Six of the nation’s largest banks—Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo—have amassed more than $1 billion in fines in 35 cases in just the last 15 months. Better Markets’ latest report details these violations along with nearly 400 other major legal actions that the six Wall Street banks have been involved in over the past 20+ years. The tally is now an astonishing 430 actions resulting in nearly $200 billion in fines and other monetary sanctions. And the violations include every conceivable type of financial misconduct, from money laundering and market manipulation to fraud and foreclosure violations.
Here are recent examples of the banks ripping off, discriminating against, and otherwise victimizing their customers:
- In February 2021, Citibank agreed to refund $4.2 million to customers as part of a settlement of allegations brought by multiple state attorneys general that it overcharged credit card customers by failing to reduce APRs as required by federal law.
- In March 2021, J.P. Morgan entered a conciliation agreement with a borrower who alleged that J.P. Morgan undervalued her home because of racial discrimination. This followed an enforcement action in January 2017, in which J.P. Morgan paid $55 million to settle allegations it engaged in racially discriminatory practices with regard to mortgages.
- In May 2021, Bank of America settled a class action lawsuit for $75 million, based on allegations that it had ripped off customers by charging overdraft fees that it had no right to collect.
- In January 2022, Morgan Stanley settled a class-action lawsuit for $60 million, based on allegations of widespread failures to protect customers’ personal data.
- In May 2022, the CFPB ordered Bank of America to pay a $10 million civil penalty for illegally processing out-of-state garnishment orders against customers’ bank accounts.
These cases represent a failure of the cops on the Wall Street beat, who are supposed to punish and deter illegal activity in our financial markets. Instead, the Banks get sweetheart deals, pay a cost-of-doing business fine, and go on their way. Meanwhile, the responsible individuals at the Banks almost always walk away unscathed. Compounding the problem, the media treats each case in isolation without painting the full picture of recidivism that calls for a tougher new approach to enforcement on Wall Street. Better Markets will soon be issuing a follow-on report that examines the root causes of the ineffective and opaque approach to oversight and enforcement that the federal banking regulators have applied to the large banks for so long. That report will also identify some sensible reforms that would increase the effectiveness of the supervisory process for large banks.