For Immediate Release: Tuesday, October 11, 2016
Contact: Cara Newlon, email@example.com, (703) 899-3206
In the wake of the Wells Fargo consumer fraud scandal, Los Angeles aims to transform the future of its banking practices
LOS ANGELES – Bank workers and consumer advocates along with elected officials announced today that the city of Los Angeles will further prohibit the unscrupulous practices of the U.S.’s largest banks.
The motion, introduced by Councilmember Paul Koretz with the support of consumer advocates and banks workers, would “prohibit predatory sales goals by any company doing business with the City of Los Angeles.” It is an addition to the city’s Responsible Banking Ordinance passed in 2012 to protect consumers from foreclosures.
“Attaching sales quotas to banking is bad for consumers and bad for workers—the only ones who profit are the banks themselves,” said Ruth Landaverde, a former Wells Fargo credit manager and Bank of America personal banker, as well as a member of the Committee for Better Banks. “At Wells Fargo, we were forced to push unnecessary mortgage refinancing, auto loans, new accounts and credit cards on customers, and Bank of America required us to open 100 new accounts a month. But by standing together, Los Angeles bank workers like me and consumers who rely on big banks have the power to eliminate predatory practices.”
Last month, banking regulators and Los Angeles city attorney Mike Feuer announced a settlement with Wells Fargo over its illegal sales practices and California State Treasurer John Chiang suspended many of the state’s ties with the bank after banks workers and others exposed millions of unauthorized bank and credit card accounts.
The city of Los Angeles would go a step further in addressing the pervasive problem of predatory sales goals by prohibiting the practice in all financial institutions and other companies that do business with the city. This ordinance is the first of its kind to address banks’ secretive and harmful practices wholesale – Los Angeles is seeking to take steps to divest from any bank that uses these tactics.
“Predatory practices that cripple our communities extend far beyond Wells Fargo and persist across the entire industry,” said Los Angeles City Councilmember Paul Koretz. “Changing the law in Los Angeles – a direct result of thousands of bank workers organizing across the country to speak out about predatory practices and abusive sales goals at Wells Fargo and other big banks for years – will protect the financial health of our city and stop banks from swindling our neighborhoods and working families.”
“I stand united with Los Angeles City Councilmen Koretz and Krekorian’s decision to hold Wells Fargo accountable for its craven consumer rip-off,” said California treasurer John Chiang in support of the motion. “Until Congress and bank regulators pass sensible reforms to curtail the further fleecing of consumers, bank customers – like California and Los Angeles – will have to fill the leadership void. I am proud to be a leader of a growing movement of state and local officials who seek to restore integrity and honesty to our banking system by talking the only language Wall Street understands: their bottom lines.”
Over the past few years, bank workers across the country organizing with the Committee for Better Banks have put a spotlight on predatory incentive programs that force them to choose between consumers’ best interests and getting paid a living wage. In Los Angeles, Minneapolis and other cities, the Committee for Better Banks has delivered petitions to bank managers from tens of thousands consumers and workers calling for an end to predatory sales goals.
This past summer, bank workers in the Committee briefed members of Congress and representatives from the Consumer Protection Finance Bureau and the Office of the Comptroller of the Currency on the aggressive sales goals that are forcing bank workers to push unnecessary products on their customers.
“Wells Fargo executives may have their backs against the wall after turning a deaf ear to our calls to end high-pressure sales goals, but the whole industry is complicit,” said Los Angeles resident Javier Sarmiento, who is a member of the Alliance of Californians for Community Empowerment (ACCE). “When I lost my home and my job in the financial crisis, I was forced to rely on a credit card I received in the mail from Bank of America. I missed one payment and my interest rate jumped over five percent. When the banks collapsed, we didn’t see a cent of the bailout, yet banks nationwide continue to push the cycle of debt onto working people—now is the time to change how banks do business.”
Los Angeles is just one of many cities where underpaid bank tellers and managers are operating under hostile work conditions and threats of losing their jobs if they don’t sell these problematic products. A June 2016 report by the National Employment Law Project analyzed interviews with dozens of frontline bank workers who detailed predatory practices at Wells Fargo, Bank of America and other major banks. The report found that consumer complaints to the Consumer Financial Protection Bureau concerning retail banking increased 34 percent in the last year, while Wells Fargo derived over a quarter of its revenue from predatory fees.
ABOUT THE COMMITTEE FOR BETTER BANKS
The Committee for Better Banks brings together bank workers, consumers and advocates to end high pressure sales goals that lead to predatory banking practices. Workers are mobilizing dozens of states including Massachusetts, California, Texas, Missouri, Rhode Island, Minnesota and Florida, and through the Committee, workers and consumers are seeking measures to rein in the nation’s biggest banks.
Organizations involved include: Alliance of Californians for Community Empowerment (ACCE), Make the Road New York, New York Communities for Change (NYCC), Minnesotans for Fair Economy, Jobs with Justice and local affiliates, the Communications Workers of America union (CWA) and UNI Global Union.