Ethics and being “To Big to Fail”

February 26, 2020

My Dear Reader,

As I’ve grown more mature into the financial industry, I’ve come to see certain transactions that I once saw as injustices as the nature of business. For instance, when banks clam up in an economic recession, it feels wrong. Like they’re starving the people really need money to continue on instead of giving a helping hand. But now, years into the financial industry, I understand that a loan is a risky proposition on the other side, and the banks not only perform a necessary action, but also a business transaction, and like every business owner, they are simply reacting to the conditions around them. The emotional aspect of every economic crisis is for politics. In modern politics, which are based more on emotion than logic, have no place for a measured view of things. Instead it’s all about injustice and outcry. Outrage and political power. So, when I discuss the ethics of Wells Fargo, I’m not doing so because I have some sort of ulterior motives against Banks or financial institutions, but because what Wells Fargo had done and has done is simply beyond the pale.

For a number of years, I’ve been reading the works of a great financial mind, his name is Simon Black and he had a chilling piece about how deep the Wells Fargo fraud has gone on for years. just take a look at this quote:

“Wells Fargo also sold customers car insurance they didn’t need, and charged erroneous fees which caused 20,000 cars to be wrongly repossessed. A computer glitch once caused over 500 Wells Fargo customers to have their houses foreclosed on. The bank charged 26 times the agreed price for foreign currency transactions. Wells Fargo illegally repossessed vehicles of soldiers who were deployed overseas. They accidentally charged late fees to more than 100,000 customers when it was the bank that was at fault. In 2016 employees were caught selling customers’ Social Security Numbers to identity thieves. Because of all this– and sadly, I’m sure I overlooked a couple scandals– the government has fined Wells Fargo a total of $18 billion since 2012, according to data compiled by the New York Times.”

Simon goes on to say that over the past decade, Wells Fargo has only paid 2.6 billion in interest to its retail customers. Can you imagine any other business operating this way in perpetuity? With that being said, I cannot even imagine a regional bank or institution that is not part of the “too big to fail” crowd pulling nonsense like this. Unfortunately, Wells Fargo has a wide berth to get away with this kind of unethical and shady business practices because they are involved in that upper crust of the lending institutions. The reason why some banks are too big to fail, is rather obvious, they simply wield a great amount of power in the amount of loans that they have on the books. And to understand the real problem behind this reality, we have to understand how the Federal Reserve works and how the monetary system works through the Mandrake mechanism.

At the risk of being too long-winded I’m going to save that detail for tomorrow, but I do want to leave you with some food for thought and the underpinning of this article. The businesses that we build and the relationships that we maintain must be honest and ethical in equal measure, or we will doom ourselves and smear the value that we create for others. But once we get to the point where we hold all of the cards per se, morality and ethics can more easily be overlooked. This is why the phrase “absolute power corrupts absolutely” is so poignant. Wells Fargo is probably too big to fail, but one thing is for sure they are corrupt. And you can take that to the bank.

To your creation and potential,
Kevin Prendiville