When the Consumer Financial Protection Board (CFPB) settled with Wells Fargo last month for $100 million, it did so without requiring that Wells Fargo admit to its wrongdoing
Or as the settlement agreement put it, the bank agreed to pay the $100 million “without admitting or denying the findings of facts and conclusions of law.”
And it wasn’t just the CFPB.
The Comptroller of the Currency settled with Wells Fargo for $35 million.
And the Los Angeles City Attorney settled with Wells Fargo for $50 million.
And all of them allowed Wells Fargo to “neither admit nor deny.”
This despite the egregious behavior documented by the CFPB.
The CFPB found, for example, that Wells Fargo opened more than 1.5 million deposit accounts without client consent, transferred funds between client accounts without client consent, applied for almost 600,000 client credit cards without client consent, issued client debit cards without client consent, and enrolled clients in on-line banking services without client consent.
As a result, Wells Fargo charged customers approximately $2 million in fraudulent deposit-account fees and more than $400,000 in fraudulent credit-card related fees.
Yet, Wells Fargo neither admitted nor denied that it had violated the law.
Why?
Daniel Alter wants to know.
Alter is a Senior Fellow in residence with the Program on Corporate Compliance and Enforcement at NYU Law School.
Alter recently served as the General Counsel and Chief Compliance Officer of itBit, a financial services company.
Previously he was the served as the General Counsel of the New York State Department of Financial Services.
Alter says that in allowing Wells Fargo to “neither admit nor deny the charges, the authorities blinked.”
“This was a case of serious, systemic misconduct towards consumers by a major financial institution, and it warranted a public confession,” Alter writes at the NYU Law Compliance and Enforcement Blog. “By failing to exact any such acknowledgment of culpability, the regulators missed an important opportunity. This case presented a chance to foster an ethos of ethical responsibility, both within the banking industry at large and within a single institution in dire need of cultural reform. And that ethos is the bedrock foundation of every effective compliance regime.”
Alter says that the neither admit nor deny clause, when used to settle serious regulatory violations, “suggests that the authorities either lack the power or commitment to hold violators legally and publicly accountable – that is, to shame them.”
“Surely, there are circumstances where, on balance, it is in the public interest for regulators to settle charges without requiring an alleged violator to admit liability,” Alter writes. “The infraction may not be serious enough to warrant the expenditure of prosecutorial resources, or the available resources are needed elsewhere. As the U.S. Court of Appeals for the Second Circuit recently underscored: ‘Trials are primarily about truth. Consent decrees are primarily about pragmatism.’ But, as this case makes evident, sometimes it is pragmatic for regulators to insist upon the truth.”
Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter, a legal weekly. Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor and co-director of the corporate accountability group Essential Action. They are co-authors of Corporate Predators: The Hunt for Megaprofits and the Attack on Democracy (see http://www.corporatepredators.org)
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“The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand ever invented. Banking was conceived in Iniquity and born in sin. Bankers own the Earth. Take it away from them, but leave them the power to create money, and with the flick of a pen they will make enough money to buy it back again… Take this great power away from them and all great fortunes like mine will disappear, and they ought to disappear, for then this world would be a better and happier world to live in. But if you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control credit.”
Sir Josiah Stamp: Director, Bank of England 1928-1941, (The 2nd richest man in England at the time)
“The issue which has swept down the centuries and which will have to be fought sooner or later, is the people versus the banks.”
Lord Acton (1834 – 1902)
English historian.
“I wouldn’t go to war again as I have done to protect some lousy investment of the bankers.
There are only two things we should fight for: one is the defense of our homes and the other is the Bill of Rights.
War for any other reason is simply a racket.”
USA Major General Smedley Darlington Butler (1881-1940)
“Banking doesn’t involve fraud, banking IS fraud.”
Tim Madden: monetary historian & consumer advocate.
‘yes we should have regulated the banks more but when the crisis broke and we looked at the question of regulation, we were so heavily lobbied that we didn’t do it’.
Prime Minister: Gordon Brown
“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
Henry Ford
I believe that banking institutions are more dangerous than standing armies. If the people ever allow private banks to control the issue of currency the corporations that grow up around them (banks) will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.
Thomas Jefferson.
“The financial system … has been turned over to …. the Federal Reserve Board. That board administers the finance system by authority of …. a purely profiteering group. The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money.”
Republican: (1923) Charles A. Lindberg (R.MN)
“We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board … This evil institution has impoverished … the people of the United States … and has practically bankrupted out Government. It has done this through … the corrupt practices of the moneyed vultures who control it.”
Republican: (1932) Louis T. McFadden (R.PA).
“Most Americans have no real understanding of the operation of the international money lenders.. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and … manipulates the credit of the United States.”
Senator Barry Goldwater (R.-AZ)
“The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy.”
Abraham Lincoln.
“Before passage of this Act, the new York Bankers could only dominate the reserves of New York. Now, we are able to dominate the bank reserves of the entire country.”
Senator Nelson Aldrich (1910).
“The Aldrich Plan is the Wall Street Plan. It means another panic, if necessary, to intimidate the people. Aldrich, paid by the government to represent the people, proposes a plan for the trusts instead.”
Republican Charles A. Lindbergh (R-MN)