For years, Wells Fargo kept a lower profile than its rival US banks. Before the financial crash of 2008, Wells Fargo’s government relations department was located in Minneapolis, it didn’t have a media relations strategy department, and its lawyers were spread out across the country.
Throw in a nationwide financial disaster and a little bit of time for the bank to make some acquisitions and an entirely different picture emerges in 2014. According to Politico, Wells Fargo’s assets have now more than doubled to $1.4 trillion following its acquisition of Wachovia Bank in 2008. The bank has also doubled the size of its lobbying team from three people prior to 2008 to a team staffed by seven today. The bank’s spending on lobbying has also increased from a reported $700,000 for the first quarter of 2009 to $1.6 million spent on lobbying for the first quarter this year. Wells Fargo’s new found success and boldness in DC is no accident.
According to Wells Fargo’s Washington spokesperson Anita Eoloff:
“There has to be a long game. We really cannot leave any stone unturned, as a large institution, coming off the heels of a financial crisis, where policymakers are unsure or wary. If we thought our education efforts were just to visit with those that were immediately involved in a policy decision, we [now] have to reach to the next rung. We just have to make sure all the bases are covered.”
And no doubt the bases are being covered. In 2014, Wells Fargo Bank finds itself to be the largest mortgage originator in the country. Such a lofty title means that the institution is also under a deeper amount of scrutiny from regulatory agencies in Washington. Wells Fargo’s reaction to the issue: Simply work on formulating the regulation. As Politico details in their interview with a financial services lobbyist:
“I feel like Wells is trying to get in and get their view heard [by] as many [trade groups] as possible, dominate the policy formulation process so that whatever they ask is, at the end of the day it’s got — without maybe people realizing it — a lot of Wells perspective built into it,” said one financial services lobbyist, who asked for anonymity to discuss another institution.
Wells Fargo’s new found accolades into the “too big to fail” status haven’t come without its challenges either. At present, the bank has agreed to pay out a $62.5 million settlement to close a securities lending lawsuit with the City of Farmington Hills Employees Retirement System in which the plaintiff has alleged that Wells Fargo Bank improperly advertised a risky securities lending program as safe. The roughly 100 investors suing the bank say that Wells Fargo advertised the investment program as safe but instead invested their money into mortgage backed securities that carried a high level of risk.
To compound the bank’s woes, Wells Fargo hasn’t been able to shake off a lawsuit filed against it by the city of Los Angeles, California. On May 28, Bloomberg informs us that US District Judge Otis Wright II ruled that the city’s allegations that the bank targeted minority lenders with “predatory loans” were legally sufficient at this stage to proceed with the case. The city alleges that Wells Fargo intentionally placed minority borrowers into loans they couldn’t afford since at least 2004.
As Wells Fargo continues to grow and to play its hand at shaping policy, so too do the institution’s legal woes (Inquisitr 2009, Wells Fargo even sues itself!). What’s unclear is whether Wells Fargo Bank wants to play ball by the rules, or to write the rules instead.