victory not just for the CFPB and the mission to police the financial industry’s recklessness but also for the interests of everyday American people over those of the Wall Street financiers whom the government often prioritizes.
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James DeVinne is a student at American University in Washington, DC majoring in International Service with a focus on the Middle East and South Asia. He is a founding member of Occupy Baltimore and interns at the Tahrir Institute for Middle East Policy.