THE BLOG

Below the Fold: Wells Fargo Gets Picked Up On Radar

06/28/2012 04:10 pm ET | Updated Aug 28, 2012
  • Richard Zombeck Richard Zombeck is a freelance writer and a podcaster at TandZTalk.com.

A wrap-up of stories and posts you might have missed or overlooked -- the ones below the fold.

For quite some time Wells Fargo managed to stay below the media's radar and let the other guys like Bank of America and JPMorgan Chase, for example, bear the brunt of consumer and activist outrage. Lately, it seems, they've had to prove that they're equally nasty and contemptible as the others. Foreclosing on priests and temples; closing bank accounts without apparent reason; promoting and profiting from private prisons; and ripping off towns, states and counties with bid rigging that skimmed money slated for schools, hospitals, and nursing homes.

Wells Fargo can't seem to get enough bad press these days. While working with the "any press is good press" theory may work for loud mouths like Rush Limbaugh and Glenn Beck, it's not a strategy normally employed by most consumer based businesses.

In a piece I wrote a couple of weeks ago I speculated that Wells Fargo had closed the bank accounts of ML-Implode's Aaron Krowne out of retribution for Martin Andelman's articles about Wells Fargo's egregious and reprehensible track record in respect to homeowners and foreclosures. It's important to note that Andelman blogs independently, is not paid by ML-Implode, and ML-Implode does not dictate or control what he writes. His blog, however, is hosted on ML-Implode. In essence, it would be like closing Arianna Huffington's bank account because of something I wrote on Huffington Post.

Wells Fargo took particular offense, asserting that the headline was factually incorrect, but claimed that for privacy reasons they cannot disclose publicly the specifics behind the decision to close accounts. They asked that the title of the article be changed to not use the word "retaliation" and that somehow the original headline, "Wells Fargo Freezes Account in Retaliation," was inaccurate since one of the articles mentioned, "Husband's Suicide Yesterday, Wells Fargo to Evict Wife Tomorrow Anyway," by Martin Andelman was written after they had made the decision to close the account. Andelman's article was written on May 14 and Wells Fargo made the decision to close Krowne's account on May 11.

While there's a potential argument in favor of that interpretation, that's not the only article in which Andelman chastises Wells Fargo. Some of the articles include the following: "Arizona Loan Modification - Couple Says Wells Fargo is the Scammer," in May 2010; "Arizona Judge Orders Wells Fargo to Testify on Loan Modification Practices," in August 2009; "Federal Judge Magner: Wells Fargo's Behavior 'Highly Reprehensible'," in April, 2012; and "Wells Fargo Closes Accounts if Firms Offer Loan Mod Services," in July 2009. In this last piece he writes:

Today, I was informed that Wells Fargo Bank is unilaterally closing the business checking accounts of companies simply because they are offering loan modification services. Yes, you read that right. Business checking accounts. Because you offer to help people obtain loan modifications from banks... like Wells Fargo.

Incidentally, one of ML-Implode's advertisers is RESTReportMatters.com, a "no upfront fees" NPV analysis company that has had some impressive success helping homeowners secure loan modifications after being erroneously denied by Wells Fargo and other major servicers, according to Manager Michael Nazarinia.

In the same week that ML-Implode's accounts were closed, Nazarinia's Wells Fargo business checking, personal checking, and personal savings accounts were also all closed. Adding to the pile of "coincidence" Wells Fargo also closed the bank accounts of a former RESTReportMatters.com employee and, presumably out of good measure, the account held by the employee's mother.

While Wells Fargo claims to be unable to publicly disclose why they close accounts, they were also unable to disclose their reasons to the individual account holders. Krowne, Nazarinia, and the others say they all received the same unsigned generic form letter dated May 11, 2012 from "Risk Operations and Fraud Prevention Services."

The opening and closing paragraphs of the letter read:

Please be advised that Wells Fargo has made a decision to exit the relationship with you and close the above referenced account (s). Your account (s) will be closed within thirty (30) days from the date of this letter.

...
Should you have any questions, you may contact your local Store Manager or your Relationship Manager, if applicable.

Surprisingly, the letters were sent with no explanation as to what risk or potential fraud caused this action. Adding to the confusion, neither Wells Fargo employees nor the "Store Managers" at the Wells Fargo branches, when asked by Krowne or Nazarinia, were able to provide a reason for the accounts being closed.

In my earlier piece I wrote of Krowne:

Aaron Krowne, ML-Implode.com's founder and publisher is one of the more respected and well known bloggers in the financial activist community. It's surprising that Wells Fargo would willingly poke that potential hornet's nest and risk the backlash from his supporters.

In the last two weeks Wells Fargo, who has managed to fly under the radar of many homeowner and consumer advocates, has received more attention than a business could hope for.

Steve Dibert of MFI-Miami and a former mortgage broker during the boom years posted, "Whistles Were The Only Thing NOT Being Blown By Wells Fargo Employees" in which he describes, in detail, the "perks" many brokers and real estate professionals allegedly received when doing business with Wells Fargo.

I can tell you that on the wholesale lending side we were also enticed with "special perks" by lenders. Both Wells Fargo and Countrywide aggressively enticed us to write large volumes of sub-prime loans. Where Wells Fargo offered their retail loan officers trips to family friendly 5-Star Caribbean resorts, the perks we received on the wholesale lending side more resembled a Hunter S. Thompson novel filled with naked women, booze and drugs.

Abigail Fields of Reality Check, in her piece, "Wells Fargo: Lying, Cheating, Paranoid, Vicious," lays out point-by-point the ways in which Wells Fargo has allegedly cheated, lied, and acted unethically.

As to paranoid, well, consider Wells's vindictive closure of checking accounts to punish a blogger for highlighting how Wells's actions contributed to a borrower's suicide. A banking behemoth fears a little ol' blogger so much it feels the need to retaliate by closing a bank account of a vaguely though not financially affiliated websites? Has CEO John Stumpf lost his mind?

As to Wells's viciousness, well there is that suicide story. Or this one. Or this latest needless infliction of misery.

In it she links to another of Andelman's articles titled, "Wells Fargo Hates Me! Bank Freezes, Closes Wrong Account," which is not entirely dissimilar to "Bringing Up the Rear: John Stumpf, CEO, Wells Fargo Bank," a piece he wrote for the Niche Report. It's no longer at the Niche Report, but can be found in its entirety here.

From the article:

What sort of a company engineers this sort of strategic core competency anyway? Remember Ford's infamous Pinto strategy... rather than fix the problem, just settle them as they exploded? Well, this Wells Fargo stuff makes that look as benevolent as Girl Scouts selling cookies after church.

Wells Fargo actually engineered a strategy and built a system to rampantly abuse the individuals in our society least able to defend their interests. This is a bank that deserves to have a statue erected in its likeliness and even its own Lazarus-styled sonnet.

Stumpf, according to Mark Gongloff of the Huffington Post, is the second highest paid bank CEO after JPMorgan Chase's Jami Dimon with $23 Million and $19.8 Million in compensation respectively.

In the last week alone, Wells has made the news for foreclosing on a priest in San Francisco and a Jewish temple and school in South Florida.

Archbishop King suspects the bank could be engaging in a form of "dual tracking" where one department makes a promise to work with the homeowner while another sends auctioneers to points of sale like San Francisco City Hall and, unknown to the owner, auctions off the home.

Daily Kos ran an article, "STUNNING! Banksters launder foreign drug cartel money as Wells Fargo invests in for-profit prisons," in April about Wells Fargo's involvement in private prisons. Quoting from the original article published in Salon.com, the post reads:

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.

I suggest you read the entire piece in Salon before assuming that anyone's gone off the rails with conspiracy theories.

Matt Taibbi of Rolling Stone recently published an article that, while long is by no means a slog, details how the TBTF banks were engaged in bid rigging of municipal bonds in "virtually every state, district and territory in the United States," and how "Wall Street wiseguys" spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from cities and small towns across America.

How did they rig the auctions? Simple: By bribing the auctioneers, those middlemen brokers hired to ensure the town got the best possible interest rate the market could offer. Instead of holding honest auctions in which none of the parties knew the size of one another's bids, the broker would tell the pre­arranged "winner" what the other two bids were, allowing the bank to lower its offer and come in with an interest rate just high enough to "beat" its supposed competitors. This simple but effective cheat - telling the winner what its rivals had bid - was called giving them a "last look." The winning bank would then reward the broker by providing it with kickbacks disguised as "fees" for swap deals that the brokers weren't even involved in.

According to the article, four banks took part in the scam: UBS, Bank of America, Chase and, you guessed it, Wells Fargo.

Taibbi also appeared alongside Yves Smith of Naked Capitalism in an interview with Bill Moyers last week and towards the end of the interview says of the bankers, "They genuinely think they earn all their money .... These guys really think that they have a unique and special genius that entitles them to earn the vast sums of money that they pay themselves."

Moyers near the very end of the interview, referring to Wall Street and the banker's attitudes and actions, offers a definition of a sociopath, as being "radically deprived of empathy." To which both Smith and Taibbi agree. You can watch the interview here.