Jack and the giant bank
Massachusetts senator Elizabeth Warren is still concerned about "too big to fail," a phrase that should find a prominent place in the horror gallery of the American consciousness alongside "we have taken steps to assure this never happens again" and "we didn't break any laws." Sen. Warren's concern refers to the big banks and the government's repeated cowering at the prospect of holding huge financial institutions responsible for the incalculable damage they do, not only to the fiscal health of the nation, but to the public's perception of fairness and justice.
Attorney General Eric Holder expressed fear that exacting large settlements from behemoth banks for the various abuses they regularly commit might unsettle the tenuous financial health of a country still recovering from the implosion of the sub-prime mortgage bubble in 2008. Holder's logic is pretty treacherous terrain to venture upon given the fact that what he seems to be saying is that bigness can trump badness. You can get away with most anything as long as you have managed to surround yourself with an aura of invincibility like some cheesy special effects in a fifties sci-fi movie.
The big banks have legions of lawyers and lobbyists all programmed to act wounded when anyone has the effrontery to question their clients' motives and integrity. The banks can supply volumes of data and graphs and charts all designed to cloak and camouflage, excuse and distort. But their most daunting defense remains an unspoken one: The threat of what might happen to the country if they are held to account.
They cast themselves as the first domino in an intricate pattern the collapse of which would impact on every aspect of American life. If they fall, so the reasoning goes, the country might plunge another Great Depression. It is, at its core, a gigantic bluff, but the words "if" and "might" have a powerful effect on Washington legislators. (As in "If the country goes into another depression, I might loose my benefit-laden job.")
It looks as if too big to fail also means too big to admit we made a mistake, too.
A 62-year-old resident of Hermosa Beach, Cal. named Larry Delassus, who suffered from a liver ailment, died in a courtroom on Dec. 19 of last year. The death would probably have attracted little notice except for the fact that Mr. Delassus, described as a shy and retiring man, was in the midst of a long battle with Wells Fargo, one of the most prominent of our too big to fail entities.
Right from the start, it was clearly a case of Jack and the Giant. But right from the start, there also was no question as to who had made the mistake. So Mr. Delassus, a Navy veteran, decided to climb the beanstalk.
He was ahead on his mortgage payments for his condominium and his property taxes were all paid in full. That didn't matter much when someone at Wells Fargo punched in two wrong numbers on a computer and the bank concluded that Mr. Delassus was $13,361.90 behind on his taxes. The bank paid the outstanding tax bill -- the amount that was actually owed by another customer -- and then promptly doubled Mr. Delassus' mortgage payments.
He couldn't pay twice the amount on his mortgage every month and soon fell behind in his payments. Despite graciously acknowledging that the mistake was theirs, Wells Fargo would not let Mr. Delassus resume his original payment schedule because he had fallen so far behind on the inflated amount unless he agreed to a reinstatement fee. A reinstatement fee usually is comprised of the past due amount plus a little extra for all the trouble that the bank has experienced as a result.
Wells Fargo had a rather unique approach to the amount that Delassus needed to pay in order to recover the home he lost to their bungling. They refused to give him an amount. Waiting in a wheelchair to testify in court, Mr. Delassus, after waging a two-year battle with Wells Fargo, succumbed to a massive heart attack that his friends have little doubt was exacerbated by the strain of his ordeal.
It was a Dr. Suess story right out of hell and the really scary aspect of it is that it is becoming more and more commonplace.
Wells Fargo has perfectly demonstrated the inhuman results of the bestowal of unchecked, unregulated, and arrogantly abusive power, but Republicans in congress still have refused to approve Richard Cordray as head of the Consumer Financial Protection Bureau. The CFPB was created in the wake of the 2008 financial debacle expressly to prevent instances like what happened to Larry Delassus from occurring and escalating. Their refusal speaks volumes about the true allegiances of the GOP, not that any further evidence was really necessary.
Alden Graves is a regular Banner columnist.
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