#toobigtofail

Just a few of Wells Fargo's recent greatest hits include:7-10

Blaming a computer glitch after it foreclosed on 400 homes for absolutely no reason (the bank was "very sorry").

Facing accusations of gender bias from senior executives.

Forcing redundant car insurance on more than 800,000 people, raking in $73 million while 25,000 people had their cars repossessed.

Allegedly changing loan terms of bankrupt mortgage borrowers in secret without informing them.

Playing a role in funding Trump's immigrant prisons as one of the lenders to private prison companies GEO Group and CoreCivic.

Being accused of falsifying records in order to make mortgage applicants pay for delays the bank actually caused.

Facing allegations of stealing from rich investors to pay for legal fees to defend a lawsuit from those same rich investors.

Pushing even its richest clients into unnecessary products and charging huge fees.

Oh, and let's not forget opening 3.5 million unauthorized bank and credit card accounts and blaming it on low-paid workers struggling to hit incentives.

Instead of rewarding criminality and failure, it is time to shut down Wells Fargo once and for all.

Without even getting into the creation of revenue out of thin air ($billions every year in the U.S. in various fees and fines), the daylight robbery of the banking system is constructed on the privilege of the banks to create money itself out of thin air.

That the lending of American and British banks is restrained by capital requirements (10.5% of risk-weighted assets, under Basel III), which were supposed to buffer systemic risk following the financial crisis, does not in any way prevent the banks from lending far in excess of reserves, as fractional-reserve banking has always permitted them to do.

For instance, if a bank receives $100 in new deposits and adds $10 of that to its reserves (as used to be the 10% reserve requirement) it lends the other $90; but the $100 deposit remains on the books as a liability, which means that the $90 lent out is new money created out of thin air that resides in someone else’s account. Then when this money is spent and ends up in other people’s accounts even more money can be created in the same money-multiplying way. The extent to which banks can lend un-backed by reserves is restricted not by reserves anymore but by capital, following Basel III, which is a restriction as low as a low reserve requirement would be. According to Joseph T. Salerno (2012), the institutional conditions in the U.S. today allow for each dollar of currency deposited in a bank to increase the U.S. money supply by up to a maximum of $10 (a bit less than that post–Basel III). 

This license of the banks to extend credit creates inflation, which over time transfers purchasing power from the public to the government and to banks and everyone else doing deals with the government. To create money out of thin air and then earn interest on it is a privilege effectively guaranteed by the central bank, which can print whatever quantity of money it needs to bail out any business or systemic failure created by excessive leveraging of credit extended against cash reserves. Thus the central bank is the base of all inflationary money creation, the practice of which can be stabilizing in the short term and disastrous in the long term (as we will soon see).

In a free market a central bank would not exist, since government-backed monopolies would not exist. Thus banks would have to be very cautious about extending credit, since excessively risky lending would result in the failure and shut down of the bank. Inflation would therefore be much lower and restrained by market forces instead of being an invisible (and potentially unlimited) tax determined by the policy of the central bank – that is, unelected “technocrats” with the exclusive power to dictate the money supply.

In a free market, without the existence of legal tender (enforced-monopoly usage of a sole currency), each bank would be responsible for its own brand of currency which would freely compete as any other product or service would.

In an ideally stable system, there would be no fractional-reserve banking. Banks would not create money out of thin air and instead would retain the full amount of cash deposited so that the demand deposits of all customers would be instantly and simultaneously redeemable. Banks would make money on credit instruments such as time deposits, since these have maturities that can be matched to loans, instead of on the inherent riskiness of short-maturing deposits backing long-maturing loans.

Wells Fargo should not exist. Wall Street cops punished the megabank 43 separate times since 2008. Wells launched three separate ad campaigns begging Americans to believe it turned a corner, and it keeps breaking the law.1

Now, new reports claim the feds are investigating Wells Fargo's wholesale banking unit.2 The news came right after female executives blew the whistle on gender bias within the bank, which occurred right after reports that the bank was scamming even its wealthiest clients, which we learned soon after Wells Fargo came under fire for profiting off the private prison companies running Trump's immigrant jails, which became a scandal on the heels of the company admitting it foreclosed on 400 homes absolutely without reason, which happened right after...3,4,5

You get the idea.

Tell Congress: Shut down criminal megabanks like Wells Fargo.

Rep. Maxine Waters' bill would shut down Wells Fargo and other criminal megabanks. Federal regulators have the power to crack down on criminal megabanks and even revoke their federal corporate charters, but have utterly failed to do their job. Rep. Waters' bill would force regulators like the Office of the Comptroller of the Currency and the Federal Reserve to use every tool available to shut down megabanks that repeatedly abuse consumers and to hold bank executives responsible.6

Just a few of Wells Fargo's recent greatest hits include:7-10

Blaming a computer glitch after it foreclosed on 400 homes for absolutely no reason (the bank was "very sorry").

Facing accusations of gender bias from senior executives.

Forcing redundant car insurance on more than 800,000 people, raking in $73 million while 25,000 people had their cars repossessed.

Allegedly changing loan terms of bankrupt mortgage borrowers in secret without informing them.

Playing a role in funding Trump's immigrant prisons as one of the lenders to private prison companies GEO Group and CoreCivic.

Being accused of falsifying records in order to make mortgage applicants pay for delays the bank actually caused.

Facing allegations of stealing from rich investors to pay for legal fees to defend a lawsuit from those same rich investors.

Pushing even its richest clients into unnecessary products and charging huge fees.

Oh, and let's not forget opening 3.5 million unauthorized bank and credit card accounts and blaming it on low-paid workers struggling to hit incentives.

Instead of rewarding criminality and failure, it is time to shut down Wells Fargo once and for all.