For additional context to the data, we sought out experts to answer questions on topics such as banking violations and consumer protections.
Philip Mattera is the Director of the Corporate Research Project of Good Jobs First
1. Have we seen an increase or decrease in banking violations over the last few years?
Over the past five years or so, there has been a tsunami of misconduct cases involving major banks. The cases with the biggest settlements and fines—reaching billions of dollars for banks such as JPMorgan Chase and Bank of America—involved the sale of toxic securities and mortgage abuses in the period leading up to the financial meltdown of 2008. The big banks have also paid billions to resolve cases concerning practices such as the manipulation of both interest rate benchmarks (especially LIBOR) and foreign exchange markets. We've also seen numerous cases involving credit card abuses and other consumer protection violations. The recently announced case against Wells Fargo for charging fees on accounts created without the customer's knowledge is the latest example.
2. Have there been any big changes to accountability or transparency within the U.S. banking system?
The big difference is that the Justice Department and some of the regulatory agencies are willing to impose much bigger penalties than in the past. Also new is the aggressive role of the Consumer Financial Protection Bureau, which in its five years of existence has brought a series of high-profile cases against both large and small financial violators. The unresolved question is whether these larger fines are having the intended deterrent effect or are regarded as a cost of doing business by financial institutions that go on breaking the rules.
3. How can people get involved with promoting greater transparency among banks?
Customers who have experienced mistreatment by financial institutions should be sure to file complaints with agencies such as the CFPB, which makes it easy to do so on its website at http://www.consumerfinance.gov/complaint/. The bureau takes these complaints seriously in its enforcement activities. It is also important for the public to express support for the CFPB and other financial regulatory agencies to push back against industry efforts to weaken oversight.
Andrea Luquetta-Kern is the Director of Policy and Research at the California Reinvestment Coalition
1. Do consumers have the right to pursue legal action against banks, if they believe they've been wronged? If not, what can they do?
It depends, but mostly, no. Banks have included forced arbitration clauses to prevent their customers from joining together to sue them. However, the good news is that the Consumer Financial Protection Bureau (CFPB) is proposing rules that will likely eliminate bank's ability to use arbitration clauses with their customers. For right now, we'd recommend reaching out directly to your bank to address this issue, if that fails, a CFPB complaint can help spur action. If you still need redress, you could contact an attorney to confirm whether or not you're bound by an arbitration clause, or if there's a way to still pursue legal action.
2. Do you have any general tips for consumers about how they can improve their chances of resolving a conflict or proving their case to the bank/regulator?
We recommend keeping detailed notes and copies of your statements or documents related to the problem, as well as a log of who you spoke to at the bank (or regulator agency) and what their response was. Social media can also be an effective way to catch the attention of a company.
In terms of regulators, the CFPB has earned a reputation of being one of the most responsive to consumers. Noting the $11 billion in consumer relief the CFPB had obtained in its first four years, Professor Adam Levitin from Georgetown Law School explained:
"These recoveries are even more remarkable given that they include a period of time when the CFPB was still ramping up its staffing and finding its sea legs, and do not include pending actions. In contrast, all of the federal bank regulators combined—the Federal Reserve, FDIC, OCC, OTS, and NCUA—plus the Federal Trade Commission achieved less than a billion in consumer relief over the decade prior to the operation of the CFPB despite these agencies having the very same power as the CFPB to prohibit unsafe and deceptive acts and practices."
3. What are some telltale signs that a consumer's bank is taking advantage of them or engaging in predatory practices?
You should be wary if your bank is trying to sell you something other than what you asked for. If you're interested in a product they're suggesting, do some research, comparison shop, and come back later. You should never respond to hard sales tactics, no matter how good they sound, on the phone or in person. We also recommend checking the CFPB complaint database to see what other customers have experienced. You can filter by company and by product, so for example, you could look up Wells Fargo and bank accounts.
Read your statements regularly, review your transactions, and check for unexpected fees. You can also ask your bank how much you've paid in fees each year. Last, obtain your credit report for free here: https://www.annualcreditreport.com/index.action You can also obtain reports from ChexSystems and Early Warning System.
Jim Angleton is the President of Aegis FinServ Corp
1. Do you think consumers who bank at small region and community banks have a better chance of avoiding predatory practices?
Good question. Community banks under $1.5B do not have the talent or manpower to offer diverse programs/products and rely on 3rd party vendors to provide such services under a private label scenario. Larger Community Banks above $1.5B have difficulty with organic growth. Therefore they have multiple departments and are self sufficient. However, they use different measurement tools plus cost center analysis. This can get them into trouble, like [Wells Fargo], by offering small base pay and incentivized structures above certain thresholds of income expectations. The answer is yes, but it is qualified by the size of the institutions. Lastly, Bank Examiners and Regulators have thinned out and they are overwhelmed when conducting routine examinations. When complaints are the reason for examination...they come in as if guns blazing and ready to kick-butt.
2. How about large institutions?
The bigger ones, to a certain point are very gamy. Regulators are cautious when writing up bigger banks and citing violations. They know once they issue their exit memorandum and citations for violation of regs, policy and procedures...they could be sued, challenged by official filing of complaint plus objection to findings. They actually are much harsher upon the smaller bank than the big ones.