Banking scandals have become all too common in the last few years. The most recent one involves American bank Wells Fargo. Only last week, reporters at the Wall Street Journal revealed that the enormous U.S. financial institution has been cheating its own customers on their exchange rates for foreign currency transactions.
Wells Fargo uncovered this themselves while internally auditing their fee structures. It turns out that 88 percent of all their reviewed sample business and personal accounts had been substantially overcharged. The bank was charging foreign exchange rates of up to four percent.
In many cases they had contracted with their customers to assess them a .15 percent fee. This is an enormous over 25 times higher than the contract. In other words, the bank was levying what amounts to relatively enormous commissions for simply selling and buying money.
These were not exotic currency pairs Wells was changing either. The bank admits that the vast majority of them were for exchanging U.S. dollars with euros. Admittedly this should be the most commonly and easily converted pair in the world. It only needs a second to execute such a trade.
Over five trillion in currency changes hands each day, many billions of which are euros. This takes place via electronic platforms 24 hours a day during business days. It only makes the Wells’ action all the more ridiculous and corrupt. These currency exchanges do not require them to do anything.
Unfortunately, this is not the first time that Wells Fargo has been caught in a customer banking scandal. The last one involved them creating literally millions of accounts for customers. The problem was that they did not consult these customers before they opened the accounts. The bank was trying to create new products that would generate more fees.
Wells Fargo is not alone in these practices of taking advantage of or even cheating their own customers. Virtually the entire banking industry has been involved in one scandal or another. A number of the big banks were found guilty of working together to rig the foreign exchange rates and various interest rates.
Others have deliberately fixed the prices of assets. Many cheerfully sold products to their own clients that they admitted were toxic in the first place. Practically all of the major banks used even customer deposits to buy into hopeless loans to borrowers who would never be able to repay.
These banks also rely on accounting tricks to make their balance sheets appear stronger than they really are. This involves hiding losses by reclassifying assets or showing potentially problematic assets to be worth full value on their statements.
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