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CFPB Report Shows Wells Fargo Charged Students Three Times More than Other Banks
Wells Fargo in trouble again, again, and again
Washington, DC – re-posted from Senator Warren’s office (1/17/19) – A report by the Consumer Financial Protection Bureau (CFPB) prepared in February of 2018, but only recently released through a Freedom of Information Act request (Trump trying to slow down consumer access to information), reveals that the fees charged to college students by Wells Fargo for debit cards and other financial products were more than three times higher than the average charges by other financial institutions. The CFPB examined bank fees at 573 colleges. The students at the 30 colleges with Wells Fargo products paid an average of $46.99 in fees annually, the highest of the banks examined, and more than three times higher than other banks.
Wells Fargo Charged Student Exorbitant Fees.
According Senator Elizabeth Warren “Wells Fargo has a history of aggressively and sometimes illegally squeezing its customers to boost its profits, and this report illustrates that the bank is deploying similar tactics on America’s college campuses to target vulnerable students. When granted the privilege of providing financial services to students through colleges, Wells Fargo used this access to charge struggling college students exorbitant fees. These high fees, which are an outlier within the industry, demonstrate conclusively that Wells Fargo does not belong on college campuses.”
Low Income More Likely to Pay Excessive Overdraft Fees
“Worse still, the burden of Wells Fargo’s fees does not hit all students equally,” wrote Senator Warren. “Low-income students are more prone to overdraft on their accounts and to suffer from your bank’s excessive overdraft fees.”
Colleges Put on Notice About Wells Fargo Excessive Fees.
The Senator also sent a letter to the presidents of 31 colleges where Wells Fargo provides financial services to students, making the colleges’ leaders aware of the CFPB findings about Wells Fargo’s excessive fees as they make future decisions about campus-sponsored financial products for their students.
Other Actions Taken by Senator Warren Against Wells Fargo’s Management
Senator Warren has led the charge to hold Wells Fargo senior management accountable since the fake-accounts scandal came to light, as well as pressed to strengthen consumer protections:
- On September 20, 2016, Senator Warren called on former Wells Fargo CEO and Chairman John Stumpf to resign for his role in the fake accounts scandal. Mr. Stumpf resigned on October 12, 2016.
- On June 19, 2017, Senator Warren sent a letter to then-Fed Chair Janet Yellen urging her to remove 12 Wells Fargo board members following the fake accounts scandal.
- At a Senate Banking Committee hearing on July 13, 2017, Senator Warren again called on Chair Yellen to remove implicated Wells Fargo board members.
- Later in July 2017, Senator Warren renewed her call for the Fed to remove Wells Fargo board members after it was reported that more than 800,000 Wells Fargo customers were charged for auto insurance they did not need.
- On August 16, 2017, Senator Warren again urged for the removal of Wells Fargo board members amid new evidence that the bank failed to refund money owed to car loan customers, that it overcharged small businesses for credit card transactions, and that it billed certain mortgage customers for unexpected, optional services.
- On February 2, 2018, Chair Yellen announced in response to Senator Warren that the Fed would freeze the growth of Wells Fargo and push out four of the board members responsible.
- During a March 1, 2018 Senate Banking Committee hearing, Senator Warren urged Fed Chair Jerome Powell to hold a public vote by the Federal Reserve Board on lifting growth restrictions for Wells Fargo instead of delegating it to staff. She also asked for the public release of the third-party review of how Wells Fargo is implementing reforms. Senator Warren followed up in April and again pressed Chair Powell to change course.
- In a response to Senator Warren on May 10, 2018, Chair Powell reconsidered and announced he would require a Fed Board vote on whether to lift Wells Fargo’s growth restrictions. He also said he would consider releasing as much of the third-party review as possible.
- In December 2018, the Senator joined Senator Jack Reed (R-R.I.) and signed onto a letter to the Education Department regarding the enforcement of federal rules governing campus bank accounts.
The post Wells Fargo Rips Off Students appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
The 8th Circuit Bankruptcy Appellate Panel has issued a new opinion that is really causing a lot of anxiety and uncertainty about the exemption status in bankruptcy cases of retirement accounts awarded to debtors during a divorce case.
If a debtor is awarded a portion of their ex-spouse’s retirement account in a divorce proceeding, is that account protected in bankruptcy? Until a few months ago the majority opinion was yes, but that is all changed since the BAP issued the Lerbakken opinion.
In Lerbakken, the debtor was awarded one-half of his wife’s 401(k) retirement account in a divorce proceeding. He subsequently filed Chapter 7 and the bankruptcy trustee claimed his interest in the retirement. The bankruptcy judge ruled in favor of the trustee citing the United States Supreme Court’s opinion of Clark v Rameker, a case involving inherited IRA accounts.
To understand what the BAP was saying in Lerbakken, we need to review what the Supreme Court said about inherited IRA accounts in the Clarke opinion. In Clarke the Supreme Court said that inherited IRA accounts are not really “retirement funds” because they are designed more for current consumption than they are for future retirement needs. Why did the court say that? The court focused on 3 key differences between inherited IRA accounts and real retirement accounts:
- Additional Contributions: Inherited IRA accounts do not permit additional contributions. Traditional retirement accounts allow a person to make additional contributions so the fund grows in value during a person’s lifetime, but inherited IRA accounts do not. Thus, inherited IRA accounts do not appear to be focused on providing savings for the future.
- Required Withdrawals: Inherited IRA accounts require recipients to withdraw funds from the account. Instead of preserving the account for future retirement needs, an inherited IRA account requires the funds to be withdrawn, typically over five years.
- No Tax Penalties: There is no tax penalty for withdrawing money from an inherited IRA account. Traditional IRA accounts impose a 10% penalty for those who withdraw funds from the account when they are under age 59 & ½. Real retirement accounts penalize those who rob the nest egg, but inherited IRA accounts do not.
Given the features of inherited IRA accounts that encourage and even demand current consumption of the funds, the Supreme Court in Clark decided that such accounts do not meet the statutory definition of “retirement accounts” and, consequently, they are not protected by federal exemption laws (although such accounts might be protected under state exemption laws).
With this background in mind, let’s now return to the BAP’s opinion in Lerbakken.
In Lerbakken the BAP court takes the Clark opinion one dangerous step forward: “The opinion clearly suggests that the exemption is limited to individuals who create and contribute funds into the retirement account. Retirement funds obtained or received by any other means do not meet this definition.”
Did you get that? The BAP is saying that a Fourth Factor is implied in the Clark opinion–the exemption is limited to only those debtors who actually EARN and CONTRIBUTE the retirement funds. Accounts awarded to an ex-spouse in a divorce are not protected by the federal exemption because the ex-spouse did not earn or contribute the funds.
Wow! I’ve read the Clark opinion over and over again, and I just don’t see where the court “clearly suggests that the exemption is limited.” It does? Where? I cannot see a single line in that case “clearly suggesting” this result.
A retirement account received from a divorce settlement contains at least two of the three characteristics the Supreme Court focused on in Clark. Although debtors may not be able to make future contributions to retirement accounts divided in a divorce proceeding (what are referred to as a Qualified Domestic Relation Orders), they would be able to make future contributions if the account is converted to a Rollover IRA account. Also, debtors are not required to withdraw funds until they reach retirement age. Lastly, debtors do incur a 10% penalty if they withdraw funds before age 59 & ½. All three factors highlighted in Clark are present suggesting that the accounts are indeed “retirement funds.”
Under the BAP’s reasoning when a working parent contributes funds to a retirement account and the other parent is a stay-at-home mom or dad, all the funds in such accounts are protected for the working parent after a subsequent divorce but none of the stay-at-home parent’s funds are exempt. Apparently a stay-at-home parent does not “earn” or “contribute” to the couple’s retirement funds. This reasoning is flawed but it is now the rule in the 8th Circuit.
For 10 years my wife elected to step away from her career to devote full-time attention to our 3 children, and I’ll guarantee you that she “earned” and “contributed” as much to those retirement accounts during those years as I. The BAP’s opinion is not only wrong, it’s offensive.
WHAT ABOUT NEBRASKA’S STATE LAW EXEMPTION IN RETIREMENT FUNDS?
In addition to the federal exemption, debtors in Nebraska can take advantage of the state exemption law protecting retirement accounts (Neb. Statute §25-1552). Does Nebraska’s exemption law protect retirement accounts awarded to an ex-spouses in bankruptcy cases?
Maybe. We don’t know yet since there is no prior case answering this question. Nebraska’s exemption law seems broader, but it is also vague in many ways. So, the answer will depend on who is interpreting the statute. In theory it should not make a difference who the judge is, but in reality it makes all the difference in the world which is why nominations to our nation’s Supreme Court are such controversial events.
The Nebraska exemption law protects accounts reasonably necessary for the support of the debtor or the debtor’s dependents. Is an ex-spouse a dependent? Do you look to when the account was established or to when the bankruptcy was filed? Nobody knows, and debtor’s should be warned that their retirement accounts obtained in a divorce proceeding may not be protected in the bankruptcy process.
At some point a Chapter 7 Trustee will attempt to seize a large retirement account awarded to a divorced debtor, and then we will have a precedent to guide us. Until then, beware of filing Chapter 7 when a large retirement account awarded in divorce exist.
Image courtesy of Flickr and Kevin Dooley.
Here at Shenwick & Associates, the end of the holidays and the start of the new year brings new inquiries from potential clients who have resolved to tackle their debt in 2019. This month, we’re going to discuss the timeline of the chapter 7 bankruptcy process (we also handle cases involving other chapters of the Bankruptcy Code, such as chapter 11 and chapter 13).
When a potential client contacts us, we schedule an hour-long meeting and ask for the following documents to be brought to the meeting: (1) a list of assets; (2) a list of liabilities; and (3) an after–tax monthly budget. At the meeting, we review the documents and discuss their finances, debtor and creditor lawand pre–bankruptcy planning. Our goal in a chapter 7 filing is to discharge as much debt as possible (giving the client a “fresh start”) and exempting as many assets as possible from the bankruptcy estate that’s created when their petition is filed.
When the client retains us, we send him or her a link to enter the financial data we need to prepare the bankruptcy petition and information about the mandatory credit counseling course. We draft the petition, review and review it with the client, and finally electronically file the petition and pay the filing fee.
Shortly after the petition is filed, we receive notice of the §341 meeting of creditors. Jim attends the meeting with the client (who must bring an original Social Security card and a current photo ID). Before the meeting, we prepare the client on how to dress and questions that he or she can expect from the chapter 7 bankruptcy trustee.
Creditors may also attend the meeting and have 60 days from the date of the meeting to object to a discharge of their claim in bankruptcy or the debtor’s discharge. Our goal is to have the chapter 7 trustee close the case at the end of the meeting, which happens in about 90% of our cases. Within 60 days after the meeting, the debtor needs to take a post–bankruptcy debtor education course.
The process usually takes about two to six months from start to finish. To discuss discharging your debts in 2019, please contact Jim Shenwick.
The December 2018 New York City Taxi & Limousine Commission (TLC) sales results have been released to the public. And as is our practice, provided below are Jim Shenwick’s comments about those sales results.
1. The volume of transfers fell from November. In December, there were 95 unrestricted taxi medallion sales.
2. 87 of the 95 sales were foreclosure sales (92%), which means that the medallion owner defaulted on the bank loan and the banks were foreclosing to obtain possession of the medallion. We disregard these transfers in our analysis of the data, because we believe that they are outliers and not indicative of the true value of the medallion, which is a sale between a buyer and a seller under no pressure to sell (fair market value).
3. The large volume of foreclosure sales (approximately 92%) is in our opinion evidence of the continued weakness in the taxi medallion market.
4. The eight regular sales for consideration ranged from a low of $162,500 (two medallions) to $170,000 (four medallions) and a high of $175,000 (two medallions), for a median value of $170,000, a 5.5 % decline from November’s median value of $180,000.
5. The fact that 92% of all transfers in December 2018 were foreclosure sales shows continued weakness in the taxi medallion market and no sign of a correction.
6. At Shenwick & Associates we believe that the value of a medallion is approximately $162,000+ and dropping.
Please continue to read our blog to see what happens to medallion pricing in the future. Any individuals or businesses with questions about taxi medallion valuations or workouts should contact Jim Shenwick at (212) 541-6224 or via email at jshenwick@gmail.com.
An Overview of Wage Garnishment in Arizona Wage garnishment is the most common type of garnishment. In Arizona, the wage garnishment process usually starts when a creditor files a writ of garnishment of earnings, therefore, initiating a civil lawsuit against a debtor, who has defaulted on payments. If the judge rules for the creditor, the […]
The post An Overview of Wage Garnishment in Arizona appeared first on Tucson Bankruptcy Attorney.
An Overview of Wage Garnishment in Arizona Wage garnishment is the most common type of garnishment. In Arizona, the wage garnishment process usually starts when a creditor files a writ of garnishment of earnings, therefore, initiating a civil lawsuit against a debtor, who has defaulted on payments. If the judge rules for the creditor, the […]
The post An Overview of Wage Garnishment in Arizona appeared first on Tucson Bankruptcy Attorney.
This office often sees huge — in the tens of thousands — debts charged by the government of Maryland against drivers for failing to pay “EZ Pass” tolls. I’m looking at one now for almost $14,000.
Why the debts are so large was finally explained to me by a state assistant attorney general recently. The toll charge itself is frequently relatively small — a few dollars. However, the fine itself is $50 and the related collection charge of $8.50 are charged PER VIOLATION.
For drivers with multiple violations this can really add up. An example:
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By Erik Enquist and Matthew Flamm
Meera Joshi, CEO and chairwoman of the Taxi and Limousine Commission, plans to step down from her role in March, Mayor Bill de Blasio announced Saturday. A source told Crain's Friday that Joshi had told her senior staff Tuesday of her plans to depart.
Word leaking out might have precipitated the unusual Saturday announcement, just a day after news that Department of Buildings Commissioner Rick Chandler will retire Feb. 1.
While the mayor praised Joshi in his announcement, her departure comes on the heels of their disagreement over the state's passage of congestion surcharge for taxis and for-hire vehicles in Manhattan. Joshi publicly expressed concern about the effect that the fee would have on the taxi industry, while the mayor supported the charge as a means to speed up traffic.
Joshi and City Hall also butted heads last July over implementation of a minimum-wage study for app-based drivers that the mayor’s office felt was being pushed through too quickly in light of the troubles facing yellow cab drivers. The recently passed minimum wage rule was one of her signature accomplishments.
“I don’t know if there’s ever been a better commissioner at the TLC or anywhere else,” said Manhattan borough president Gale Brewer in an interview Saturday. She cited in particular the extensive trip data the TLC collects from Uber and other app-based services, which has allowed the agency to formulate groundbreaking policies for the companies.
Joshi will be leaving in the midst of a series of dramatic changes for the industry, including the minimum wage and the surcharge, which has been stalled by a lawsuit. The City Council had passed a bill establishing the minimum wage for drivers and Joshi's commission created regulations to enforce it. The chairwoman had been expected to preside over the implementation of those measures this year.
The commissioner will be the featured speaker Tuesday at a Crain's breakfast forum in Midtown. One advocacy group for taxis called the timing of her pending departure "concerning." Bhairavi Desai, executive director of the New York Taxi Workers Alliance, said, "The crisis for New York City drivers is far from over and the Taxi and Limousine Commission's work to fix it is just beginning."
Since Uber's rise in 2014, the yellow-cab industry has been wracked by an 80% decline in the value of medallions, the metal placards that each taxi must have to operate. Joshi has been trying to stabilize the industry, which has also been devastated by eight driver suicides within the past year and a half.
"Commissioner Joshi’s tenure was marked by such progressive innovations as the protection and enhancement of driver earnings, citywide access to for-hire services for persons with disabilities, a 50% reduction of fatalities in crashes involving taxis and for-hire vehicles in the last year, [and] significant advances in consumer protections," the mayor's press release Saturday said.
It also credited her with creating the first "pathway to the effective management of congestion and environmental impact relating to TLC-licensed services."
"In this unprecedented period of growth, Meera has brought about equally unprecedented and vital change that will serve as a model for cities throughout the nation and the world," de Blasio said in the statement. "Under her leadership New Yorkers who use wheelchairs can get service, passengers are assured that every driver and vehicle is safe, our city has detailed records of the 1 million daily trips and New York City is the only place where app drivers have pay protection. She will leave an unparalleled legacy and has raised the bar for good government. I am grateful for her service."
In the release, Joshi thanked "a skilled and principled TLC staff, a commission dedicated to doing the right thing and engaged industry members and advocates, through public debate and data we increased accountability, safety, access, modernized taxi regulation, protected drivers and increased consumer protections."
No successor has been chosen, City Hall said, promising a decision "in the coming months."
Copyright © 1996-2019. Crain Communications, Inc. All Rights Reserved.
Here’s a New Year’s resolution to consider: Get rid of your car. Your life — and your fiscal health — could improve significantly. Also, the planet will thank you.
It sounds drastic, but — if you really think it through — it may not be as crazy as it seems. In fact, I’ve done it for the past year. It can be done. It’s way more feasible than you think.
Getting to work: Remember there is public transportation. Let somebody else do the driving. Take advantage of that time for yourself. Read. And make use of technology to get work done: Use your cell phone to answer emails, review documents, whatever.
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A New York judge has temporarily blocked a state congestion pricing surcharge that would have added a $2.50 fee to yellow cabs and some for-hire vehicles in order to help fund the subways.
The fee was slated to begin on New Year's Day, and would've targeted trips that touch a designated "congestion zone" below 96th Street in Manhattan. On Thursday night, Manhattan Supreme Court Justice Martin Shulman issued a temporary injunction so the court could review a last-minute lawsuit filed by cab drivers opposed to the fee. A hearing is scheduled for January 3rd.
The fee was approved by Governor Andrew Cuomo and the legislature in March, after the broader push for congestion pricing failed once again. From the start, critics of the legislation have argued that the piecemeal approach would unfairly target already-struggling taxi drivers, while letting private motorists off the hook for their role in clogging the streets. "We are pleased Albany's sham of a congestion tax is now temporarily suspended," said Independent Drivers Guild spokesperson Moira Mintz in a statement.
Let’s do FULL congestion pricing - which should explore variable road pricing - not just make this about revenue generation (which the taxi & FHV charge is) but make it be truly effective:✔️Disincentiving all vehicles coming into CBD
✔️Dedicated lockbox for MTA
✔️Safer streets https://t.co/mFCFYPI1LY— Corey Johnson (@CoreyinNYC) December 21, 2018
According to the New York Taxi Workers Alliance, cab drivers could lose up to $15,000 a year in income under the legislation. In frequent rallies in Albany and outside City Hall, they've dubbed the fee a "suicide surcharge," in reference to the string of financially devastated drivers who've taken their own lives over the last year. Taxi and Limousine Commissioner Meera Josi, who is named in the lawsuit, admitted last month that the fee was "potentially devastating" for yellow cab drivers, whose fares already include a $2.50 pick-up fee and 80-cent accessibility and mass transit charge.
The fee was expected to bring in about $400 million a year for the MTA, at least some of which had been earmarked for the Subway Action Plan. In a statement to Gothamist, Patrick Muncie, a spokesperson for Cuomo, said: “The state plans to vigorously defend the law, which was approved by the legislature and will generate hundreds of millions of dollars to improve the subway and help ensure New Yorkers have a safe, reliable transportation system."
This week, the governor vowed to implement a comprehensive congestion pricing proposal during his first 100 days in office. Driver advocates, including the NYTWA, have said that yellow cabs should be exempted from any congestion pricing plan, because it would "make survival—let alone a raise—impossible for drivers."
Uber, meanwhile, has supported the fee, spending around $100,000 on lobbying efforts, according to the NYTWA. As written, the legislation would charge only a 75 cent fee when a group ride is requested through one of the app-based services, even if the trip isn't matched with a second passenger. A spokesperson for Uber declined to comment on the ruling.
The lawsuit names the state, the city and the Taxi and Limousine Commission as defendants. Many of the plaintiffs are family members and close friends of drivers who've committed suicide, including the brother of Kenny Chow, who took his own life in May after racking up $700,000 in debt on his medallion. A total of eight for-hire drivers have committed suicide in the last 13 months.
"We know the fight is long from over, but we feel relieved and encouraged that a judge is telling the Governor to listen to our suffering," said NYTWA Executive Director Bhairavi Desai. "There is a real crisis here. And Governor Cuomo has the power to help drivers instead of adding an additional crushing burden on a workforce already facing financial despair."
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