It has been almost a year since Wells Fargo was fined an unprecedented $185 million dollars for illegally opening 3.5 million accounts. Since then, politicians from Los Angeles and Philadelphia to Raleigh and Washington, D.C., have put out a series of edicts and laws to hold Wells Fargo and its executives accountable. In June, the Los Angeles City Council moved to divest city funds from Wells Fargo, marking yet another blow to the bank.
These steps, while important, go only so far in protecting the people whose lives and livelihood depend on trustworthy banking. As reports from the National Employment Law Project found, the same system of high-pressure sales goals that helped Wells make fistfuls of cash from illegal accounts exists at nearly every other major bank. In just the past eight years, my family and I have been cheated by both Wells Fargo and Bank of America — and, sadly, that’s not uncommon.
After flying under the radar, Los Angeles is now poised to take a meaningful step that could prevent another Wells-sized scandal, not just punish the perpetrators of the last one. It might not make for the flashiest headline, but good policymaking isn’t always glamorous.
This summer, City Councilman Paul Koretz and the City Attorney’s Office are advancing a new policy to show banks that rely on aggressive sales goals — the very tactics that created the Wells scandal — that these practices aren’t welcome in our city.
Koretz’s motion, which is making its way through the City Attorney’s Office, bans banks that rely on aggressive sales quotas from doing business with the city of Los Angeles. The new rule would require that banks do not engage in practices that harm consumers by amending our city’s Responsible Banking Ordinance.
That ordiance was created in 2012 to protect us from another subprime mortgage crisis. Banks, though, always have more tricks up their sleeves — and our regulations similarly need to evolve.
On Thursday, Aug. 17, elected officials, local residents and workers, and industry experts will gather in Los Angeles to hold a groundbreaking panel to address that need. The Community Review Board for Responsible Banking, led by the Committee for Better Banks and the Alliance of Californians for Community Empowerment, will open the forum to experts and the public for testimony and recommend policies to protect consumers like me and the city’s financial health.
My family and I are intimately familiar with big banks’ predatory games. In the 2008 financial crisis, we lost our San Fernando Valley home and I lost my job as a security-camera installation specialist, a position I’d held for 15 years.
While I was looking for a new job, I kept receiving glossy pamphlets from Bank of America and Wells Fargo offering me credit cards. At first, I refused. Then, as our savings got eaten up and we got more desperate, I activated a Wells Fargo credit card with a 3 percent interest rate. I made payment after payment on time until one bad month. And with that, my interest rate shot up more than 5 points.
For my family, that one credit card began a spiral of debt that swallowed up our savings and our financial future for years. I’d call Wells customer service representatives to discuss my payments, but they’d just relentlessly pressure me to open new accounts.
Since the Wells scandal broke, I’ve read that bank workers were pressured by management to “round up” immigrants and encourage them to open accounts. I’ve heard stories through my work in the Committee for Better Banks, which advocates for responsible banking practices, from tellers who had to make the impossible choice between providing for their own families and pushing their neighbors to sign up for unnecessary services.
In a system that effectively demands workers push predatory products on customers or risk being fired, we’re all victims.
Getting caught by state and federal authorities, and one of the largest fines ever levied on a major bank, got Wells Fargo to stop using high-pressure sales goals. But ending quotas at one bank doesn’t solve the problem facing families who keep their savings with or work for banks across our city. Other banks, like Bank of America and SunTrust, use the same types of sales goal to push unnecessary credit cards and products and make their billions.
Later this year, Los Angeles will call for bids from banks who want our city’s business, valued at hundreds of millions of dollars. It’s a lucrative contract, guaranteeing the winning bank a reliable payout for at least 10 years. With the help of City Council and the City Attorney’s Office, this seemingly mundane process takes on new meaning. The city shouldn’t bank with any entity that rips off its residents.
This requires enacting an explicit policy that ends relationships with any bank that makes its money with discriminatory and unfair practices.
With measures like this, we can send a powerful message to big banks that Los Angeles customers and bank employees won’t be duped again in the service of greater-than-ever profits. A $185 million fine opened our eyes to the gravity of Wells Fargo’s scandal; a common-sense update to our Responsible Banking Ordinance will help make sure we never live through that deception again.
Javier Sarmiento, a Panorama City resident, is an employee of the Los Angeles County Metropolitan Transportation Authority.
