Ooooh so this is awesome news.
During the housing boom, Wells Fargo hired thousands of temporary staff and paid them overwhelmingly in commission to crank out as many mortgages as possible and pointedly didn’t check how secure those mortgages were but then turned around and told the federal government there was no chance that any of them would go under so could they please have insurance. And then when all the mortgages went under the Wells Fargo execs were all “oh goodness me how ever could that have happened”.
Anyway the Federal Housing Authority had to pay out the insurance claims on Wells Fargo’s defaulted subprime mortgages but now finally they’re suing to get the money back. Hopefully this goes well? Most likely they will end up settling for a very large sum of money rather than have all their information laid out in court.
America’s 10 most profitable corporations paid an average corporate income tax rate of just 9 percent in 2011, according to a study from financial site NerdWallet reported by the Huffington Post. The 10 companies include Wall Street banks like Wells Fargo and JP Morgan Chase, oil companies like ExxonMobil and Chevron, and tech companies like Apple, IBM, and Microsoft. The two companies with the lowest tax rates were both oil companies. ExxonMobil paid $1.5 billion in taxes on $73.3 billion in earnings, a tax rate of 2 percent. Chevron’s tax rate was just 4 percent. None of the companies paid anywhere near the 35 percent top corporate tax rate … .
This is just one of many massive settlements between the lending industry and the government. The lenders did some really bad stuff leading up to the recession.
I’m sorry. Let me try that again. The lenders allegedly did some really bad stuff leading up to the recession. It’s just allegations and $175,000,000.
The United States also alleges that, between 2004 and 2009, Wells Fargo discriminated by charging approximately 30,000 African-American and Hispanic wholesale borrowers higher fees and rates than non-Hispanic white borrowers because of their race or national origin rather than the borrowers’ credit worthiness or other objective criteria related to borrower risk.
Here are two bits of background on this news:
- The sort of discriminatory lending at issue in this suit is one of the primary reasons that the median non-white family has approximately one seventh the net worth of the median white family.
- The Obama DoJ, in stark contrast with the Bush DoJ, cares about fair lending.
This reinforces why I left Wells Fargo bank last month. Besides their high fees and confrontational customer service, they’re just not interested in being a community bank. A bank, to my mind, contributes to our lives by offering a safe an secure space to conduct money business. When I think of a bank, I want to think, “Man, what a great bank.” A bank should back local businesses fairly. It should help people land the right mortgage. And it should properly capitalize land developers who build things around cities. You know, just do the right friggin thing all the friggin time. The below shows that Wells Fargo is not interested in communities, it’s not that type of company despite it’s breezy ads, lofty promises, and pretty horses. Wells Fargo is just bad.
Wells Fargo is one of the top five largest banks in America, a fact that on its own is damning enough, basic human decency not exactly being conducive to success in the financial industry. Despite, or rather because of, its role as one of the leading sub-prime mortgage lenders prior to the 2008 crash in the housing market, the bank was handed $37 billion from the U.S. government, a transfer of wealth from the foreclosed upon have-nots to the haves doing the foreclosing – people like chairman and CEO John Stumpf, whose compensation actually rose after his company’s de facto bankruptcy to a cool $18 million last year.
As Wells Fargo has grown over the years, using its bailout funds to gobble up rival Wachovia and expand to the East Coast, so has the U.S. prison population. By 2008, one in 100 American adults were either in jail or in prison – and one in nine black men between the ages of 20 and 34, many simply for non-violent offenses, justice not so much blind as bigoted. Overall, more than 2.3 million people are currently behind bars, up 50 percent in the last 15 years, the land of the free now accounting for a full quarter of the world’s prisoners.
These developments are not unrelated.
A driving force behind the push for ever-tougher sentences is the for-profit prison industry, in which Wells Fargo is a major investor. Flush with billions in bailout money and an economic system designed to siphon wealth from the working class to the idle rich, Wells Fargo has been busy expanding its stake in the GEO Group, the second largest private jailer in America. At the end of 2011, Wells Fargo was the company’s second-largest investor, holding 4.3 million shares valued at more than $72 million. By March 2012, its stake had grown to more than 4.4 million shares worth $86.7 million.
Unfortunately, it’s a safe investment. While a 50 percent growth in the number of human beings our society cages in rape factories may sound impressive – or perhaps the word is “revolting” – a study released last year by the Justice Policy Institute found that the private prison industry grew by more than 350 percent over the last decade and a half. While other industries of course benefit from state-granted privileges, companies like GEO profit by the state literally kidnapping and handing them clientèle, particularly as of late about-to-be-deported immigrants, of which President Barack Obama has ensured there is a steady, record-breaking supply.
“All prisons are awful,” says Melanie Pinkert, an activist based in Washington, DC, who along with other members of Occupy DC’s “Criminal Injustice Committee” is helping lead a boycott of Wells Fargo, which just expanded to the nation’s capital. “But private prisons take it to the next level.” Indeed, a recent report from the U.S. Justice Department found that at one GEO-run juvenile facility in Mississippi, sexual abuse was endemic, “among the worst that we have seen in any facility anywhere in the nation.” According to the report, GEO staff demonstrated:
- Deliberate indifference to staff sexual misconduct and inappropriate behavior with youth;
- Use of excessive use of force by [prison] staff on youth;
- Inadequate protection of youth from youth-on-youth violence;
- Deliberate indifference to youth at risk of self-injurious and suicidal behaviors; and
- Deliberate indifference to the medical needs of youth.
These findings, shocking though they may seem, are not surprising. With an eye on maximizing quarterly profits, privately run facilities are even less inclined than state-run prisons to treat their involuntary customers humanely, skimping on health care and anything else that could hurt their bottom line, particularly programs aimed at reducing recidivism. As the ACLU noted in a report released late last year, “Not only is there little incentive to spend money on rehabilitation, but crime, at least in one sense, is good for private prisons: the more crimes that are committed, and the more individuals who are sent to prison, the more money private prisons stand to make.”
Wells Fargo bank will file a court challenge to a new state law signed by Gov. Rick Snyder that overturned a $2.4-million judgment against the brother and business partner of Michigan Republican Party Chairman Bobby Schostak, the bank’s attorney said Friday.
The law Snyder signed Thursday, which says a lender can recover only the real estate offered as collateral when a certain type of commercial loan goes into default, is unusual because it is retroactive, to the benefit of Schostak’s brother.
The law is intended to overturn a judgment related to an unpaid loan on a Traverse City mall that was controlled by the Livonia-based real estate firm Schostak Bros. That judgment was upheld by the Michigan Court of Appeals.
The new law also could impact at least one other case recently decided on similar grounds in federal court in Michigan, though attorneys and legal scholars say the new state law may violate the U.S. Constitution.
On Friday, Bank of America bent. A source at the bank, who asked not to be identified because the policy is still evolving, said it likely it will offer ways for its customers to avoid debit card fees through using direct deposit, maintaining minimum balances or using Bank of America credit cards.
They sure Netflixed that up.
Oh, ouch! You know you’ve fucked up epically when you become a verb.
One of the most pervasive arguments against banking regulation is that the banks will pass all regulatory costs on to consumers, thereby making bank accounts hugely expensive. This line of reasoning effectively asserts that regulators are trapped by the banks, and that any effort to limit any profitable activity in the banking sector will mean huge pain to consumers.
As this announcement shows, though, this kind of argument holds no water - because there are many banks, and they’re all vigourously competing for market share, and (other than recent anecdotes of bizarre arrests) switching banks is a relatively costless procedure. If you regulate banks more strongly, they’ll need to take much of the hit to profitability themselves or risk losing market share.
Obviously the Wells Fargo shareholders are going to lose some money here. But this is probably worthwhile for long-term sustainability of the world’s largest banking system.
On Saturday, October 08, 2011, the Occupy Together protesters of Colorado Springs, CO mustered at 10:30 am in Acacia Park to celebrate their first complete day of 24/7 occupation protesting in support of the Occupy Wall Street cause. After a short general assembly meeting, a commonality among the movement reflecting a respect for democracy and free speech, the protesters began a march targeting all of the major bank branches in downtown Colorado Springs.
The first bank to get protested was Chase Bank on East Boulder Street, where the particularly bold chant of “Close your accounts” broke out, in addition to rallying cries that have been a staple of this protest so far.
The march then began south on Tejon Street with stops at the many downtown banks in the area, turning West on East Pikes Peak Avenue and South again on South Cascade Avenue culminating in a protest in front of the Wells Fargo Branch in the Merrill Lynch building. Wells Fargo closed its branch for the day with a large group of people clearing out of the building to chants of “Hey Wells Fargo, You can’t hide, we can see your greedy side.”
In the wake of the financial crisis, a number of the nation’s largest banks were excused from the government’s rescue program before they had returned to a position of complete financial security — in part because they wanted to avoid restrictions on how much their executives would get paid, according to a new report from the program’s government overseer.
Citigroup, Wells Fargo, PNC and Bank of America successfully lobbied to leave the federal bailout program early in 2009, even though the Federal Reserve Board and the Federal Deposit Insurance Corporation had recommended they take additional steps to shore up their assets, according to a new report from the Special Inspector General for the Troubled Relief Asset Program, a government watchdog office.
Treasury Assistant Secretary Tim Massad released this statement in response to the report:“We are pleased that the report acknowledges that the nation’s largest banks are much stronger today as a result of the actions the government took. Treasury wanted the major banks to raise private capital and repay taxpayers because that was necessary to restore stability and strength to the financial system. Moreover, we estimate that taxpayers will realize a $20 billion gain on the assistance to banks provided under TARP.”
There’s a staggering amount of bad paperwork in citywide foreclosures - not just in New York, but around the country.
I posted a related story yesterday, but there didn’t seem to be too much interest in it.