The financial crisis of 2008 really shattered my world view. Until then I thought there was a free market where the companies that do good business survive. Since then you almost hear every week how banks do stuff that would have killed pretty much any other company but banks get away with it. This is just unbelievable.
Nah, it's just the nature of capitalism. Industries that require a large amount of startup capital lead to natural monopolies or duopolies. Those who cheat, skirt the law, or lobby to make getting into the industry harder do better than those who follow the spirit of the law. Board of directors exist not to create a balanced society, but to maximize returns on investment for owners and shareholders, and so will always behave as sociopathically as they can get away with. The government is supposed to regulate those industries, but because they buy off the government in the US, the duopoly-forming pressures continue unabated.
>> That's what happens when you centralize banking...
> Nah, it's just the nature of capitalism. Industries that require a large amount of startup capital lead to natural monopolies or duopolies.
But is that true of banking? The nation has a long history of small banks. While they've had their crises too, I don't think there's any natural motivation for bank consolidation besides using scale to eek out efficiencies and to gain power and influence.
> I don't think there's any natural motivation for bank consolidation besides using scale to eek out efficiencies and to gain power and influence.
Motivation has nothing to do with it. The development of power and influence through asymmetric growth in the industry is enough for this to emerge. There are still small banks today, but it's no coincidence that the largest (and thus overall best performing) banks cheat the system. The best performing become large and powerful on their own.
But your assertion was that banking is an "industr[y] that require[s] a large amount of startup capital" such that it will "lead to natural monopolies or duopolies." The fact that you can have a small, profitable bank disproves that.
Capital is more than just money. It takes a lot to jump through the regulatory hoops, money requirements, and insurance costs while having competitive prices against other Banks and still make a profit.
Even if it was just a money issue, new banks do still require a fair amount of money for relatively little profit in an industry that is well established. If someone is going to put their capital on the line, why wouldn't they put it in a higher growth industry?
These don't make new bank creation impossible, just unlikely.
In the same thread you state "Nah, it's just the nature of capitalism. Industries that require a large amount of startup capital lead to natural monopolies or duopolies" as the cause of centralization of the banks. Then you go on and explain where the high-capital cost actually comes from:
"It takes a lot to jump through the regulatory hoops, money requirements, and insurance costs while having competitive prices against other Banks and still make a profit."
I'm not blaming capitalism, just pointing out that in some industries, monopolies naturally form. If anything, I'm blaming the government for getting taken over by the rich instead of keeping the imbalances in line.
I don't understand your point. I think it's apparent to almost anyone that you need a fair amount of startup capital to start a bank. And when you go on to say:
>I don't think there's any natural motivation for bank consolidation besides using scale to eek out efficiencies and to gain power and influence.
Are efficiencies and power-seeking somehow not enough? I mean let's look at Standard Oil. What did Rockefeller do other than eek out efficiencies and try to gain power and influence? Efficiences are what defines a natural monopoly, we can't just throw it out.
Standard Oil is an interesting case. One of the things that made SO such a powerful monopoly (among many other things; I'm focusing only on business structure here) was the infrastructure it built up for transporting, refining, and selling oil. That is very capital-intensive, a situation a bit like (say) Comcast, whose businesses is protected by the large investments a competitor might need to make in laying fiber.
A good comparison might be shale oil companies, which largely are pretty small; Chesapeake, one of the most famous, has a market cap of 4.3B (so about the size of a tech unicorn). Shale oil companies, of course, are largely using oil and gas infrastructure built by years ago, so there isn't a competitive advantage keeping large companies afloat.
I think the parent is asking which of these examples banks are more like. Is there some sort of hidden infrastructure banks need to build before they're competitive—a total position database, or operating licenses in a bunch of markets, or an algorithmic trading platform—or can small banks largely compete with bigger banks? Like SO or CHK?
Small banks existed because anti-trust laws were enforced. After Reagan, anti-trust stopped looking at market share and only cared about consumer prices. Hence why we've seen a huge consolidation of capital resources in large firms and cities, because that's where the economies of scale are.
Locality is one aspect that helps incentivize a bank being a "good local citizen".
Another might be a "benefit corporation" which is a kind of entity that can be created in 30 states. I'm not aware of any state dissolution of corporations or shareholder lawsuits to enforce such articles of incorporation. But at least in theory, the reason why a corporation is "for profit" or "not for profit" is because it's in their articles of incorporation, so any other purpose for the corporation set out ought to be enforcible as long as it's not vague nonsense.
For example "make some people happy" might mean you can be an dick company, but if you make a really slick iphone app that people "like" then you've complied? This is something ethical startup founders would have to write into the articles of incorporation to bind future board of directors even once the founders aren't majority shareholders, is how I understand it.
Most people don't price check banking like they do e.g. groceries or mobile-phone plans. This is why Chase can pay a pittance of interest and charge for using others' ATMs while e.g. Ally pays 10 to 60 basis points on their checking account [1] while re-imbursing the ATM fees other ATM providers assess.
Most people don't have enough in bank accounts for it to matter. People do tend to price check loans rates. Those who keep more money in their bank account will price check CDs, but for a checking/savings account you are probably looking at around $20 a year if you find the best account - having a local bank close by is worth more than that.
So for the cost of keeping $15000 stuck in a checking account for say 10 years, you get a whopping $927.31. You'd get more money back dropping that into a high-efficiency AC system or solar panels.
Meanwhile, most people don't even have $15000 lying around with nothing else to do. My understanding from surveys done by various companies is that 60% of Americans don't even have $1000 in savings. And those with beaucoup money are negotiating their own loan rates, because there's better places to park their money for long-term interest.
I needed a check from Discover Bank (online savings, similar to Ally) to pay my old outsourcing HR company back for a 401k loan. Discover Bank sent me an "official check" (which takes ~8 days to arrive from issuance), which (according to the FDIC consumer protection laws [1]) is identical to a cashier's check, but the outsourcing HR company would not accept an "official" check, only certified/cashiers.
Had I banked at Chase, they would've provided me an actual "cashier's check" in branch at a moment's notice.
Is it worth ~$200/year in interest to not be able to get to your savings at a moment's notice? Before, I would've said yes. Now that its cost me an $1800 IRS penalty, no longer.
This kind of thing doesn't normally happen, or shouldn't.
You should have a local bank account for the times you need local branch if you do most of your banking online.
If you're going to spend quite a bit of money soon, like within a month or so, you should move that money into a local branch beforehand, like I did when I was buying my house and I knew I'd need the funds on closing date.
Even if you fail to do that ahead of time you can wire the money for, maybe, $20 to the local bank, wire transfers are instant, and get the cashier's check there.
That's like saying "you shouldn't use brokerage accounts cause if you need the money you'd have to wait for the sale to settle before you can access your funds."
I was between jobs, my child was sick, and my dog was dying. I agree I could've solved the problem by starting the process immediately when I separated from my last employer. Life happens.
I have documentation to show I made a best effort attempt to repay the loan in time (official check, fedex tracking numbers, etc), but I won't know if its good enough until I file next year's tax returns and challenge the 401k provider's 1099-R.
While it sounds like the op is joking, a friend of mine recently researched online banks and recommends Goldman Sachs Retail Bank as a good choice. Similar offerings as Ally.
Fun fact: it is a crime to rely on ATMs if you use BART. You MUST be in possession of small bills to buy your freedom from the BART faregates if your Clipper card is underpaid while trying to exit.
$20s and credit cards are only accepted by machines on the outside of the faregates. It is not possible to load excess value onto your card while underpaid; you can only pay the card up to the minimum value to exit, in cash, subject to the change the machine is prepare to give.
If, like me, the only cash you carry is $20s from an ATM, the only way to get out of BART in this situation is to illegally walk through the emergency exit gate.
Being able to go to a bank teller who gives out $5s and $10s is a big deal.
Businesses are run by human beings. Of course they take shortcuts and try and screw people over. Not sure that would really change regardless of the system we're under.
"The forces interested in keeping a large company afloat, he argue, are far greater than those that wish to see it perish. He'd present the students with the following hypothetical situation. First, he'd say, let's locate our major factory in an earthquake zone. Then let's infuriate unions by paying executives large sums of money while cutting wages. Third, let's select a company on the brink of bankruptcy to supply us with an essential irreplaceable component in our production line. And fourth, just in case our government is tempted to bail us out when we get into trouble, let's bribe a few indiscreet foreign officials. That, Milken would conclude, is precisely what Lockheed had done in the late 1970s."
This isn't something localized to banks.
(The quote is from Liar's Poker, a really enjoyable read IMO)
I had a related comment on another thread earlier today. Different context, similar point.
"Free Market" is a big hairy term. But, the definition of free market that includes (or expects) all the emergent benefits attributed to free market is limited to a certain realm. Markets with barriers to entry (emergent or regulated, high fixed/marginal costs, any structure that lends to oligopoly, financialization, and bunch of other market characteristics (including interventionist policy) result in markets that are not free in that sense. There is no creative destruction, highly competitive dyanamics and such.
The financial markets have never (and IMO will never) resemble the market for toiletries or music festivals. Neither will many other markets: transport infrastructure, for example, for different reasons.
The free market is an abstract concept, a model. It explains some markets better than others.
This. The real irony about the banks is that by heavily regulating banks and explicitly backing them, we also implicitly allow this sort of abusive behavior towards customers.
Well, no, because the problem is not the regulation, but the lack of enforcement of the regulation. And that happens because the political appointees who runt the agencies are too close to the banks they are supposed to be monitoring. If Wells is making changes to the loans without properly getting the court's approval, that's fraud on the court and clearly illegal. Getting a criminal proceeding against Wells or any of its employees requires the DoJ to agree to take action, which seems highly unlikely.
During the fallout from the housing bubble, it became apparent that many loans had not been properly transferred as they were sold from one investor to the next. The result of this was that many foreclosures were brought with essentially forged papers--servicers worked overtime trying to cover up broken paper trails. The courts in some states, esp. Florida, looked the other way as this bogus paper was passed in front of them.
In other words, regulation is a great system, except it always gets corrupted by the politics of the regulators?
I'm very supportive of regulating banks, both in theory and in reality. But we can't just wish away corruption and influence. Especially since so much financial activity is highly technical and the only people knowledgeable enough to create and enforce reasonable regulations are the same as the people conducting those activities that need to be regulated in the first place.
Like anything else, it's a political issue. Meaning: citizens have to give a shit about it, be informed, and be vocal about it with their representatives. Republicans in Congress just voted to roll back Dodd-Frank, and are aiming to get rid of the CFPB. Why? Because the CFPB is actually trying to protect people from shit like this.
Everyone is kicking the blame elsewhere. First, the banks, then lack of regulations, then too-much regulations, then imperfect regulations, then corruptible regulators, then finally the people that don't participate in politics.
The more I follow politics, and the media in general, I am leaning towards describing the entire thing as a giant soap opera where the media only "comments" or "gossips" instead of reporting facts and assigning provable blame. Everyone just passes off blame, no one really can hold anyone else accountable, and the cycle just repeats constantly. This is a fault of the system in that it allows blame to be passed along like that. The problem never really being addressed, just half-assed by each batch of politicians so that they can simultaneously take some blame, take some credit for trying, and also not be held accountable in any way.
>"ok, so we've abandoned the notion of objective truth and everything is all about the narrative."
Essentially, yes. Everything is relative, and since we have no base-principles to infer complex laws/rules/behavior from, we're constantly bickering with one another about minute details.
>"the interesting question is whether or not there ever really was a cycle where the citizenry were informed, and could collectively influence policy."
That's an interesting question. I can't say I can think of such a time. But I guess as a seemingly-intelligent and connected society with all of humanity's knowledge available at our fingertips, we should be striving for such a thing. Not defending an already-broken system just because we've decided it's "good enough".
It's nigh-impossible to actually do any sort of "corrective" maintenance on the system we have in place. Just look at Trump, or Brexit. The much-touted "checks and balances" is actively hindering his policies from being enacted (the one that got him voted in). Additionally, with Brexit, it's exposing just how complicated and intertwined global "contracts" and laws are between nations. In both cases we have giant behemoths of laws and processes in place to simply stunt any sort of correction or movement in any direction (whether good or bad). At that glacial pace, I don't think our life-spans are enough to see things through, or see drastic change or experiments when it comes to the models of government we've already-defined and have available.
The checks and balances you deride are not abstract concepts, words do not leap from paper and take action. The checks and balances you disparage are people who disagree, which actually is how it's supposed to work.
One thing I've learned as I've grown older is that the penalties for these things are absolutely malleable and the law can say "no, there's no passing the buck, the bank is responsible." Or the consumer. Whatever the politics of the day say should happen.
Daylighting, or "sunlight as disinfectant," is great in a world where shame works and the appearance of rectitude is valued.
But we are seeing in US politics a world emerge where shame doesn't work, where players don't even try to appear honest, and where the very idea of consensus factual external reality is under attach.
In such a world, it will take a lot more than daylight to nudge good behavior from folks. It will take actual fear of being sent to jail.
I hear ya. I don't know how we got to this state, and I'm active player. Complacency?
The silver lining is that Trump was a wake up call. Many, many of my non-political friends contacted me and asked "What do we do? How do I start?" Our boring party meetings have triple the attendance. Any thing that needs doing now gets done.
For my part, I started a book study group, mentoring my friends how to be activists. For example, an upcoming homework assignment is testifying at a public hearing (local city or county council). Most of us have never even attended a meeting before.
"Well, no, because the problem is not the regulation, but the lack of enforcement of the regulation. "
Problems in complex systems with large numbers of variables, attractors, etc are not solvable by just doing a single thing (if it was, it's not a complex system :P)
This kind of "if only x" thinking, IMHO, does not lead to actual solutions. It usually just leads to some other gravity well of the system, where now someone else says "if only y".
Prior to heavy regulation, we allowed the same sort of abusive behaviour, except it would be followed by a whole bunch of people, who had no hand in the impropriety, losing their life savings.
If you want to give ammunition to anti-capitalist movements, I strongly endorse returning to this model.
Of course, if you want to give ammunition to anti-capitalist movements, I also recommend that we continue to bail out the people who did have a hand in the impropriety.
No we don't. Nobody is responsible for this behavior except for the banks that do it. They are run by adults who are perfectly capable of taking responsibility for their actions.
But you're not allowed to do better in the presence of the state. The regulations essentially dictate the way that you have to do things, which is the way that the banks are currently doing it. And you have very little chance of competing with them at that level.
We're allowed to involve ourselves in the politics and push to update, modify, and otherwise "improve" the regulations.
There's too much of a "set and forget" mentality when it comes to government.
IMO, that's due to all the fear mongering over governments being bad. People feel obligated to then fight for private corporate power.
These things don't just "happen". They're planned and documented in government record. We often call them laws. They are specifically tilting the playing field.
And just how involved have we been able to get? They've proposed and passed laws with objection before even they know what is written. Many laws are effectively written by industries which they will benefit and then passed to benefit the politicians. When foul play is called out, someone unaccountable falls on their sword while the regulation that benefits cronies and stifles competition remains on the books until "the most powerful" comes along to influence change. In none of these steps are the average citizen involved. Did the average citizen vote to have laws the effectively regulate away business and consolidate power in all industries to a few companies that are in bed with the government? If so what good is empowerment when you're part of the issues.
Kind of easy to say when you're part of a majority. I'm part of an actually-oppressed-by-law minority. By virtue of Democracy, my minority's say has very little effect unless it's shared by the majority.
>"We're allowed to involve ourselves in the politics and push to update, modify, and otherwise "improve" the regulations."
It's always a game of compromise based on who has more numbers. Until such a time as arbitrarily small groups can self-aggregate within an area and split-off from a larger governing entity, it'll never be any better for minorities.
We're both part of the exploited majority. I'm not sitting on fuck you money. I grew up in a trailer on gov cheese, eating spam, being told I'm a mooch for not being born rich.
I'm 1/4 native american, though I look white. I knew my 100% native american relatives. I heard the stories, passed down. I literally smashed some racist a-hole in the face while hassling my obviously native american grandmother, among numerous other encounters. I mean it's easy to say you know what I am, and not have a clue.
Don't stand up to the machine itself then. Stand up to your family, friends, and neighbors. Challenge them to find ways to get off these services and avoid mindless consumption.
I've been helping people setup Raspberry Pi's with Syncthing to share their private files (mostly pictures). Fuck Facebook and Snap. Undermine them.
I am seriously weirded out by the tech scene, with all these smart folks that mindlessly go work for these companies rather than using their knowledge to simply help their neighbors solve problems. Narcissists and sycophants the lot of them.
Our time and effort are the means of production. Point them at alternative solutions. It's actually easier than you think
Yeah, this is somewhat heretical but I feel like democracy works best with monoculture, not the pluralist society that we have. Which is sad, in a way, but it seems like maybe the US is just too big, maybe we should embrace federalism and shift more and more power to the states. That way Kansas can go full Somalia and California can become a Nordic satellite state. Maybe everyone would be happier? Seriously.
"Do better"? Us, and what army? With the possible exception of Sam Altman, none of us has any non-negligible agency in the political realm of any nation, let alone our own.
And it's not just an issue of quantity: we aren't the people who control the mass media and thusly the opinions of the majority.
Perhaps, but you'd be surprised at the number of issues that would be solved by every market being "free enough". Of course, by "every market" I must also include the market on aggression, wherein government is, by definition, a (localized) monopoly.
The definition of a trust has also changed. Before the '70s, a merger that would result in a single company owning, say, 20% of a market would be a red flag. Nowadays, you have giants in any mature industry: it's the nature of capitalism.
Since I like the idea of free market, I wish the market size of any company was limited to 15%, to truly allow competition and diversity of players. However, our economy is now global, and unless all the other countries play by these same rules (which I find highly unlikely), it will be a race converging to a few giant players and the occasional disrupters.
Free markets work really well…except when there is fraud. No economic system works when people don't follow the rules.
And the only way to manage that is to make sure the expected value of the fraud is significantly lower (ideally greatly negative) than the gains from the fraud.
That means that the chances of getting caught times the costs of getting caught need to be quite high.
A free market is commonly defined as one in which competition is unrestricted by anything but the natural forces of the market itself - voluntary contracts and supply and demand.
A market which recognizes the legitimacy of government to regulate it must restrict competition to whatever that government declares legal, and as such any such market cannot be considered free.
A free market, like free speech, must be anarchist, or in the weak case, must tend towards anarchy.
Open market means balancing capitalism vs democracy. Property rights, fair and impartial judiciary, regulations to promote competition, and so forth.
Whereas free market means might makes right. AKA feudalism, corporatism, kleptocracy, neo-reactionary, fantasy land, etc. Basically whatever nonsense the Heritage Foundation stooges are paid to peddle.
Even though I grew up listening to the Sex Pistols, I still have no idea what anarchy is, idealized or not. I just assume its more Lord of the Flies than some hippy free love commune.
In general, idealized terms, anarchism is the belief that all transactions between people should be voluntary and non-coercive. Because states derive their power though a monopoly on involuntary coercive force, anarchists believe that no state and no interaction with a state can be morally justified.
Beyond that, anarchists seem to disagree about everything except whether or not taxes are theft or weed should be legal, and probably not even that.
Personally, I suspect anarchy simply resets the evolutionary curve of society to clan-based power structures, and that tribalism, mafias, serfdom and states proper will inevitably be reinvented.
I felt unscathed in this regard, considering banks are so intertwined with government. In an organic way, it might have been better to let the banks fail hard in 2008, that would hve served as a cautionary tale to bank managers/owners not to rely on the state. On the other hand, that could have had tremendous economic short-term consequences.
The problem is not that banks mismanaged and failed, but that the consequences of it were too grave to allow failure.
Even some of the legal stuff that Wells Fargo does boggles the mind. My parents had a Wells Fargo mortgage. It's now been sold twice and I've had to setup automatic monthly payments for them each time. I live in fear of two things...
First, some enterprising fraudster will call/mail that they've acquired the loan and demand payment. Given how often loans are sold, it wouldn't take much conning to convince retirees that a payment is due and a check needs to be mailed to some P.O. Box.
Second, these companies that buy up loans don't seem all that technically capable. I fear that, one day, my parents' loan will be bought by one without an automatic monthly payment system. Again, someone with shady morals could start a company that looks to buy mortgages on properties where the mortgage is a fraction of the cost of the home and then not offer a auto-pay feature. When people inevitably miss a couple of manual payments, they could aggressively try to foreclose.
Both of these opportunities for abuse are made possible by banks with mostly positive reputations doing something that shouldn't be allowed. If a bank wants to offload debt that they've initiated, we should require them to continue to process customer payments on that debt and forward the money to whomever they sold to. Consumers should have the right to choose which companies they have business relationships with and we shouldn't have that relationship changed without our permission.
But when happens if the mortgage services doesn't process that payment and you begin to incur late fees and head towards preforeclosure through no fault of your own?
You send it certified. Then fax them and their lawyer a copy of the air bill and say see you in court. Trust me, slumlords pull this shit everyday with renters.
Trust me, I've seen people lose their homes through no fault of their own, because their servicer made mistakes and they had no legal recourse except getting a check for a few grand several years later as compensation.
That article isn't the same. They stopped paying their mortgage because that was a requirement for the TARP loan modification program. They didn't get the modification and as a double whammy fell even further behind on payments.
My issue is with banks, landlords, and utilities where you send payment and they act like you didn't. Then threaten you with all types of legalese. This happens all the time for long term, rent-controlled, and rent-stabilised tenants. The landlord is trying to find any reason to throw you out. I've spoken with housing advocates and legal aid on this. If the owner starts acting up, i.e. not cashing checks while simultaneously sending you eviction notices, document everything. Spend the extra dollars to send a certified letter and keep the receipts.
I had a similar experience with discounted-if-paid-promptly hospital bill. I got a call saying, essentially "we didn't move the money around our internal systems in time and now we want the rest of the money".
Since I paid with a credit card I could make the case that I was charged before their deadline and they let it go.
I've had similar things happen with my electric bill. I noticed at some point that I had been paying small late fees. Looking into it, they would cash my checks, but not credit the account until the day after the payment was due. They stopped doing it after I pointed it out, but that took a lot of convincing. I'm not convinced that it was an accident.
The problem can be with more tech. capable companies sometimes... for example, BoA can't send an electronic payment to Esurance or Vonage and these 2 companies won't accept physical checks either (you have to setup automatic payments through their respective websites) ... Note: This happened a year or 2 ago so it might have changed.
Be careful with this though. I learned recently that the hard way when a check was sent and lost in the mail. I had to petition with the bank to explain the issue, which they had to investigate, and then determine the outcome.
Bill pay services usually deduct the amount of the check to be sent from your account and put it into a holding account before sending the check. The check sent acts more like a certified check than a personal check (because in a personal check, funds aren't withdrawn until the check is cashed).
I have always thought this is a little fishy - why the bank can't issue a personal check for me without withdrawing the funds from my account... but there may be regulatory or liability issues involved for the bank.
Bottom line, if you count on the bank to send a paper check for you, it's not EXACTLY the same as if you send a personal check yourself.
You could consider refinancing with an entity that doesn't sell mortgages.
I've had a mortgage with my credit union for about ten years now, and they still have it. And no, it wasn't just resold out from under me without my noticing it; I actually asked one of their reps once and they outright told me that they don't resell their mortgages.
The downside is that as far as I know, I don't have a promise from them that they won't sell it, just a track record of not selling it. Still, if you're worried enough it may be worth considering. I recognize this is not a free option; you'd have to consider it as a form of insurance and consider whether you're willing to pay for it.
> Second, these companies that buy up loans don't seem all that technically capable. I fear that, one day, my parents' loan will be bought by one without an automatic monthly payment system. Again, someone with shady morals could start a company that looks to buy mortgages on properties where the mortgage is a fraction of the cost of the home and then not offer a auto-pay feature. When people inevitably miss a couple of manual payments, they could aggressively try to foreclose.
Don't most consumer banks and credit unions these days have automatic bill payment systems that, if the recipient is incapable of recieving payment otherwise, fallback to mailing computer-printed checks, so that consumers get automatic payments even if the payees don't have their own system?
IIRC 3-4 years after the financial crisis NPR ran a story the premise of which was basically "WTF is up with major white collar crime seemingly never being punished?" and they claimed the FBI's division devoted to financial crimes had been gutted to devote more resources to fighting terrorism after 2001, and that those resources had simply never been restored, leaving them only able to pursue a couple major cases at a time. Since these sorts of investigations/cases are against people and organizations with money and the laws in question are often nuanced and complex, the cases drag on for months to years. IOW as long as a dozen plus major violations are occurring every year they'll only be able to pursue a few percent of them, and only some smaller percentage will end in more than a slap on the wrist (because, again, these people have money).
If that's true then ROI on corporate law-breaking is great right now, as long as you're not one of the one or two most egregious cases any given year.
There was a study recommendation to regulate unregulated securities and take them away from investment banks..Guess what Goldman Sacs in Trump admin is thee to do?
I have trust issues with banks, and even my credit union. I verify their interest calculations. I monitor payment amounts. I challenge everysingleincorrect "NSF fee" (it's a small-town bank, and this has happened several times.)
In a situation like in the article, continue paying the original, higher, correct loan payment. Make sure that the 'extra' (and indeed, any extra you intentionally pay any other time) goes toward the principal balance and not into your property tax escrow account. You've got to watch any bank you do business with, even to correct their honest mistakes. If your payment changes, find out why. If your extra principal payments aren't applied correctly, get it fixed. And when you have evidence of a pattern of wrongdoing, get the law involved.
If they even bother investigating. From the sibling comment:
> But who's going to investigate Wells Fargo over a $15 "mistake" that they fix as soon as you ask them to?
The bureaucracy to file charges for something so small is a non-starter. It's probably happening to tens of thousands of other customers, but then you have to do the leg-work to get other people on board. There's nothing you can do involving the law that doesn't require a significant time investment. And as you've said, the punishment is such a pittance that all the hard work didn't matter in the end.
I've successfully gotten the law involved with Citibank with a time investment of around 10, maybe 15 minutes. All I did was filled out this form: https://www.consumerfinance.gov/complaint/ and they handled it from there. However, the CFBP has only been around for less than a decade.
>> And when you have evidence of a pattern of wrongdoing, get the law involved.
Where do you go exactly? I left Wells Fargo because (among similar "errors"), the charged me $15 monthly for "Fees" which they would reverse when I asked them what the fee was for. I had documentation of them insisting it was just a one-time mistake for several consecutive months and then charging the fees again every month for months. But who's going to investigate Wells Fargo over a $15 "mistake" that they fix as soon as you ask them to?
This is what class action suit are for. Multiply $15 by a hundred thousand affected customers for a year, and you've got some serious cash. The same reason Fargo is down to do this is the same reason it's a good target for a class action: there's actually a lot of money there.
Even though you aren't a Wells Fargo customer anymore you can probably still file a complaint as long as you still have the documentation. Letting them know let's them undercover systemic problems.
It does indeed happen when an account isn't close to zero. And I always disable "overdraft protection" on my accounts - no, if I don't have the money, I don't want to pay you $35 for the privilege of "avoiding embarrassment" at the point of sale. Apparently, depending on authorized (but not yet settled) debit transactions (of which there can be multiple for the same event), the time of day, how long it's been between those authorizations and settlement, and some hand-wavy heuristic that no one can ever explain, this particular account would incur the fee for no reason the humans at the bank could explain.
And they always start off with the "be more responsible" spiel, until I get them to do the math themselves. Then they look confused, reverse the fee, and promptly forget about it. Until it happens again.
Part of the problem in these cases is factoring in those non-settled charges - money doesn't actually move until the settlement comes through. Sure, auths should affect available balance (and then refuse to accept more transactions if there's not enough available), but shouldn't be affecting the balance calculation for NSF fees.
Stories like this really go to show that no matter how much PR a bad company uses to try to regain good will, they are still rotten and are still actively trying to screw you. Wells Fargo, Walmart, Uber, TimeWarner/Spectrum, etc.. all bad to the core.
The frontline employees are typically not authorized to make such changes alone. This sounds again like too much pressure by management and somewhere in the chain someone was stepping over the line. The fact that such egregious missteps have happened now twice (unauthorized account opening) is a very, very worrying sign for the culture in Wells Fargo. Top management should be asked some very hard questions and maybe some changes are needed.
Banks seem to be insulated these days like the Oligarchs after the fall of the Soviet Union. They can do no wrong. Even when they're caught, few if any ever go to jail. What does a bank have to do before the government says "enough" and starts locking people up?
"What does a bank have to do before the government says "enough" and starts locking people up?"
They protect themselves by hiring politicians and people from regulating agencies for a lot of money. If they stopped doing that they would be in trouble.
Worth noting that one of the first things a lot of the Russian oligarchs did was set up their own banks - alongside their own security and intelligence services.
I go quite a bit out of my way to avoid any interactions with banks.
I keep most of my savings in cash and never take out loans. The result: a blank credit report (which HR at most companies seems to like when I'm getting hired) and few late penalties, and never being told I can't have access to my money because of "XYZ." Not to mention, avoiding all the crappy online banking web GUIs.
Don't you aftraid of losing all of your savings due to a robbery? Also if you would want to purchase a house in the future how would you make a payment? IRS won't like a diplomat full of cash in hundreds of thousands of dollars? They will have questions.
I second that. Tried using cash as a down payment on a house did not fly even though I could reconcile the difference in cash with what I kept in the bank with my pay stubs and deposit/withdrawl records. Underwriters want to see that cash sitting in a bank account.
Yeah, if you want to use cash, you basically have to be able to just pay for the house in it's entirety. With downpayments, the underwriters really want to make sure you didn't just take out a loan somewhere to finance that downpayment. Showing up with cash in that instance is basically indicating you don't want them to know where you got the money, which isn't going to fly when a person's job is based around playing it safe.
Even so, most businesses aren't going to want to handle a suitcase full of $200,000+ in cash, unless they are a bank. My lawyer handled all the cash (cashier's check) in my house buying transaction. My lawyer doesn't own an armoured car and doesn't have the ability to handle all that cash.
That is going to bite you bad if you actually need to get a loan, like if you were to buy a house.
I recently got my first credit card, and my loan discrimination gave me some complications. I couldn't get automatically approved for any credit limit since all my loans are paid and closed, giving me an effective credit score of zero (in the loan officer's words).
I stick to credit unions, where you are a shareholder by virtue of being a depositor.
Wells Fargo is yet another example of big bank that a long time ago should have been disallowed from buying any more banks. Local banks don't get away with shady stuff like this because you can go visit a banker in person. There is no such thing as a "local" Wells Fargo. It has the same customer service and anonymity as an internet forum.
Wells Fargo decided I had to pay a $50 fee for a failed transaction even though my mortgage was already paid for the month. They refused to remove the fee even though they could produce a signed transfer of service disclosure.
Disclaimer: I work for one of the top 10 banks in the US by assets.
I was shocked, SHOCKED, to find out that our CEO isn't even a tiny bit of a lying, cheating sociopath. I started working here for the benefits and culture in the IT department, and assumed that the people responsible for paying for all the cool stuff we got were doing the same thing I assume all the other big banks do (Wells, JPMorgan Chase, Citi).
I've only been here a little while, and not seen anything nefarious, though I only have visibility into the IT infrastructure mostly, and some development work. But I'm still wondering how a company can become this large and successful in this sector without griminess from the top.
It's restored my faith in stuff a little bit. Also note, if you look at the top 10 banks in the USA, the bottom half are a small fraction of the size of the top 3, and we're in the bottom half.
I'm not surprised. I might be misremembering, but I'm pretty sure Wells Fargo was also the bank where its employees were opening up bank accounts without their customers' knowledge for bonuses. Oh, and it's also one of the banks where whistleblowers were basically pressured into leaving and then blacklisted on a list that big banks circulate internally so they couldn't find jobs in the banking industry ever again.
Not so simple. My mortgage was sold to Wells Fargo without my input. I don't want to refinance because it wouldn't make sense financially as well as it could just be sold right back to Wells Fargo.
But clearly, what needs to happen is that the protections passed in the wake of the 2008 financial crisis need to be undone, and the Consumer Financial Protection Bureau needs to be neutered.
This bank helped build the American West. It was there before the current batch of executives arrived. Will it still be there after they leave? Possibly, if they accept personal responsibility for these problems, pay big fines, do some time at Club Fed, and get out of banking.
Will they do that? Probably not. After all, no organization in the 21st century is conceivably more valuable than the people who are lootingxxxxx running it.
P.S. Also worth mentioning, various governments have various laws and regulations prohibiting doing business with agents convicted of criminal activity. It would also be worth actually adhering to and enforcing those.
A bigger threat than a fine that often represents a fraction of the profits already gained.
But seriously, pierce the corporate veil and lock them up. Long past due. And experience has now shown, the only way to substantially reduce such activity (e.g. Savings and Loan Scandal of the '80's).
P.P.S. Regarding this, and all the Federal agents/roles that have been reassigned from domestic and financial crime to "terrorism". More Americans face greater terror today from the prospect of being screwed over by fraudulant big business, than face real (as opposed to manufactured) terror over a terrorist attact. Or, a "terrorist" attack, looking at how broadly that label gets applied, today. (I was going to say, how broadly it gets "thrown around", only it isn't really being "thrown around", it's being used quite deliberately to foster self-serving agendas.)
I get that generally changing the terms of a loan after everything is signed is sketchy. But in this case it looks like they were trying to do the customers a service:
>The changes, which surprised the customers, typically lowered their monthly loan payments, which would seem to benefit borrowers, particularly those in bankruptcy. But deep in the details was this fact: Wells Fargo’s changes would extend the terms of borrowers’ loans by decades, meaning they would have monthly payments for far longer and would ultimately owe the bank much more.
I guess the devil is in the details, but if they just lowered the minimum payment what's the harm to the consumer? AFAIK the vast majority of loans in the US are simply calculated. If you make your payments as expected on time you wouldn't be effected. If you aren't able to do that, then of course you're not paying off the principle as quickly and the term would be extended. Just like making extra payments will shorten the term.
To be clear: changing the rate? Adding fees? Sure, that's really bad; rake them over the coals. But if it's just changing the minimum payment amount I'm missing the problem.
Changing the terms of the contract without explicit approval from both sides is beyond sketchy. At minimum, it's an unapproved amendment and therefore doesn't apply. At worst, it's a new contact that at least one side didn't agree to and therefore doesn't apply. It looks like people agreed without understanding the details.
In this case, I'd wager by lowering the payments, less loans were "risky" and therefore their assets look better. That probably was for the benefit of repackaging those "assets" and/or better guarantees from the Fed.
The most specific allegation is that they extended the maturity of the loan, which as a consequence lowered the minimum payment. Under normal circumstances, and with clear communication to the borrower, this is a change that can only be better for the borrower; they can continue to pay on the old schedule, or pay less on the new schedule over more time without going into default. However, many of the borrowers were in bankruptcy at the time of the change. During this process they were not in control of their own assets; the bankruptcy trustee was paying their bills for them. If the bankruptcy trustee paid the new lower minimum payment, it would result in the borrower paying more in interest than they otherwise might have.
You literally quoted the answer in your comment. There's a short-term benefit and a much greater long-term harm. Offering this facility to consumers is fine, doing it unilaterally isn't. Many consumers won't realize the long-term impact because they're not good at financial planning.
The "ultimately owe the bank much more" part is why this is really bad.
Even while you're filing for bankruptcy, you would want to structure the mortgage so that you are paying it off as quickly as you can specifically because compounding interest really hurts.
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[ 2.8 ms ] story [ 151 ms ] thread> Nah, it's just the nature of capitalism. Industries that require a large amount of startup capital lead to natural monopolies or duopolies.
But is that true of banking? The nation has a long history of small banks. While they've had their crises too, I don't think there's any natural motivation for bank consolidation besides using scale to eek out efficiencies and to gain power and influence.
Motivation has nothing to do with it. The development of power and influence through asymmetric growth in the industry is enough for this to emerge. There are still small banks today, but it's no coincidence that the largest (and thus overall best performing) banks cheat the system. The best performing become large and powerful on their own.
Capital is more than just money. It takes a lot to jump through the regulatory hoops, money requirements, and insurance costs while having competitive prices against other Banks and still make a profit.
Even if it was just a money issue, new banks do still require a fair amount of money for relatively little profit in an industry that is well established. If someone is going to put their capital on the line, why wouldn't they put it in a higher growth industry?
These don't make new bank creation impossible, just unlikely.
"It takes a lot to jump through the regulatory hoops, money requirements, and insurance costs while having competitive prices against other Banks and still make a profit."
And yet you still blame capitalism?
It happens. My parent's neighbor was involved in starting up a new small local bank a few years ago. Now they have three branches.
>I don't think there's any natural motivation for bank consolidation besides using scale to eek out efficiencies and to gain power and influence.
Are efficiencies and power-seeking somehow not enough? I mean let's look at Standard Oil. What did Rockefeller do other than eek out efficiencies and try to gain power and influence? Efficiences are what defines a natural monopoly, we can't just throw it out.
A good comparison might be shale oil companies, which largely are pretty small; Chesapeake, one of the most famous, has a market cap of 4.3B (so about the size of a tech unicorn). Shale oil companies, of course, are largely using oil and gas infrastructure built by years ago, so there isn't a competitive advantage keeping large companies afloat.
I think the parent is asking which of these examples banks are more like. Is there some sort of hidden infrastructure banks need to build before they're competitive—a total position database, or operating licenses in a bunch of markets, or an algorithmic trading platform—or can small banks largely compete with bigger banks? Like SO or CHK?
Another might be a "benefit corporation" which is a kind of entity that can be created in 30 states. I'm not aware of any state dissolution of corporations or shareholder lawsuits to enforce such articles of incorporation. But at least in theory, the reason why a corporation is "for profit" or "not for profit" is because it's in their articles of incorporation, so any other purpose for the corporation set out ought to be enforcible as long as it's not vague nonsense.
For example "make some people happy" might mean you can be an dick company, but if you make a really slick iphone app that people "like" then you've complied? This is something ethical startup founders would have to write into the articles of incorporation to bind future board of directors even once the founders aren't majority shareholders, is how I understand it.
https://en.wikipedia.org/wiki/Benefit_corporation
[1] https://www.ally.com/bank/interest-checking-account/
Meanwhile, most people don't even have $15000 lying around with nothing else to do. My understanding from surveys done by various companies is that 60% of Americans don't even have $1000 in savings. And those with beaucoup money are negotiating their own loan rates, because there's better places to park their money for long-term interest.
Had I banked at Chase, they would've provided me an actual "cashier's check" in branch at a moment's notice.
Is it worth ~$200/year in interest to not be able to get to your savings at a moment's notice? Before, I would've said yes. Now that its cost me an $1800 IRS penalty, no longer.
[1] https://www.fdic.gov/regulations/laws/rules/6500-3222.html
This kind of thing doesn't normally happen, or shouldn't.
You should have a local bank account for the times you need local branch if you do most of your banking online.
If you're going to spend quite a bit of money soon, like within a month or so, you should move that money into a local branch beforehand, like I did when I was buying my house and I knew I'd need the funds on closing date.
Even if you fail to do that ahead of time you can wire the money for, maybe, $20 to the local bank, wire transfers are instant, and get the cashier's check there.
That's like saying "you shouldn't use brokerage accounts cause if you need the money you'd have to wait for the sale to settle before you can access your funds."
I have documentation to show I made a best effort attempt to repay the loan in time (official check, fedex tracking numbers, etc), but I won't know if its good enough until I file next year's tax returns and challenge the 401k provider's 1099-R.
https://www.nerdwallet.com/banking/best-checking-accounts
$20s and credit cards are only accepted by machines on the outside of the faregates. It is not possible to load excess value onto your card while underpaid; you can only pay the card up to the minimum value to exit, in cash, subject to the change the machine is prepare to give.
If, like me, the only cash you carry is $20s from an ATM, the only way to get out of BART in this situation is to illegally walk through the emergency exit gate.
Being able to go to a bank teller who gives out $5s and $10s is a big deal.
This isn't something localized to banks.
(The quote is from Liar's Poker, a really enjoyable read IMO)
"Free Market" is a big hairy term. But, the definition of free market that includes (or expects) all the emergent benefits attributed to free market is limited to a certain realm. Markets with barriers to entry (emergent or regulated, high fixed/marginal costs, any structure that lends to oligopoly, financialization, and bunch of other market characteristics (including interventionist policy) result in markets that are not free in that sense. There is no creative destruction, highly competitive dyanamics and such.
The financial markets have never (and IMO will never) resemble the market for toiletries or music festivals. Neither will many other markets: transport infrastructure, for example, for different reasons.
The free market is an abstract concept, a model. It explains some markets better than others.
During the fallout from the housing bubble, it became apparent that many loans had not been properly transferred as they were sold from one investor to the next. The result of this was that many foreclosures were brought with essentially forged papers--servicers worked overtime trying to cover up broken paper trails. The courts in some states, esp. Florida, looked the other way as this bogus paper was passed in front of them.
I'm very supportive of regulating banks, both in theory and in reality. But we can't just wish away corruption and influence. Especially since so much financial activity is highly technical and the only people knowledgeable enough to create and enforce reasonable regulations are the same as the people conducting those activities that need to be regulated in the first place.
I'm not sure of the fix, here.
The more I follow politics, and the media in general, I am leaning towards describing the entire thing as a giant soap opera where the media only "comments" or "gossips" instead of reporting facts and assigning provable blame. Everyone just passes off blame, no one really can hold anyone else accountable, and the cycle just repeats constantly. This is a fault of the system in that it allows blame to be passed along like that. The problem never really being addressed, just half-assed by each batch of politicians so that they can simultaneously take some blame, take some credit for trying, and also not be held accountable in any way.
the interesting question is whether or not there ever really was a cycle where the citizenry were informed, and could collectively influence policy.
even if we were just being naive, the abandonment of that model doesn't seem to have empowered the populace - seemingly the opposite.
Essentially, yes. Everything is relative, and since we have no base-principles to infer complex laws/rules/behavior from, we're constantly bickering with one another about minute details.
>"the interesting question is whether or not there ever really was a cycle where the citizenry were informed, and could collectively influence policy."
That's an interesting question. I can't say I can think of such a time. But I guess as a seemingly-intelligent and connected society with all of humanity's knowledge available at our fingertips, we should be striving for such a thing. Not defending an already-broken system just because we've decided it's "good enough".
It's nigh-impossible to actually do any sort of "corrective" maintenance on the system we have in place. Just look at Trump, or Brexit. The much-touted "checks and balances" is actively hindering his policies from being enacted (the one that got him voted in). Additionally, with Brexit, it's exposing just how complicated and intertwined global "contracts" and laws are between nations. In both cases we have giant behemoths of laws and processes in place to simply stunt any sort of correction or movement in any direction (whether good or bad). At that glacial pace, I don't think our life-spans are enough to see things through, or see drastic change or experiments when it comes to the models of government we've already-defined and have available.
But we are seeing in US politics a world emerge where shame doesn't work, where players don't even try to appear honest, and where the very idea of consensus factual external reality is under attach.
In such a world, it will take a lot more than daylight to nudge good behavior from folks. It will take actual fear of being sent to jail.
The silver lining is that Trump was a wake up call. Many, many of my non-political friends contacted me and asked "What do we do? How do I start?" Our boring party meetings have triple the attendance. Any thing that needs doing now gets done.
For my part, I started a book study group, mentoring my friends how to be activists. For example, an upcoming homework assignment is testifying at a public hearing (local city or county council). Most of us have never even attended a meeting before.
Exciting times.
2. We need to teach humans how to manage their own money and not give it away willingly to corruptible humans.
Problems in complex systems with large numbers of variables, attractors, etc are not solvable by just doing a single thing (if it was, it's not a complex system :P)
This kind of "if only x" thinking, IMHO, does not lead to actual solutions. It usually just leads to some other gravity well of the system, where now someone else says "if only y".
If you want to give ammunition to anti-capitalist movements, I strongly endorse returning to this model.
Of course, if you want to give ammunition to anti-capitalist movements, I also recommend that we continue to bail out the people who did have a hand in the impropriety.
It is also an ideal; a status to be strived-for.
We're allowed to involve ourselves in the politics and push to update, modify, and otherwise "improve" the regulations.
There's too much of a "set and forget" mentality when it comes to government.
IMO, that's due to all the fear mongering over governments being bad. People feel obligated to then fight for private corporate power.
These things don't just "happen". They're planned and documented in government record. We often call them laws. They are specifically tilting the playing field.
Get involved and tilt them back.
Kind of easy to say when you're part of a majority. I'm part of an actually-oppressed-by-law minority. By virtue of Democracy, my minority's say has very little effect unless it's shared by the majority.
>"We're allowed to involve ourselves in the politics and push to update, modify, and otherwise "improve" the regulations."
It's always a game of compromise based on who has more numbers. Until such a time as arbitrarily small groups can self-aggregate within an area and split-off from a larger governing entity, it'll never be any better for minorities.
I'm 1/4 native american, though I look white. I knew my 100% native american relatives. I heard the stories, passed down. I literally smashed some racist a-hole in the face while hassling my obviously native american grandmother, among numerous other encounters. I mean it's easy to say you know what I am, and not have a clue.
Don't stand up to the machine itself then. Stand up to your family, friends, and neighbors. Challenge them to find ways to get off these services and avoid mindless consumption.
I've been helping people setup Raspberry Pi's with Syncthing to share their private files (mostly pictures). Fuck Facebook and Snap. Undermine them.
I am seriously weirded out by the tech scene, with all these smart folks that mindlessly go work for these companies rather than using their knowledge to simply help their neighbors solve problems. Narcissists and sycophants the lot of them.
Our time and effort are the means of production. Point them at alternative solutions. It's actually easier than you think
And it's not just an issue of quantity: we aren't the people who control the mass media and thusly the opinions of the majority.
Since I like the idea of free market, I wish the market size of any company was limited to 15%, to truly allow competition and diversity of players. However, our economy is now global, and unless all the other countries play by these same rules (which I find highly unlikely), it will be a race converging to a few giant players and the occasional disrupters.
And the only way to manage that is to make sure the expected value of the fraud is significantly lower (ideally greatly negative) than the gains from the fraud.
That means that the chances of getting caught times the costs of getting caught need to be quite high.
A market which recognizes the legitimacy of government to regulate it must restrict competition to whatever that government declares legal, and as such any such market cannot be considered free.
A free market, like free speech, must be anarchist, or in the weak case, must tend towards anarchy.
Whereas free market means might makes right. AKA feudalism, corporatism, kleptocracy, neo-reactionary, fantasy land, etc. Basically whatever nonsense the Heritage Foundation stooges are paid to peddle.
Even though I grew up listening to the Sex Pistols, I still have no idea what anarchy is, idealized or not. I just assume its more Lord of the Flies than some hippy free love commune.
Beyond that, anarchists seem to disagree about everything except whether or not taxes are theft or weed should be legal, and probably not even that.
Personally, I suspect anarchy simply resets the evolutionary curve of society to clan-based power structures, and that tribalism, mafias, serfdom and states proper will inevitably be reinvented.
The problem is not that banks mismanaged and failed, but that the consequences of it were too grave to allow failure.
First, some enterprising fraudster will call/mail that they've acquired the loan and demand payment. Given how often loans are sold, it wouldn't take much conning to convince retirees that a payment is due and a check needs to be mailed to some P.O. Box.
Second, these companies that buy up loans don't seem all that technically capable. I fear that, one day, my parents' loan will be bought by one without an automatic monthly payment system. Again, someone with shady morals could start a company that looks to buy mortgages on properties where the mortgage is a fraction of the cost of the home and then not offer a auto-pay feature. When people inevitably miss a couple of manual payments, they could aggressively try to foreclose.
Both of these opportunities for abuse are made possible by banks with mostly positive reputations doing something that shouldn't be allowed. If a bank wants to offload debt that they've initiated, we should require them to continue to process customer payments on that debt and forward the money to whomever they sold to. Consumers should have the right to choose which companies they have business relationships with and we shouldn't have that relationship changed without our permission.
https://www.propublica.org/article/bank-errors-continue-to-c...
"Bank Errors Continue to Cause Wrongful Foreclosures"
My issue is with banks, landlords, and utilities where you send payment and they act like you didn't. Then threaten you with all types of legalese. This happens all the time for long term, rent-controlled, and rent-stabilised tenants. The landlord is trying to find any reason to throw you out. I've spoken with housing advocates and legal aid on this. If the owner starts acting up, i.e. not cashing checks while simultaneously sending you eviction notices, document everything. Spend the extra dollars to send a certified letter and keep the receipts.
Entirely agree.
Since I paid with a credit card I could make the case that I was charged before their deadline and they let it go.
Bill pay services usually deduct the amount of the check to be sent from your account and put it into a holding account before sending the check. The check sent acts more like a certified check than a personal check (because in a personal check, funds aren't withdrawn until the check is cashed).
I have always thought this is a little fishy - why the bank can't issue a personal check for me without withdrawing the funds from my account... but there may be regulatory or liability issues involved for the bank.
Bottom line, if you count on the bank to send a paper check for you, it's not EXACTLY the same as if you send a personal check yourself.
I've had a mortgage with my credit union for about ten years now, and they still have it. And no, it wasn't just resold out from under me without my noticing it; I actually asked one of their reps once and they outright told me that they don't resell their mortgages.
The downside is that as far as I know, I don't have a promise from them that they won't sell it, just a track record of not selling it. Still, if you're worried enough it may be worth considering. I recognize this is not a free option; you'd have to consider it as a form of insurance and consider whether you're willing to pay for it.
Don't most consumer banks and credit unions these days have automatic bill payment systems that, if the recipient is incapable of recieving payment otherwise, fallback to mailing computer-printed checks, so that consumers get automatic payments even if the payees don't have their own system?
If that's true then ROI on corporate law-breaking is great right now, as long as you're not one of the one or two most egregious cases any given year.
There was a study recommendation to regulate unregulated securities and take them away from investment banks..Guess what Goldman Sacs in Trump admin is thee to do?
Resist that recommendation
In a situation like in the article, continue paying the original, higher, correct loan payment. Make sure that the 'extra' (and indeed, any extra you intentionally pay any other time) goes toward the principal balance and not into your property tax escrow account. You've got to watch any bank you do business with, even to correct their honest mistakes. If your payment changes, find out why. If your extra principal payments aren't applied correctly, get it fixed. And when you have evidence of a pattern of wrongdoing, get the law involved.
> But who's going to investigate Wells Fargo over a $15 "mistake" that they fix as soon as you ask them to?
The bureaucracy to file charges for something so small is a non-starter. It's probably happening to tens of thousands of other customers, but then you have to do the leg-work to get other people on board. There's nothing you can do involving the law that doesn't require a significant time investment. And as you've said, the punishment is such a pittance that all the hard work didn't matter in the end.
I've successfully gotten the law involved with Citibank with a time investment of around 10, maybe 15 minutes. All I did was filled out this form: https://www.consumerfinance.gov/complaint/ and they handled it from there. However, the CFBP has only been around for less than a decade.
Where do you go exactly? I left Wells Fargo because (among similar "errors"), the charged me $15 monthly for "Fees" which they would reverse when I asked them what the fee was for. I had documentation of them insisting it was just a one-time mistake for several consecutive months and then charging the fees again every month for months. But who's going to investigate Wells Fargo over a $15 "mistake" that they fix as soon as you ask them to?
You file a CFPB complaint here:
https://www.consumerfinance.gov/complaint/
I've done this successfully against Citibank.
Even though you aren't a Wells Fargo customer anymore you can probably still file a complaint as long as you still have the documentation. Letting them know let's them undercover systemic problems.
Huh...how often does that happen? If you don't mind me asking, does that happen even if the account in question isn't close to zero?
And they always start off with the "be more responsible" spiel, until I get them to do the math themselves. Then they look confused, reverse the fee, and promptly forget about it. Until it happens again.
Part of the problem in these cases is factoring in those non-settled charges - money doesn't actually move until the settlement comes through. Sure, auths should affect available balance (and then refuse to accept more transactions if there's not enough available), but shouldn't be affecting the balance calculation for NSF fees.
They protect themselves by hiring politicians and people from regulating agencies for a lot of money. If they stopped doing that they would be in trouble.
I keep most of my savings in cash and never take out loans. The result: a blank credit report (which HR at most companies seems to like when I'm getting hired) and few late penalties, and never being told I can't have access to my money because of "XYZ." Not to mention, avoiding all the crappy online banking web GUIs.
I recently got my first credit card, and my loan discrimination gave me some complications. I couldn't get automatically approved for any credit limit since all my loans are paid and closed, giving me an effective credit score of zero (in the loan officer's words).
I stick to credit unions, where you are a shareholder by virtue of being a depositor.
Use a local bank or credit union. I've always had much better service and respect for me as a customer that way.
I was shocked, SHOCKED, to find out that our CEO isn't even a tiny bit of a lying, cheating sociopath. I started working here for the benefits and culture in the IT department, and assumed that the people responsible for paying for all the cool stuff we got were doing the same thing I assume all the other big banks do (Wells, JPMorgan Chase, Citi).
I've only been here a little while, and not seen anything nefarious, though I only have visibility into the IT infrastructure mostly, and some development work. But I'm still wondering how a company can become this large and successful in this sector without griminess from the top.
It's restored my faith in stuff a little bit. Also note, if you look at the top 10 banks in the USA, the bottom half are a small fraction of the size of the top 3, and we're in the bottom half.
How would you possibly know?
The rest of management/leadership could still be rotten to the core.
http://www.rollingstone.com/politics/news/u-s-sues-wells-far...
http://www.vanityfair.com/news/2017/05/wells-fargo-corporate...
I am incredibly saddened by the fact that this association is weak enough that people could even entertain the idea that they are misremembering.
Wells Fargo should be forever branded, and if you are doing business with them you really should stop.
Will they do that? Probably not. After all, no organization in the 21st century is conceivably more valuable than the people who are lootingxxxxx running it.
The one thing that will put the brakes on such.
P.S. Also worth mentioning, various governments have various laws and regulations prohibiting doing business with agents convicted of criminal activity. It would also be worth actually adhering to and enforcing those.
A bigger threat than a fine that often represents a fraction of the profits already gained.
But seriously, pierce the corporate veil and lock them up. Long past due. And experience has now shown, the only way to substantially reduce such activity (e.g. Savings and Loan Scandal of the '80's).
P.P.S. Regarding this, and all the Federal agents/roles that have been reassigned from domestic and financial crime to "terrorism". More Americans face greater terror today from the prospect of being screwed over by fraudulant big business, than face real (as opposed to manufactured) terror over a terrorist attact. Or, a "terrorist" attack, looking at how broadly that label gets applied, today. (I was going to say, how broadly it gets "thrown around", only it isn't really being "thrown around", it's being used quite deliberately to foster self-serving agendas.)
I get that generally changing the terms of a loan after everything is signed is sketchy. But in this case it looks like they were trying to do the customers a service:
>The changes, which surprised the customers, typically lowered their monthly loan payments, which would seem to benefit borrowers, particularly those in bankruptcy. But deep in the details was this fact: Wells Fargo’s changes would extend the terms of borrowers’ loans by decades, meaning they would have monthly payments for far longer and would ultimately owe the bank much more.
I guess the devil is in the details, but if they just lowered the minimum payment what's the harm to the consumer? AFAIK the vast majority of loans in the US are simply calculated. If you make your payments as expected on time you wouldn't be effected. If you aren't able to do that, then of course you're not paying off the principle as quickly and the term would be extended. Just like making extra payments will shorten the term.
To be clear: changing the rate? Adding fees? Sure, that's really bad; rake them over the coals. But if it's just changing the minimum payment amount I'm missing the problem.
In this case, I'd wager by lowering the payments, less loans were "risky" and therefore their assets look better. That probably was for the benefit of repackaging those "assets" and/or better guarantees from the Fed.
Read up on this important court case: https://en.wikipedia.org/wiki/Williams_v._Walker-Thomas_Furn....
One customer had nine years left on their mortgage. Wells Fargo extended that to forty years, giving Wells Fargo an extra $40,000 in interest.
Another customer had fourteen years left on their mortgage, it was extended to forty years, giving Wells Fargo an extra $85,000 in interest.
If you're expecting to retire with your house paid off, the additional 31 or 26 years of payments could ruin your life.
Even while you're filing for bankruptcy, you would want to structure the mortgage so that you are paying it off as quickly as you can specifically because compounding interest really hurts.
From groceries, with cashiers not ringing up specials or coupons correctly, sometimes the wrong UPC/wrong price and they aren't even paying attention.
Everyone else is trying to charge extra hidden fees, and sometimes they are illegal, like these.
But honestly, most people are so out of it, so clueless, they don't notice if they have the paperwork in hand.
Now we've really jumped the shark and are forging people's paperwork (account scandal) and submitting false documents.