Distrust in American banking grows
As the Presidential political campaigns continue and the East coast of the United States focuses on trying to survive what appears to be one of the most dangerous hurricanes in several decades, it would seem almost nothing else of importance is actually happening.
Very quietly however, the American Banking system seems to be in trouble again and along with it a growing distrust by the American people.
Bank of America continues to have financial problems reporting that it has lost more than $60 billion on its acquisition of Countrywide Mortgage, including the cost of last week's big settlement with the Justice Department after being found liable for fraud back in 2013 over defective mortgages. But according to The American Banker, its issues are hardly over.
To the average person, Bank of America’s problems seem insurmountable and even frightening. BOA has hundreds of thousands of delinquent, unsellable mortgage loans to work through which seems by all standards to simply indicate the potential for loss and instability. Federally insured or not, nobody wants their money tied up in an unreliable institution; the end result could ultimately be more BOA customers closing their accounts.
Added to Bank of America’s problems is the latest difficulty from America’s other top bank, Wells Fargo in its scandal over phony accounts. Wells Fargo was charged with fraud by the State of California because its staff opened checking, savings and credit card accounts without customer approval for years to satisfy managers' demand for new business. The Consumer Financial Protection Bureau (CFPB) reported: "According to the bank's own analysis, employees opened more than two million deposit and credit card accounts that may not have been authorized by consumers". On September 8, Wells Fargo agreed to a $190 million settlement with U.S. regulators and California prosecutors.
Although the bank has fired 5,300 employees as part of its agreement with the State of California allowing Wells Fargo to conduct its own investigation, after Wells Fargo CEO, John Stumpf appeared before a United States Senate committee hearing, several members of Congress stressed that Wells Fargo customers were stolen from and suggested criminal charges should be considered.
Besides the State of California, the states of Illinois, Connecticut, Massachusetts, Oregon and New York City also have the bank either under investigation or have taken action against Wells Fargo.
Although Wells Fargo was singled out in the Senate Committee hearing, based on a survey conducted last year by the consulting firm CG42, 40 percent of Wells Fargo customers complained employees’ constantly pushed products they did not need or want. Customers at other banks made similar complaints: Bank of America customers, 31 percent said they felt overly pressured for products they didn’t want or need and at both Chase and Citigroup, 27 percent agreed they too were pressured.
Although unhappy with the practices, customers at these other banks have not reported any wrong doing.
The reality is more Americans are slowly moving their money out of banks and into other more easily obtainable financial institutions such as credit unions, insurance checking accounts and even pre-paid debit services and private payday accounts. Many simply utilize these financial products as “direct depositories” for the purpose of accessing cash from which many simply hide and then conduct their personal business.
Still others with larger cash flows are purchasing gold, silver and Bit Coins. In short, Americans are trusting traditional banking much less.
Although the distrust of the American Banking system led to a run on banks in 1929, the collapse of the stock market and ultimately the great depression, experts today tell us, “not to worry, it simply can’t happen again” but tell that to the nation of Greece.
© 2016 The Outlaw Observer and Opinion