YEREVAN (CoinChapter.com) – As reported on Dec 20, Wells Fargo, an American multinational financial services company, will pay $3.7 billion in penalties for ‘illegal activity,’ including unjust foreclosures. The Consumer Financial Protection Bureau (CFPB) called the bank’s actions the result of “widespread mismanagement.”
Wells Fargo in trouble with the law again.
Rohit Chopra, the CFPB’s director, commented, “Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families.”
To be more precise, over 16 million consumer accounts, auto loans, and mortgages were violated. Chopra called Wells Fargo a “repeat offender” and a “corporate recidivist” while noting some progress in their corporate policy’s compliance.
The bank’s CEO, Charlie Scharf, commented that he already “took the necessary actions” to prevent future slip-ups.
We and our regulators have identified a series of unacceptable practices that we have been working systematically to change and provide customer remediation where warranted. This agreement is an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us.
The CFPB director noted that the latest fine is just the beginning for Wells Fargo. However, judging by the statement above, Scharf does not expect serious action.
Also read: US Senate Close to Passing $1.7T Spending Bill — What Does It Mean for Crypto?
Meanwhile, the crypto community watches with awe how a banking giant can get away with nothing but fines, while the latest crypto fraud resulted in a few jail sentences.
The prosecution went after SBF but not the bankers
In detail, the FTX saga shook the crypto sector, and the man behind the wheel of the ‘death car,’ Sam Bankman-Fried (SBF), was arrested and charged with fraud, then released for a $250 million bail. Moreover, his accomplice, Caroline Ellison, the chief of Alameda Research, turned out to be a key witness in the case.
The Securities and Exchange Commission (SEC) alleged that Ellison manipulated FTT prices by purchasing large quantities on the open market, operating under directions from Bankman-Fried. Moreover, the complaint alleges that SBF raised billions of dollars by falsely claiming FTX to be a safe crypto trading platform.
To be clear, in no way do we suggest that the actions against SBF were unjust! On the contrary, financial fraud should, on any level, be prosecuted.
But such utter disregard for investor money, which, incidentally, the SEC was set to protect, is not indigenous to the crypto market. The ongoing prosecution of Wells Fargo argues the point, and the bank is not unique regarding ‘shady business.’
Also read: Crypto “non-compliance is not gonna work,” Gary Gensler said to SBF, or did he?
US has a soft spot for bankers
The number of bankers jailed during the previous financial crisis in 2008 is precisely zero. Yet, during the four-plus years after the 2008 collapse, the SEC has brought charges against more than 150 people and institutions. The agency also collected approximately $2.68 billion in penalties.
Meanwhile, no Wall Street executives were prosecuted for fraud during that time. According to estimates, the financial meltdown left 8.8 million Americans jobless, leading to a $700 billion government bailout.
The lenient approach goes back to the Great Depression
The 2008 crisis, or the current one, for that matter, is not unique either. The Great Depression should have seen a few bankers in jail. Not quite.
In 1932, the Senate Committee on Banking and Currency opened a public inquiry into the stock market crash. The investigation led to a few indictments for several tycoons of the time. However, the lack of appropriate regulations against the kind of speculation that fueled the crash meant that bankers escaped justice.
To be fair, there were instances in American history with massive jail sentences for bank executives. For example, during the ‘savings and loan crisis’ of the ’80s, the government came down with harsher punishments. As a result, more than 1,000 bankers were convicted by the Justice Department (JD).
William Black, who served as the government’s point man for litigation in the crisis, accused the JD of not implementing the same approach in 2008.
Also read: Bank of Japan Revises Yield Curve Control Policy.
While the institutions mostly seem to buy their way out of trouble, the regulators watch the crypto sector closely. Admittedly, fraud in any sector causes harm to consumers, and their interests should be a priority. However, a fair distribution of fraud detection should also lead to the same treatment among ‘big dogs’ on Wall Street.
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