Wells Fargo: Riding the 1% Stagecoach of Injustice
Wells Fargo has been using its stagecoach to loot American communities for more than a decade. After boosting its bottom line by selling subprime mortgages, by the end of 2011, the bank owned $19 billion worth of homes that used to belong to American families.
Wells Fargo has been condemned for the aggressiveness of its foreclosure activity. MSNBC recently reported that the bank’s employees are required to fulfill quotas of 10-11 foreclosures processed per day. In February, Wells Fargo settled charges of foreclosure abuse brought by 40 states, joining four other foreclosure banks in paying $25 billion. One of the settled charges included having robots sign foreclosure documents that attest to having been reviewed by human lawyers.
After Wells Fargo forecloses on a property they do a better job maintaining the properties in white communities than in communities of color.
Wells Fargo has faced a series of fines over its abusive lending practices for nearly a decade. In 2003, California regulators fined the bank $38 million for mailing “live checks” to potential customers without adequately disclosing the terms of the loans. Last July, they paid a record $85 million fine for steering customers into costlier loans than their credit rating qualified them for.
Where have the profits from preying on customers gone? Not very much goes to Uncle Sam. Over the last four years, Wells Fargo reported $69 billion in U.S. profits and paid just $2.6 billion in federal corporate income taxes, an effective tax rate of just 3.8%. During the period 2008-2011, Wells Fargo collected more than $21 billion in tax subsidies from the U.S. Treasury.
A big chunk of the bank’s profits also winds up in the pockets of Wells Fargo’s highly compensated executives. CEO John Stumpf received $18 million in compensation last year, an increase of $800,000 over 2010. Stumpf’s retirement pension plan is valued at $16 million. Quite a nice reward for ruining the financial futures of so many Americans.
Scott Klinger is an Associate Fellow at the Institute for Policy Studies.
