A power has risen up in the government greater than the people themselves, consisting of many and various and powerful interests. . . and held together by the cohesive power of the vast surplus in the banks,. — John Calhoun, May 27, 1836 Speech

Herewith an update on the arcane world of banking as practiced by Wells Fargo, the fourth largest bank in the United States.

The update is prompted by a story about the bank in the New York Times on March 9, 2019, and by an appearance by Timothy Sloan, the bank’s president, before the House Financial Services Committee, on March 12, 2019.

The unfavorable publicity is not new, nor are the bank practices that are, to its critics, like honey to flies. Its previous bad practices have been widely reported. Their continued practices, although transmogrified, continue to be bad practices.

In 2016, we learned that the bank had opened more than 3.4 million fake accounts for customers, in order to meet sales goals. We learned that individuals who received car loans from the bank, were sold car insurance when the loans were made, whether or not it was needed by the borrower. The Wall Street Journal reported that the bank’s employees had overcharged customers for foreign exchange fees transactions.

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The bad practices did not go unrewarded, although the bad practices were on a two-way street. On the positive side, from the bank’s perspective, the bank and the complicit employees, generated lots of revenue from the fraudulent practices. On the negative side the bank paid state and federal fines and penalties of $1.5 billion. In addition, it paid $620 million to settle the claims made against it by defrauded customers. It also apologized for the fact that it had charged 570,000 customers who took out auto loans with the bank, for auto insurance they didn’t need.

Some hoped that the light of day that had shined on the bank’s practices might cause the fourth largest bank in the United States to mend its ways. According to some employees, as reported in the New York Times story, bad practices persist. According to Mr. Sloan’s testimony before the House Financial Services Committee, on the other hand, things have greatly improved. Readers can decide for themselves who is right.

According to the Times report, bank employees are no longer opening fake accounts or selling unsuspecting customers unneeded car insurance. However, employees who spoke to the NYT report that in many branches employees are under great pressure to bend the rules to meet performance goals. In one branch that has a large debt collection practice, employees are expected to make 30 calls an hour and recoup $34,000 in overdue debts during that 60-minute period. It would be interesting to listen in on a 120 second telephone call between a creditor and a debtor in which the creditor not only explains to the debtor the reason for the call, but shows the debtor how to make the past due payment during the call. If nothing else, the practice gives new meaning to the term “fast talker.”

Six days after the New York Times’ report was published, Wells Fargo’s president, Timothy Sloan was in Washington testifying before the House Financial Services Committee. He had been summoned by the Committee in order to satisfy the members’ curiosity as to how the bank had reformed itself following the earlier scandals. The NYT report was no help to him.

Throughout the hearing the report was referred to by members of the Committee. In responding to questions about the bank’s practices and whether the bank could improve, Mr. Sloan said: “I can’t promise you perfection, but what I can promise you is that the changes we’ve implemented since I’ve become C.E.O. will prevent harm the best we can.” In response to a question of why it had taken a long time for the bank to refund money to customers to whom it had sold car insurance they didn’t need, he suggested there had been “give and take” with the comptroller as to how much to refund. (Had I been the purchaser of such insurance I would have not had any difficulty letting the bank know how much I should get back, with interest, without needing the assistance of the comptroller.)

During his testimony, Mr. Sloan said the bank “had examined 160 million accounts and contacted more than 50 million customers to make sure we’ve made things right, and I believe we have.” Mr. Sloan was telling the Committee that the bank had examined accounts numbering almost one-half of the total population of the United State That sounds as plausible as the idea that a bank debt collector can make 30 successful debt collection calls in one hour. It all goes to show why this writer is not in the banking business. Or perhaps it goes to show that Wells Fargo continues to have unrealistic expectations of its employees, and an exalted view of its operations as expressed by its president.