day, another major banking scandal.
It’s getting to the
point where you can practically set your watch to these things.
latest involves our old friend Wells
Street Journal reported last night that Wells has been
screwing its customers on foreign currency exchange rates.
Wells Fargo conducted an internal review of its fee arrangements and
found that they had massively overcharged 88% of the sampled customers.
For example, the
bank might have signed a contract with a customer to charge 0.15% on
foreign currency transactions, but instead charged as much as 4%…
about 26x higher than
It’s absurd to begin
with that a bank would charge even a small percentage-based commission
on foreign currency transactions (much less 4%), especially given that
most of the transactions were to exchange euros and US dollars.
are common in many industries.
When you list your
house for sale, for example, your real estate agent receives a
commission when s/he finds a buyer and closes the deal.
commissions often range between 2% to 6%. But agents earn this money
because houses are big, illiquid assets. And it often takes a lot of
time and work to close a sale.
Wells Fargo has been charging huge commissions on buying and selling
foreign exchange (FX) market trades around $5.3 trillion each
day (compare that to about $200 billion for US equities).
That makes the US dollar / Euro trade literally one of THE most
popular financial transactions in the world.
billions of dollars and euros are exchanged every single business day of
the week, around the clock, through electronic trading platforms.
not like some currency trader at Wells Fargo ever had to lift a finger
trying to find a buyer for his customer’s euros.
Anyone who has ever
traded FX knows that it takes a fraction of a second to buy/sell major
There’s zero work
involved on Wells Fargo’s end. Yet they charge a steep commission as if
they have to put in all sorts of time and effort to buy and sell
currency. It’s ridiculous.
But even worse, the
bank formally agreed with its customers to charge a set fee. And then
they totally violated those promises simply because it suited their
utterly, completely pathetic.
Bear in mind, this is the same
bank that was caught creating
fake accounts and charging fees
to unsuspecting consumers without their consent, also because it
suited their interests…
… and that this is
an industry that has a track record of constantly violating their
These banks have
been caught red-handed
illegally colluding to fix interest rates and exchange
They have manipulated asset prices and knowingly
sold their customers toxic assets.
They have invested their customers’ hard-earned
savings in astonishingly stupid, no-money down loans to
borrowers who had no hope of repaying the debt.
every accounting trick in the book to misstate their true financial
condition, including the utter farce of carrying Volcker
Rule assets on their books at 100 cents on the dollar… or mysteriously
reclassifying their bond portfolios in a way to hide losses.
themselves the most magnificent bonuses when times are
And when the house of cards begins
to fall, they go to the public with hat in hand, claiming that they’re
too big and important to lose any
Despite taking the
public’s bailout money, these banks treat their customers with such
contempt and suspicion. They make you feel like you’re committing a
crime when you request a cash withdrawal of your own money.
It’s truly remarkable that this
industry has any credibility left.
The good news is
that it won’t last.
no longer have a monopoly on finance. Technology already
makes it possible to conduct just about any transaction you need outside
the banking system.
You can deposit and
withdraw funds, borrow money, exchange currency, invest your savings,
pay bills, transfer funds, make online payments, etc. with
platforms, and various
technologies are often better, faster, and cheaper than the traditional
tells us that technology almost invariably puts entrenched industries
out of business.
obliterating traditional retail. Digital media is destroying print
And it’s only a
matter of time before cryptofinance displaces the banking system.
Whether or not you
think Bitcoin is a bubble at $10,000, it’s still worth understanding the
enormous potential (and opportunities) of what these technologies can
Because the alternative of dealing
with Wells Fargo isn’t that attractive.
by Simon Black via SovereignMan.com