Wells Fargo’s big mess
Big government’s standard answer for any problem is to insist it needs more power, usually in the form of additional burdensome regulations.
Time and time again, however, the public sees clearly that the problem is ineffective enforcement of existing rules.
The ongoing scandal involving Wells Fargo is a case in point.
Wells Fargo has agreed to pay a record fine of $1 billion to federal regulators to settle a variety of charges of misconduct.
The banking giant has been in the news since 2016 for a dizzying variety of misbehavior. It has included requiring car loan borrowers to pay for insurance that they did not want or need, forcing some to get so far behind on payments that their vehicles were repossessed.
In addition, Wells Fargo admitted to improperly charging customers fees to lock in interest rates on pending mortgage loans.
But this is not the first time that Wells Fargo has been in the hot seat. Previously, the company has paid fines for other improper business practices, including $187 million for opening as many as 3.5 million bank and credit card accounts that had not been authorized by customers.
Why, one may be tempted to wonder, did Wells Fargo get away with creating 3.5 million fraudulent accounts before anyone in Washington noticed?
Closing the barn door after all of the livestock have departed is not a genuine safeguard, as some might put it.
Small financial institutions without the resources of giants such as Wells Fargo complain frequently about the cost of complying with federal regulations. That cost often has to be passed on to consumers.
Meanwhile, the Wells Fargos of the world are taken to task only after they have done great harm.
Big government politicians want even more regulations. But for a long time, Wells Fargo got away with misdeeds that existing rules were supposed to prevent.
Perhaps more attention ought to be given to enforcing regulations that are already in place, rather than creating new ones.