# Is Wells Fargo "a criminal enterprise"?

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Staff Emeritus
2019 Award
This is rapidly turning into "Banks are evil. This act is evil. Therefore banks committed this act."

The FDIC has three options when bailing out a failed bank:

1. Simple payoff: the depositors get a direct payout for their deposits (small banks only).

2. Sell off: Another bank acquires the liabilities and assets of the failed bank.

3. Bail out: The failed bank is not closed, and all depositors (insured or not) are fully protected (Only a select few large banks). This is paraphrased from Irving Sprague, former Director of the FDIC.

This is rapidly turning into "Banks are evil. This act is evil. Therefore banks committed this act."
Not it's not. We're discussing the original post if Wells Fargo a criminal enterprise.My assertion is yes. If you care to continue the debate, please refute any of my statements.

https://www.fdic.gov/bank/analytical/banking/2000dec/brv13n2_2.pdf

Here is an analysis of the S&L crisis in the 1980's. S&Ls are insured by the FSLIC, a cousin to the FDIC for commercial banks. The FSLIC became insolvent in 1986. The resolution of over 1000 S&L failures cost the taxpayers an estimated $128B. The same will happen to the FDIC in the event of another big bank failure. mheslep Gold Member Before asserting the conditions of the S&L failures were the same as now, what changes were made in the wake of the S&L failures. Before asserting the conditions of the S&L failures were the same as now, what changes were made in the wake of the S&L failures. Are you asking me because you don't know, or are you testing my knowledge of S&L regulation? There was a whole bunch of legislation after the 2008 collapse too. Neither FIRREA nor Dodd Frank address the moral hazard of reserve requirements. I apologize for my link to the FDIC. I ran a report on bank failures, and copied the IP address. It takes you to the main page. You can go to bank failures and run a query yourself from the home page. mheslep Gold Member KM, you just implied the situation between the S&L collapse and now are the same. I'm asking you to back that assertion with some evidence. No I didn't. I asserted that currently the FDIC is in the same situation as the FSLIC was at the time of its insolvency. And that situation is the FDIC does not have enough funds to cover the failure of two or more large banks. mheslep Gold Member No I didn't. I asserted that currently the FDIC is in the same situation as the FSLIC was at the time of its insolvency. ... No, its not. Relative to the FDIC, the FSLIC had very little hands on control of S&Ls such as capital controls (3%), minimum number of investors (one for S&Ls at the time), time that insolvent firms were allowed to stay open (years). https://www.fdic.gov/bank/historical/history/167_188.pdf Thousands of banks have failed since the FDIC was created, and more will fail. The FDIC insures deposits, not all the assets of the bank. https://www.fdic.gov/bank/individual/failed/banklist.html I think there are many indications of problems with US banking, but that does not include that the FDIC is in the same position as the FSLIC was decades ago. I do have to stand corrected on statement I made. Since 2011 the FDIC has changed the assessment rates to reflect the relative risk of the institution. Now the minimums are about$3-4 per $100. And the problem remains the same, they are both underfunded. This is rapidly turning into "Banks are evil. This act is evil. Therefore banks committed this act." V50, you are an intelligent person. When you examine the facts pertaining to the banking system, you can only draw one conclusion. The banks can engage in risky behavior with no consequence. If the FDIC is incapable of making good its liabilities, history has proven that the government (i.e. the people) will make good the difference. The banks have been continuously bailed out by the taxpayers since the inception of the FDIC. The first time a government supported a bank in a time of failure was in 1696. There was run on the Bank of England which led to insolvency. The Parliament responded by making a law which suspended the "payment of specie". This means that depositors could not redeem their payments in gold (the standard of currency of the day). The precedent was set, and to this day there is an unholy alliance between govermnents and central banks that defies logic. Just because something is legal, does not make it right. In the words of the Mayer Amschel Rothschild ( the original bankster), "Give me control over the issuance of a nation's currency, and I care not who makes its laws." Vanadium 50 Staff Emeritus Science Advisor Education Advisor 2019 Award Kevin, I am afraid your argument is too slippery for me and you keep moving the goalposts. The fact that a bank commits some bad acts does not prove it commits other bad acts, just like the fact that a person is a thief does not allow you to hang him for murder. Fractional reserve banking, "too big to fail" and risky S&L loans in the 1980's have nothing to do with this particular Wells Fargo scandal. nsaspook and russ_watters Kevin, I am afraid your argument is too slippery for me and you keep moving the goalposts. The fact that a bank commits some bad acts does not prove it commits other bad acts, just like the fact that a person is a thief does not allow you to hang him for murder. Fractional reserve banking, "too big to fail" and risky S&L loans in the 1980's have nothing to do with this particular Wells Fargo scandal. Yes, of course you are right, FR banking has nothing to do with this scandal. Cheers. I used to have a bank account with Wells Fargo 8 months ago. I was incredulous when they took$12 dollars out of my account for no reason. The story: I had transferred some money from savings to checking to buy an item (I can't remember exactly what it was, probably a game to play with some friends) I knew the exact cost of. When I bought the item (online purchase) for the exact amount Wells Fargo gave me an overcharging fee. When I tried to get my my money back because I clearly had not over charged but paid the exact amount the Wells Fargo rep would only give me six dollars back. I was thoroughly upset and resorted to keeping my money away from Wells Fargo. The worst part is that I was powerless to do anything about it. They took the money I had entrusted them with. I can't imagine I am the only one this has happened to.

mheslep
Gold Member
The WF CEO was sacked couple days ago.

Staff Emeritus
2019 Award
But replaced by his right-hand man. Meet the new boss.

Borg, nsaspook and mheslep
Astronuc
Staff Emeritus
The bank stands to lose $99 billion in deposits,$4 billion in revenue and a customer base that could dwindle by up to 30 percent, a study released Monday by cg42 showed. Ultimately, about 14 percent of customers are actually projected to switch banks, an at-risk level that a cg42 principal still said is "dramatically higher" than what would be expected from any of Wells Fargo's competitors.