If the big banks are deregulated even more with crony capitalism continuing, this will look minor in comparison to another Wall Street crash and taxpayer-funded bailout. The last giant bailout cost the U.S. taxpayer hundreds of billions, if not more, yet today, the too big to fail, too big to jail banks are even bigger than they were years ago.
In congressional hearing rooms and on national television, Wells Fargo has vowed to make things right for the thousands of customers who were given sham accounts.
The bank’s new chief executive, Timothy J. Sloan, in his first week on the job, said his “immediate and highest priority is to restore trust in Wells Fargo.”
But in federal and state courtrooms across the country, Wells Fargo is taking a different tack.
The bank has sought to kill lawsuits that its customers have filed over the creation of as many as two million sham accounts by moving the cases into private arbitration — a secretive legal process that often favors corporations.
Lawyers for the bank’s customers say the legal motions are an attempt to limit the bank’s accountability for the widespread fraud and deny its customers their day in open court.
Under intense pressure to meet sales goals, Wells employees used customers’ personal information to create unauthorized banking and credit card accounts in a far-reaching scandal that has rattled the San Francisco bank to its core, forcing the retirement of its longtime leader, John G. Stumpf, and enraging regulators and politicians of all stripes.
In many instances, the fees that customers were charged on the unauthorized accounts were less than $100. Few lawyers will take up individual arbitration claims when the potential damages are low.
“This is meant to have a chilling effect,” said Zane Christensen, a lawyer who represented customers in a suit against Wells Fargo in federal court in Utah. “They know customers will have a hard time finding a lawyer to represent them in arbitration.”
But those damages could cost the bank a fortune if multiplied over potentially thousands of customers in a class-action lawsuit.