The Ridgewood Blog Brings a Free Market Laissez-faire Point of View to Local, New Jersey State and National Issues.
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Ridgewood NJ, while administration officials insist the rescue of Silicon Valley Bank is not a “bailout,” most voters think taxpayers will be on the hook and wealthy investors will benefit.
Continue reading Two-Thirds of Voters Expect SVB Bailout to Cost Taxpayers
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Ridgewood NJ, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing a coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.
Continue reading Central Banks Take Coordinated Action to Enhance Liquidity in the Banking System
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TRENTON NJ, Attorney General Gurbir S. Grewal announced today that New Jersey is among the states joining a settlement agreement with Wells Fargo Bank that resolves allegations the company engaged in a variety of sales, lending, and other improper business practices for more than a decade.
Under the settlement terms New Jersey will receive nearly $17 million. Wells Fargo’s total payment under the agreement is approximately $575 million, including distributions to other states, attorneys’ fees, and other payments.
The alleged consumer protection violations in Wells Fargo’s sales, auto-lending, and mortgage-lending practices include (1) opening millions of unauthorized accounts and enrolling customers into online banking services without their knowledge or consent, (2) improperly referring customers for enrollment in third-party renters and life insurance policies, (3) improperly charging auto loan customers for force-placed and unnecessary collateral protection insurance, (4) failing to ensure that customers received refunds of unearned premiums on certain optional auto finance products, and (5) incorrectly charging customers for mortgage rate-lock extension fees.
Through this settlement with 50 states and the District of Columbia, Wells Fargo will also create a consumer redress review program through which consumers who have not been made whole through other remediation programs already in place can seek to have their inquiry or complaint reviewed by a bank escalation team for possible relief. To date, this settlement represents the most significant engagement involving a national bank by state attorneys general acting without a federal law enforcement partner.
Wells Fargo has identified more than 3.5 million accounts where customer accounts were opened, funds were transferred, credit card applications were filed, and debit cards were issued without the customers’ knowledge or consent. The bank has also identified 528,000 online bill pay enrollments nationwide that may have resulted from improper sales practices at the bank. In addition, Wells Fargo improperly submitted more than 6,500 renters insurance and/or simplified term life insurance policy applications and payments from customer accounts without the customers’ knowledge or consent.
“Wells Fargo’s corporate culture led to repeated breaches of its customers’ trust,” said Attorney General Grewal. “This settlement should send a message to all financial institutions that they need to take steps to avoid similar consumer protection violations, because we stand ready to hold the financial industry accountable.”
The states allege that Wells Fargo’s senior management exerted significant pressure on middle management and line employees to generate sales, through the establishment of unrealistic sales goals and an incentive compensation program. These sales goals became increasingly hard to achieve over time, the states allege, and employees who failed to meet them faced potential termination and unfavorable reviews. As a result, employees routinely enrolled customers in checking and savings accounts, credit cards, debit cards, unsecured lines of credit and online bill pay services without their knowledge or consent.
The states also contend that Wells Fargo employees wrongly charged more than two million auto financing customers premiums, interest, and fees for forced-place collateral protection insurance, even though this insurance duplicated coverage the customers already had in place. As a result, Wells Fargo has agreed to provide remediation of more than $385 million to approximately 850,000 auto finance customers. The remediation will include payments to over 51,000 customers whose cars were repossessed.
According to the states, Wells Fargo also failed to provide proper refunds to auto finance customers who had purchased Guaranteed Asset Protection insurance policies, designed to address situations in which a car buyer/borrower ends up owing more than a vehicle’s value. As a result, Wells Fargo has agreed to provide refunds totaling more than $37 million to certain auto finance customers.
Finally, the states alleged that Wells Fargo improperly charged residential mortgage consumers for rate lock extension fees. With rate lock extension, borrowers could “lock in” an ostensibly favorable interest rate, for a fee, even if their loans did not close within the defined rate lock period. The states determined that some bank branches were charging rate lock extension fees even when the delay was caused by Wells Fargo, a practice contrary to the company’s policy. The bank has identified and contacted affected consumers and has refunded or agreed to refund over $100 million of such fees.
Wells Fargo has previously entered into consent orders with federal authorities – including the Office of the Comptroller for the Currency (OCC) and the Consumer Finance Protection Bureau (CFPB) – related to its alleged conduct. Wells Fargo has committed to or already provided restitution to consumers in excess of $600 million through its agreements with the OCC and CFPB as well as through settlement of a related consumer class-action lawsuit, and will pay over $1 billion in civil penalties to the federal government. Additionally, under an order from the Federal Reserve, the bank is required to strengthen its corporate governance and controls, and is currently restricted from exceeding its total asset size.
As part of its settlement with the states, Wells Fargo has agreed to implement within 60 days a program through which consumers who believe they were affected by the bank’s conduct, but fell outside the prior restitution programs, can contact Wells Fargo to be reviewed for potential redress. Wells Fargo will create and maintain a website for consumers to use to access the program and will provide periodic reports to the states about the program’s progress.
More information on the redress review program, including Wells Fargo escalation phone numbers and the website address will be available on or before February 26, 2019.
The $17 million Wells Fargo payout to New Jersey is the sixth highest amount recovered among all jurisdictions participating in the multi-state settlement
By Craig McCarthy | NJ Advance Media for NJ.com
on April 17, 2017 at 7:20 AM, updated April 17, 2017 at 4:28 PM
NEW BRUNSWICK — A Somerset County woman is suing Wells Fargo Bank alleging she was fired for refusing to participate in an alleged scheme similar to the bank’s widespread account scam that led to millions of dollars in federal fines.
Melinda Bini, a former assistant vice president and regional private banker at the Highland Park bank’s branch, says in a recent lawsuit that supervisors instructed her to manipulate accounts and sell banking products or investments that were not the customers’ best interest or without their knowledge.
The lawsuit, filed in Middlesex County Superior Court on April 5, names Wells Fargo and three local bank supervisors.
“the CHOICE Act offers us a way out by pointing us towards a system that will allow the market to determine the risk of a financial institution, and make it unlikely that taxpayers will ever be called on again to bail out Wall Street and the bad decisions of regulators who oversee it” Rep. Scott Garrett CD5
Norbert Michel / @norbertjmichel / September 20, 2016
On Tuesday, Sept. 13, the House Financial Services Committee passed the Financial CHOICE Act. Among other needed financial reforms, the bill would make taxpayer-funded bailouts of big banks less likely and ease regulations that hurt community banks.
It’s hardly a surprise that the vote (30–26) was largely along party lines, but some of the anti-CHOICE Act rhetoric was disturbing. Just as with the 2010 Dodd-Frank Act, it appears that fear-mongering and special interest lobbying will prevent real financial reforms from even being debated.
Only one of the bill’s 11 sections deals with reform of the Consumer Financial Protection Bureau (CFPB), but opponents are doing their best to tie this entire debate to the CFPB and Wells Fargo. In the process, they’re presenting Americans with a false choice: leave the CFPB alone and remain safe, or reform the CFPB and drown in fraud.
Ranking member Maxine Waters, D-Calif., proclaimed:
We need to look no further than just last week to see why we need a strong Consumer Financial Protection Bureau, which used its authorities under Dodd-Frank to uncover a massive scheme under which millions of consumer accounts at Wells Fargo were fraudulently opened, with the bulk of this fraud perpetrated in my hometown of Los Angeles.
One serious problem with this logic is that the fraud occurred just prior to 2014, almost two years after the CFPB was up and running. And the CFPB didn’t uncover it.
If the CFPB is so vital for fraud protection, what happened?
But what good is logic when the objective is to scare everyone into believing Dodd-Frank and the CFPB make us safer? Fear-mongering is a tried and true Washington tactic, especially when it comes to financial markets.
And it’s not just politicians who use fear-mongering. Special interest groups use the same ploy, and the retail trade associations’ opposition to the CHOICE Act’s repealing of the so-called Durbin Amendment is the perfect example.
The Durbin Amendment, named after Illinois Senator Dick Durbin, imposed a price cap on the debit card interchange (“swipe”) fees that banks charge for using their cards. Supposedly, retailers everywhere were going to pass these savings on to their consumers.
As was easily predicted, consumers haven’t saved at all. Even Barney Frank admits that consumers didn’t see any benefit from the price cap.
Instead, retailers have benefited from the lower fees without lowering their customers’ prices. Worse, consumers have lost out on low-cost banking services because banks raised other fees to compensate for their lost revenue.
Need more evidence?
It’s not the consumers clamoring for the House to leave price controls in place. It is business and retail trade associations, such as the National Grocers Association, the Society of Independent Gasoline Marketers of America, and the National Restaurant Association.
There’s no doubt that these groups’ members have a difficult time running a profitable business, but so does everyone. Instead of pushing back on the CHOICE Act over one tiny section—one that would benefit millions of consumers—these groups should push for large-scale relief of the regulations that make it so difficult for their members to earn money.
Supporting the types of reforms in the CHOICE Act would be a great place to start.
By John Alan James
On the fifth anniversary of the signing of the Wall Street Reform and Consumer Protection Act, Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, and a panel of regulatory experts gathered at an American Enterprise Institute meeting to discuss the impact of the legislation on America’s economic system.
Hensarling has been successful in finding bi-partisan support in modifying some financial regulations, particularly where federal courts have contended that regulators have failed to prove the benefits of the suggested remedies. But in his recent speech at the Institute, he made it clear that his ultimate goal is the repeal of the Dodd-Frank Act.
Fines and legal fees paid by financial institutions have risen dramatically in the past five years. Violations of regulations covering money laundering and sanctions have been extremely costly to banks, with penalties negatively impacting balance sheets and shareholders’ equity.
The Dodd-Frank Act has expanded the role and power of the federal government in corporate affairs and created a new and growing need for compliance risk management. The job of chief compliance officer, responsible for the implementation of internal and external governance policies and procedures, has grown from a clerical position to a new type of professional often reporting directly to the board and primarily responsible to the chief executiv
Five years ago today, the Dodd-Frank Act was signed into law amidst promises that the legislation would protect American consumers, make our economy more competitive, and end ‘too big to fail.’ Instead, Dodd-Frank has stifled economic growth, made it more difficult for Main Street businesses to obtain credit, and increased the likelihood that taxpayers will be on the hook for additional Wall Street bailouts. Most importantly, this law has and has made it harder for Americans to find a job, buy a home, and save money for their family’s future. Rep Scott Garrett
https://www.youtube.com/watch?v=_9vApbUrnDM
By Kevin Cirilli – 07/20/15 07:22 PM EDT
House Financial Services Committee chairman Jeb Hensarling (R-Texas) will say in a policy speech on Tuesday that the 2010 Dodd-Frank Wall Street Reform law has made the country “less financially stable.”
Hensarling’s attack on the fifth anniversary of Dodd-Frank, will come during a speech at the American Enterprise Institute in Washington.
“The Dodd-Frank architecture, first of all, has made us less financially stable,” Hensarling will say, according to excerpts obtained by The Hill. “Since the passage of Dodd-Frank, the big banks are bigger and the small banks are fewer… Dodd-Frank concentrates greater assets in fewer institutions. This is bad policy and bad economics.”
He will argue that Dodd-Frank’s regulations — despite being written largely for financial institutions — have impacted “grocery markets, cable TV servers and bowling alley chains” that “must comply with regulations imposing wage controls, salary ratios and private compensation disclosures made for Wall Street investment firms.”
Hensarling made similar arguments on Saturday, when he delivered the Republicans’ weekly address, as well as in an op-ed for The Wall Street Journal published earlier Monday.
Liberals like Sen. Elizabeth Warren (D-Mass.) and Democratic presidential candidate Sen. Bernie Sanders (I-Vt.) have argued that Dodd-Frank didn’t go far enough in regulating the markets.
They have criticized the financial industry for lobbying heavily against Dodd-Frank to weaken its regulations.
https://thehill.com/policy/finance/248582-hensarling-dodd-frank-made-country-less-financially-stable
Submitted by Tyler Durden on 07/18/2015 18:15 -0400
Submitted by Josh Grossman via The Mises Institute,
Last week, former Secretary of Education and US Senator Lamar Alexander wrote in the Wall Street Journal that a college degree is both affordable and an excellent investment. He repeated the usual talking point about how a college degree increases lifetime earnings by a million dollars, “on average.” That part about averages is perhaps the most important part, since all college degrees are certainly not created equal. In fact, once we start to look at the details, we find that a degree may not be the great deal many higher-education boosters seem to think it is.
In my home state of Minnesota, for example, the cost of obtaining a four-year degree at the University of Minnesota for a resident of Minnesota, North Dakota, South Dakota, Manitoba, or Wisconsin is$100,720 (including room and board and miscellaneous fees). For private schools in Minnesota such as St. Olaf, however, the situation is even worse. A four-year degree at this institution will cost $210,920.
This cost compares to an average starting salary for 2014 college graduates of $48,707. However, like GDP numbers this number is misleading because it is an average of all individuals who obtained a four-year degree in any academic field. Regarding the average student loan debt of an individual who graduated in 2013, about 70 percent of these graduates left college with an average student loan debt of $28,400. This entails the average student starting to pay back these loans six months after graduation or upon leaving school without a degree. The reality of this situation is that assuming a student loan interest rate of 6.8 percent and a ten-year repayment period, the average student will be paying $326.83 every month for 120 months or a cumulative total re-payment of$39,219.28. Depending upon a student’s job, this amount can be a substantial monthly financial burden for the average graduate.
https://www.zerohedge.com/news/2015-07-18/how-student-loans-create-demand-useless-degre
Jul 18, 2015
WASHINGTON, D.C. – Rep. Scott Garrett (NJ-05), Chairman of the House Financial Services Capital Markets and Government Sponsored Enterprises Subcommittee, issued the following statement in response to Federal Reserve Chair Janet Yellen’s testimony before the House Financial Services Committee today.
“The Federal Reserve has proven itself to be one of the most unaccountable and least transparent agencies in the federal government, and today’s hearing did little to change that reality. From being unresponsive to subpoena requests from our Committee to dismissing concerns over serious problems in the fixed income markets, the Fed is the poster child of a shadow regulatory system that threatens taxpayers and our broader economy. It is an agency in dire need of change, and I look forward to continuing our Committee’s efforts to bring real reforms to the Federal Reserve.”
Rep. Garrett has been a longtime critic of the Federal Reserve’s lack of transparency and its failed monetary policy. He is the author of two pieces of legislation that would shed light on the Federal Reserve’s notoriously opaque operations:
H.R. 113, The Federal Reserve Accountability and Transparency Act of 2015
H.R. 2625, The Bailout Prevention Act of 2015
Shock vote on terms of bailout pushes Greek banks to the brink of meltdown as long queues form at country’s cashpoints
Eurozone finance ministers have refused a Greek request to extend its bailout programme
The current programme expires on June 30, and will not be continued
Finance ministers are continuing emergency meetings in Brussels without Greece to decide the consequences
Hundreds rushed to ATMs across the country, after Prime Minister Alexis Tsipras called for a referendum on the bailout at 1am Greek time
By SIMON WALTERS AND GLEN OWEN FOR THE MAIL ON SUNDAY
PUBLISHED: 07:06 EST, 27 June 2015 | UPDATED: 07:16 EST, 28 June 2015
Greek banks were on the brink of meltdown last night after the shock announcement that its crisis-hit government would hold a referendum on the terms of a fresh international bailout.
Long queues formed outside the country’s cashpoints after prime minister Alexis Tsipras accused the International Monetary Fund and eurozone of trying to blackmail his country – and pledged to give the Greek people the final say in a vote next weekend.
Mr Tsipras described the bailout plan as ‘humiliation’, condemned ‘unbearable’ austerity measures demanded by creditors and said he would campaign for a ‘no’ result.
JUNE 11, 2015 LAST UPDATED: THURSDAY, JUNE 11, 2015, 1:21 AM
BY KEN SWEET
THE ASSOCIATED PRESS |
WIRE SERVICE
NEW YORK — U.S. banks, tired of spending billions each year to pay back fleeced consumers, are in the process of replacing tens of millions of old magnetic strip credit and debit cards with new cards that are equipped with
computer chips that store account data more securely.
By autumn, millions of Americans will have made the switch from the old magnetic strip cards. That 50-year-old technology, replaced in most of world, lingers on the back of U.S. cards and is easily copied by thieves, leaving people vulnerable to fraud. Roughly half of all credit card fraud happens in the U.S., even though the country makes up roughly 25 percent of all credit card transactions, according to a report by Barclays put out last week.
About half of all U.S. credit and debit cards will be replaced by the end of the year. Tens of thousands of individual merchants need to upgrade their equipment to allow for “chip-and-sign” transactions instead of “swipe-and-sign” ones. If the stores aren’t ready, they could be on the hook to cover the cost of fraud.
How the new cards work and how the switch could affect consumers:
* What’s different about these cards?
https://www.northjersey.com/news/business/new-credit-cards-on-the-way-1.1353864
NEW YORK, May 30 (UPI) — Bank of America has been hit with a $30 million fine for violating the rights of accounts owned by U.S. military servicemembers, officials said.
The violations reportedly involve 73,000 different bank accounts belonging to the military members, the {link:New York Times reported: “https://www.nytimes.com/2015/05/30/business/dealbook/bank-of-america-fined-for-violations-of-military-relief-law.html?_r=0″,nw}.
The Office of the Comptroller of the Currency (O.C.C.) said {link:the bank violated the rights: “https://www.nasdaq.com/article/bank-of-america-to-pay-30-million-fix-violations-on-servicemembers-accounts-20150529-00938″,nw} of servicemembers and failed to ensure it was complying with a federal law designed to ease financial stresses on those in the military.
The law, known as the Servicemembers Civil Relief Act, seeks to ease financial strain on servicemembers as a mode to help them cope with other stresses brought on by military service.
The law limits how much interest banks can charge on servicemembers’ accounts while they are deployed, and prevents banks from repossessing vehicles and foreclosing homes on soldiers without a court order.
