What is $185 million when you have a couple trillion?
When someone takes money from another person without permission, especially repeatedly, they usually get punished. But what if that someone is a bank with nearly $2 trillion in assets?
At least until recently, it seemed like the answer is “not much.” However, in her last move as Chair of the Federal Reserve, Janet L. Yellen indicated there may be something else in store for Wells Fargo.
The bank has been no stranger to scandal. It most notably made headlines last year over allegations that it fraudulently forced unnecessary collateral protection insurance on auto loan borrowers. Once the darling of the banking industry during and after the Great Recession, Wells Fargo’s success has been increasingly linked to fraudulent tactics. It seems Wells Fargo survived the economic downturn by inventing new and creative ways to defraud its customers, like the phantom accounts that in late 2016, earned it a $185 million fine.
Earlier this month, the Federal Reserve took the unusual step of restricting Wells Fargo’s growth until it shows sufficiently improved governance and controls—as determined by the Fed. This novel feat was accomplished via a consent cease and desist order, signed by each current member of Wells Fargo’s board of directors. Additionally, four directors will be replaced by the year’s end. By one estimate, the current growth restriction is expected to cost Wells Fargo $300-400 million in 2018. Wells Fargo remains under investigation by several governmental agencies for related wrongdoing.
In the ongoing consolidated class litigation on behalf of consumers impacted by the force-placed collateral protection insurance, CaseyGerry’s managing partner, David S. Casey, Jr., is serving as Plaintiffs’ Liaison counsel. For decades, CaseyGerry has successfully litigated class actions on behalf of plaintiffs throughout the United States.
By: Alyssa Williams