By Matt Johnson
I was waiting for a reader to pose a certain question and I’m glad that person did. As the reader asked, didn’t Wells Fargo defraud their customers by creating and charging them for the fake accounts?
Indeed, Wells Fargo created those fake accounts and then charged their clients for them. It was an indefensible business act. Certainly no person in their right mind would have defended such a business practice – I know I didn’t.
As my readers know, I have not attempted to defend such a practice in any of my articles. It was never my intention to do so, and it was never my argument. In actuality, my argument had many components to it and I built these components into my argument over the course of several blogs.
The first component was simply highlighting what I believed to be an ignorance of science by that of the Minneapolis City Council. As I illustrated, their willingness to unanimously pass a staff directive to explore options to stop doing business with Wells Fargo didn’t match the complex relationship fossil fuels have with the City of Minneapolis.
That is, we use fossil fuels for energy in the forms of heating our houses and energy for our transportation (automobiles, light-rail, etc.); and fossil fuels are found in our everyday products such as shoes, sports gear such as basketballs, and tooth brushes. It’s also used in the supply chain management that provides us our coffee. And we all know our world would fall apart without coffee.
The second component was that the Minneapolis City Council was perhaps just bad at economics. That is, they didn’t understand basic economic principles and more than likely just didn’t do their homework. Instead, it felt as though their rush to end their relationship with Wells Fargo had more to do with narrative than with understanding matters of economics.
As I stated before,
According to the Minneapolis Trends Report, Second Quarter 2016, the average weekly wage for the Financial Industry was one of the highest for all industries in Minneapolis throughout the 2015 year. For example, the average weekly wage was $3,503 in the 1st Quarter of 2015. On average, that’s not bad take-home pay for a week. And over the course of a month and a year, that’s not too bad.
Moreover, the industry employed about 27,000 employees in 2015 according to the Minneapolis Trends Report; and according to the same Star Tribune article linked above, Wells Fargo today employs 11,000 of those workers ranging from entry-level to executive positions. And of course, this doesn’t include the accounts Wells Fargo manages for the city or all of the other accounts Wells Fargo manages for other businesses inside and outside the city, nor does it include the customer base.
And finally, I demonstrated the fact that poverty has increased amongst black folks in Minneapolis since the 2013 election of the Minneapolis City Council and Mayor (see table below). There have been plenty of instances where they have talked about fixing economic disparities, but obviously didn’t. And after this issue, I have concerns.
|Year||Total||Below Poverty Level||% Below Poverty Level|
Again, my argument was never to defend the business practices of Wells Fargo, and I won’t. But let me point this out for the third time, Wells Fargo had already been punished for such practices. As Bloomberg reported in September,
Wells Fargo was fined $185 million by various regulators for opening customer accounts without the customers’ permission…
My argument was to address the ignorant and impolitic economic and scientific thinking of the Minneapolis and Seattle City Councils. I illustrated the complex relationship Wells Fargo has with both city councils, and with the local, state, federal, and international economic systems.
Moreover, the readers of this blog know that Wells Fargo is responsible for the daily financial activities of both city governments. In the case of Seattle, it is responsible for $4 billion annually; and in the case of Minneapolis, the financial institution just invested $300 million in two new buildings in the downtown area and employs 11,000 employees.
So yeah, punish Wells Fargo for terrible business practices, but maintain the relationship with them and take advantage of the services and economic horsepower they provide for the respective city systems.
Photo credit: Tony Webster
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