Regulators must finish the job of penalizing Wells Fargo

Last week, Federal Deposit Insurance Corp. Chairman Martin Gruenberg issued a stern warning about the deregulatory mindset of Congress and Trump-appointed bank watchdogs.

Gruenberg, whose term is winding down, said recent proposed changes in post-financial crisis regulations threaten the “guardrails” that ensure a well-functioning banking sector.

He’s right. But Congress repealing provisions of Dodd-Frank is not the biggest threat to those guardrails. The most immediate threat involves the failure of regulators, including the FDIC itself, to assertively use powers that are still on the books.

Take the appalling case of Wells Fargo. For over a year, the bank has been hit with a flurry of revelations about wrongdoing. The number of accounts in the notorious fake-accounts scandal has swelled from 2.1 million to 3.5 million. The bank has been implicated in charging 800,000 auto loan borrowers unnecessarily for car insurance, with the added costs leading to nearly 25,000 cars being wrongly repossessed. It has saddled student loan borrowers with illegal late fees and other bogus charges. It has seized hundreds of cars from active-duty service members without the court order required by federal law.

continue reading »

More News