Commentary: Activists try to put the cuffs on Wells Fargo chief
April 26, 2013|Al Lewis
DENVER (MarketWatch) — Melvin Willis, a 22-year-old activist from Richmond, Calif., attempted something Tuesday that not even the U.S. attorney general dares to do: Place the CEO of a giant bank under arrest.
“Too-big-to-jail is an outrage,” Willis told me in a telephone interview after the attempt.
Willis had just interrupted the annual shareholders meeting of Wells Fargo (US:WFC) in Salt Lake City where he told CEO John Stumpf that he was under citizen’s arrest.
In the realm of high finance, such vigilante justice never gets far. Private security guards surrounded Willis and members of his posse. They were escorted from the Grand America Hotel before they could even read off the charges.
Willis is a part-time staffer at the Alliance of Californians for Community Empowerment. The group drove more than 700 miles from the San Francisco Bay area to demonstrate against Wells Fargo, as they have so many times in the past. Offenses in their “citizen’s arrest warrant” included illegal foreclosures and unlawful discrimination against black and Hispanic mortgage applicants.
Last year, Wells Fargo agreed to pay tens of millions of dollars to settle civil complaints containing these same allegations. But the bank denied guilt, and not one executive was named as a defendant.
After the financial crisis hit in 2008, Wells Fargo received $25 billion from the Troubled Asset Relief Program. It has since repaid this taxpayer bailout, but it can’t shake its branding as a too-big-to-fail bank, an institution too critical to the financial system to ever be shut down or prosecuted.
“The only thing John Stumpf has is a lot of money,” Willis said. “Otherwise, he’s just a person like any of us. If we did what he did ... we would all be locked up.”
Last month, U.S. Attorney Eric Holder went before the Senate Judiciary Committee and confirmed what activists like Willis have been saying.
“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy,” he said “And I think that is a function of the fact that some of these institutions have become too large.”
Since that remark, activist groups have been flooding Washington with petition signatures demanding justice. A petition by MoveOn.org demands “immediate steps to break up the big banks and prosecute the criminals who used them to destroy our economy.”
Meantime, a debate rages in Congress over whether new regulations and capital requirements have really ended too-big-to-fail.
On Wednesday, Democratic Sen. Sherrod Brown of Ohio and Republican Sen. David Vitter of Louisiana unveiled a bill that large banks vehemently oppose. It will “ensure that even the biggest banks have ... enough reserves to back up their sometimes risky practices so taxpayers don’t have to,” Brown said at a press conference.
The bill immediately drew histrionics from the banking industry: “This is a bank break-up proposal and tying together the loose fringes of the parties doesn’t make it ’bipartisan,’” said Tony Fratto, a former Treasury and White House official, in a statement emailed to media on Wednesday. He is now managing partner at Hamilton Place Strategies, which represents the banking industry.
“We’ve come a long way since 2008,” Fratto wrote. Whether because of regulation or market discipline, banks are better capitalized, more liquid, and much safer today.”
It is difficult for people who still live in the rubble of the financial crisis to know whether this claim is true. Before joining the activist group, ACCE, two years ago, Willis said he was working odd contracting jobs. One gig involved demolishing a trailer park to clear land for a new hospital. Another involved maintaining bank-owned homes for foreclosure sales.
He eventually had enough and decided to look for ways to speak out against the deteriorating living conditions he witnessed. But attempting to arrest a bank CEO, like so many other actions taken against big banks, was just an act.
“It was never our intention to physically grab John Stumpf,” Willis said. “It was a peaceful action to get our message out. We asked him to submit to our arrest... If he actually said, ‘Yes, Take me in,’ I would have been shocked.”
“It was taken as rhetorical,” said Wells Fargo spokesman Ancel Martinez, who was also at the meeting. Willis and other members of his group were asked to leave, not because of their message, but because they were disrupting the meeting, he explained.
The bank understands it is working against a tide of critics. It has responded by granting more than $6 billion in principal forgiveness on mortgages and putting 8 million customers into new loans with lower interest rates, Martinez said. It also conducts “home preservation workshops” that have resulted in 840,000 mortgage modifications, he said.
“Part of the aggravation and the discontentment in this country has been that this tepid recovery has been uneven,” Martinez said. “We want more jobs to be created. We want business to be thriving. When you have an uneven recovery, there’s continued pain, and I think that leads to frustration for a lot of sound reasons.”