FTX Collapse vs Wells Fargo Debaucle
While most of the world is focusing on the crypto drama, there are much larger financial fiascos that seemingly go unnoticed in comparison. Brad Garlinghouse, CEO of Ripple Labs is speaking out.
Garlinghouse says that there is a wildly disproportionate amount of attention directed at the collapse of crypto exchange FTX compared to banking giant Wells Fargo, which just paid $3.7 billion in fines for mismanaging customer funds.
“The world is (appropriately) outraged by SBF and FTX’s fraud, but when Wells Fargo mismanages billions in customer funds as well, it’s barely a blip on the radar. Food for thought…”
Wells Fargo was charged by the Consumer Finance Protection Board (CFPB) with mismanaging funds relating to auto loans, mortgages and deposit accounts.
Says CFPB Director Rohit Chopra.
“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families. The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country. This is an important initial step for accountability and long-term reform of this repeat offender.”
On top of the big 10-figure fine, the CFPB also ordered Wells Fargo to “stop charging surprise overdraft fees” and make changes to certain aspects of its policies on auto loans.
Garlinghouse has spoken out in the past about what he says is unreasonable scrutiny of the crypto industry. Earlier this week, he criticized U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler for his lack of foresight on the collapse of FTX and its former CEO, Sam Bankman-Fried.
The Ripple CEO said it was “shameful” that Gensler, who often lectures crypto firms on regulatory compliance, failed to see the FTX disaster coming despite having multiple personal meetings with Bankman-Fried.
“It’s ridiculous and frankly shameful that Chair Gensler was touting the SEC’s enforcement actions as the ‘cop on the beat,’ yet (per public reports) MET with [Sam Bankman-Fried] multiple times, but was caught completely flat-footed when the alleged fraud finally came to light.”
Twitter Users Chime In on Ripple CEO Scathing Assessment of Wells Fargo Case
Garlinghouse’s criticism of the lack of attention directed towards Wells Fargo for its misdeeds garnered varied responses from Twitter observers. Although few questioned the meaning behind his verbal attack, a majority supported the Ripple CEO’s assessment of the Wells Fargo case. This majority support included insisting that relevant authorities should have extended the same FTX treatment to the prominent bank. In addition, some other users pointed out that the system favored traditional banking and finance over crypto-focused operations. Yet still, a few users also addressed the perceived double standard as proof that traditional banks’ own and control the government.’
Recap of the Latest Wells Fargo Case
Two days ago, the United States Consumer Financial Protection Bureau (CFPB) demanded that Wells Fargo pay a $3.7 billion fine. According to the consumer protection agency, Wells Fargo committed widespread mismanagement of auto loans, mortgages, and deposit loans. The CFPB also alleged that the San Francisco-based bank’s unethical conduct resulted in billions of dollars in financial harm to clients. This mismanagement also resulted in the wrongful foreclosure of homes and illegal repossession of vehicles, to name a few.
The CFPB’s hefty fine comprised over $2 billion in consumer redress and a $1.7 billion civil penalty.
Weighing in on Wells Fargo’s unlawful systematic fees and interest charges on its customers, CFPB Director Rohit Chopra stated:
“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families. The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country.”
In addition, Chopra suggested that this incident was not the first time the banking giant would violate the law. As he put it, “this is an important initial step for accountability and long-term reform of this repeat offender.”
According to reports, there are 16 million customers affected in the latest Wells Fargo case.
Previous Wells Fargo Infraction
In 2016, the multinational bank and financial services platform also received a $185 million fine from the CFPB. At the time, the agency accused Wells Fargo of creating countless fraudulent savings accounts for its customers without their consent. By 2020, the banking giant agreed to pay $3 billion to resolve all liabilities pertaining to the case.
Featured Image: Shutterstock/Volodimir Zozulinskyi
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