Big banks approach half billion dollars in fines this week -- and it's only Wednesday
Wake up and good morning. It must be an unwritten rule of our biggest banks. Thou shalt find a way to snooker your customers. At least it feels that way given the seemingly unending fines paid by or allegations confronting some of the behemoth banks that happen to dominate the Florida economy.
The latest? Wells Fargo, a recent arrival to the Sunshine State. Wells Fargo said Tuesday it agreed to pay at least $37 million in a lawsuit which alleges several banks rigged bidding competitions to win business from state and local governments. Banks help municipalities invest the money they raise from bond offerings to earn interest before paying for projects. They compete by submitting to state and local governments the best yield they can offer. According to this AP story, the lawsuit alleges several banks rigged the process and deprived governments of a true competitive process that would produce the best returns on their investments. (Photo: AP.)
Most of Wells Fargo's involvement in the bid rigging scam came courtesy of Wachovia Bank, which Wells Fargo bought. But other banks already reached agreements to settle with some of the parties in the case, including JPMorgan Chase ($211 million), Bank of America ($137 million) and UBS AG ($160 million).
Then there's this whopper fine Bank of America agreed to pay. On Monday, a federal judge approved a $410 million settlement in a class-action lawsuit affecting more than 13 million Bank of America customers who had debit card overdrafts during the past decade. According to this AP story, the lawsuit claimed that Bank of America processed its debit card transactions in the order of highest to lowest dollar amount so it could maximize the overdraft fees customers paid. An overdraft occurs when the account doesn’t have enough money in it to cover a debit card transaction. Similar lawsuits have been filed against more than 30 other banks.
Despite the settlement, AP reports, Bank of America insists there was nothing improper about the processing sequence. Nothing improper? How about morally deaf? Any wonder Bank of America has such a poor reputation these days? What's their new slogan... I gouge, therefore I am? I'm not even going to get into the backlash created by Bank of America's ill-fated $5 debit card fee (recently dropped).
(Social media users posted many more negative opinions than positive about Bank of America and other large banks over the last 12 months, according to a new social media analytics report from Amplicate. Read more here.)
Still lurking out there is Bank of New York Mellon Corp., which is accused by state and federal officials -- including those in Florida -- of defrauding public pension funds on foreign-exchange trades.
So, combined, Bank of America and Wells Fargo have agreed to pay $447 million in fines so far this week. Hey, it's only Wednesday.
-- Robert Trigaux, Business Columnist, St. Petersburg Times