Today's Recidivist Corporate Criminal: Wells Fargo

When documenting the rampant corporate crime that occurs in America these days, it is interesting to see that some of the same companies keep on showing up again and again, like Uber. Another frequent company that makes an appearance on this dubious list is Wells Fargo.

Wells Fargo has been mired in controversy since it was revealed that it had defrauded thousands of account holders by opening up bogus accounts and credit cards in the account holder’s name and without authorization, simply to generate additional fees and meet sales performance goals. After the usual round of corporate denials and minimization of the problem, it was finally revealed that this particular scam had been going on for nearly 15 years.

In addition, many Wells Fargo employees who complained about this illegal conduct or reported it to their superiors were ignored and often terminated. And, in a final indignity, Wells Fargo tried to force those account holders into individual arbitration proceedings as detailed in their account opening documents in order to recoup the money that was stolen from them.

With all this in mind, you would think that Wells Fargo would make sure they were on their best behavior. But no, not the cowboys who run these unaccountable financial firms. On Wednesday, yet another class action was filed against the bank alleging that it was unilaterally changing the terms of its home loans with customers who were currently in bankruptcy. The changes initially looked to benefit these customers as it reduced their current payments to the bank. But at the same time, the changes extended the terms of the loans, meaning that the customer ended up owing far more money to the bank over the life of the loan.

Any modifications to a loan to a person in bankruptcy must be approved by the court and the parties involved. It appears that Wells Fargo did not go through this process, leading one judge to call Wells Fargo’s actions “beyond the pale of due process.” Instead, the bank submitted documents to the court that claimed that the customers had agreed to changes outlined in the modification when, in fact, they customers had neither been notified or agreed to such changes.

For those customers in bankruptcy, the extension of the life of the loan without their consent was a potentially devastating move. One couple was under a payment plan that would have paid off their loan after nine years. Wells Fargo unilaterally extended the loan to 40 years, which did lower the couple’s monthly payments. But the customers were unaware that the loan term had been extended. If they had not inquired about the change with their lawyer, they would have emerged after nine years thinking their loan was paid off only to find they had another 31 years of payments and owed an additional $40,000 in interest.

An additional incentive for this Wells Fargo fraud, besides the massive amounts of additional interest, was the fact that the government would compensate Wells Fargo up to $1,600 for every loan modification it made.

It was less than two years ago, in November, 2015, that Wells Fargo paid over $80 million in fines for not providing timely notification to borrowers whose payments were modified due to changes in tax and/or insurance costs. As part of that fine, Wells Fargo agreed to certain changes that would prevent future violations. Apparently, those changes were never implemented which has been a common problem with so many of these government fines and agreements with these giant Wall Street financial firms.

I have written this before, but it is clear that one of the major failures of the Obama administration was to treat the financial industry with kid gloves after the financial crisis, presumably out of the fear of once again destabilizing the financial markets. Instead, the administration should have hauled in many of these firms’ senior executives into court and charged them with real crimes. Yes, I know that current securities law is designed so that it is virtually impossible to win a case against these financial firms and the individuals who run them. But it would have been a shot across the bow to restrain these firms’ lawless and renegade behavior even if the government could not get a single conviction. It certainly won’t happen under Trump, but Democrats should remember that it’s never too late to hold these criminals accountable.