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Westlake Legal Group > Wells Fargo&Company

The Price of Wells Fargo’s Fake Account Scandal Grows by $3 Billion

Westlake Legal Group 21wellsfargo1-facebookJumbo The Price of Wells Fargo’s Fake Account Scandal Grows by $3 Billion Wells Fargo&Company Regulation and Deregulation of Industry Banking and Financial Institutions

Wells Fargo has agreed to pay $3 billion to settle criminal charges and a civil action stemming from its widespread mistreatment of customers in its community bank over a 14-year period, the Justice Department announced on Friday.

From 2002 to 2016, employees used fraud to meet impossible sales goals. They opened millions of accounts in customers’ names without their knowledge, signed unwitting account holders up for credit cards and bill payment programs, created fake personal identification numbers, forged signatures and even secretly transferred customers’ money.

In court papers, prosecutors described a pressure-cooker environment at the bank, where low-level employees were squeezed tighter and tighter each year by sales goals that senior executives methodically raised, ignoring signs that they were unrealistic. The few employees and managers who did meet sales goals — by any means — were held up as examples for the rest of the work force to follow.

“This case illustrates a complete failure of leadership at multiple levels within the bank,” Nick Hanna, U.S. attorney for the Central District of California, said in a statement. “Wells Fargo traded its hard-earned reputation for short-term profits, and harmed untold numbers of customers along the way.”

Now the bank is grappling with the lingering consequences. Part of Friday’s deal, which includes a $500 million fine by the Securities and Exchange Commission, is a deferred prosecution agreement, a pact with prosecutors that could expose the bank to charges if it engages in new criminal activity.

“We are committing all necessary resources to ensure that nothing like this happens again,” Wells Fargo’s chief executive, Charles W. Scharf, said in a statement on Friday.

The penalty, while large, is not record breaking. In 2015, a judge ordered BNP Paribas to pay nearly $9 billion for sanctions violations. Friday’s fine is not even the largest against Wells Fargo. In 2012, when the country’s five largest banks paid a total of $26 billion to state and federal authorities to settle investigations into their mortgage lending practices in the years leading up to the 2008 financial crisis, Wells Fargo’s portion was $5.35 billion. Including Friday’s penalty, the bank has paid more than $18 billion in fines for misconduct since the financial crisis.

Wells Fargo’s profits last year totaled nearly $20 billion.

Senior Justice Department officials told journalists in a briefing on Friday that the bank’s payments to other authorities, including $1 billion in fines to the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau in 2018, were a mitigating factor in determining how much it would owe in the current settlement.

The practices for which Wells Fargo is being punished in the current deal — which includes an admission by the bank that it falsified banking records — are not the only misbehavior the bank has revealed since 2016. Since they came to light in a settlement with California authorities and the Consumer Financial Protection Bureau, the bank has also admitted it charged mortgage customers unnecessary fees and forced auto loan borrowers to buy insurance they did not need.

Those matters are not part of Friday’s deal, and Justice Department officials declined to comment on whether they intended to take more action against the bank.

Wells Fargo is still under investigation by the consumer bureau over its practice of abruptly closing customers’ accounts, and has said in regulatory filings that the authorities are looking into improper fees it charged wealth management customers.

Friday’s deal is also unrelated to a continuing criminal investigation of former Wells Fargo executives’ individual roles in the sales practices scandal. On Jan. 23, the Office of the Comptroller of the Currency fined former top executives millions of dollars each for overseeing the bank while it abused customers. A former Wells Fargo chief executive, John G. Stumpf, agreed to pay $17.5 million, while others are fighting the cases brought by the regulator. One of them, Carrie L. Tolstedt, Wells Fargo’s former head of retail banking, faces a $25 million fine.

Justice Department officials said the settlement also did not include similar conduct that fell outside the 14-year period.

In early 2018, the Federal Reserve imposed growth restrictions on Wells Fargo that will be lifted only after the bank has shown its regulators that it has made significant changes to prevent bad behavior like the fake account scandal. Since taking over in October, Mr. Scharf has not offered any hints about when that goal might be accomplished.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

The Price of Wells Fargo’s Fake Account Scandal Grows by $3 Billion

Westlake Legal Group 21wellsfargo1-facebookJumbo The Price of Wells Fargo’s Fake Account Scandal Grows by $3 Billion Wells Fargo&Company Regulation and Deregulation of Industry Banking and Financial Institutions

Wells Fargo has agreed to pay $3 billion to settle criminal charges and a civil action stemming from its widespread mistreatment of customers in its community bank over a 14-year period, the Justice Department announced on Friday.

From 2002 to 2016, employees used fraud to meet impossible sales goals. They opened millions of accounts in customers’ names without their knowledge, signed unwitting account holders up for credit cards and bill payment programs, created fake personal identification numbers, forged signatures and even secretly transferred customers’ money.

In court papers, prosecutors described a pressure-cooker environment at the bank, where low-level employees were squeezed tighter and tighter each year by sales goals that senior executives methodically raised, ignoring signs that they were unrealistic. The few employees and managers who did meet sales goals — by any means — were held up as examples for the rest of the work force to follow.

“This case illustrates a complete failure of leadership at multiple levels within the bank,” Nick Hanna, U.S. attorney for the Central District of California, said in a statement. “Wells Fargo traded its hard-earned reputation for short-term profits, and harmed untold numbers of customers along the way.”

Now the bank is grappling with the lingering consequences. Part of Friday’s deal, which includes a $500 million fine by the Securities and Exchange Commission, is a deferred prosecution agreement, a pact with prosecutors that could expose the bank to charges if it engages in new criminal activity.

“We are committing all necessary resources to ensure that nothing like this happens again,” Wells Fargo’s chief executive, Charles W. Scharf, said in a statement on Friday.

The penalty, while large, is not record breaking. In 2015, a judge ordered BNP Paribas to pay nearly $9 billion for sanctions violations. Friday’s fine is not even the largest against Wells Fargo. In 2012, when the country’s five largest banks paid a total of $26 billion to state and federal authorities to settle investigations into their mortgage lending practices in the years leading up to the 2008 financial crisis, Wells Fargo’s portion was $5.35 billion. Including Friday’s penalty, the bank has paid more than $18 billion in fines for misconduct since the financial crisis.

Wells Fargo’s profits last year totaled nearly $20 billion.

Senior Justice Department officials told journalists in a briefing on Friday that the bank’s payments to other authorities, including $1 billion in fines to the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau in 2018, were a mitigating factor in determining how much it would owe in the current settlement.

The practices for which Wells Fargo is being punished in the current deal — which includes an admission by the bank that it falsified banking records — are not the only misbehavior the bank has revealed since 2016. Since they came to light in a settlement with California authorities and the Consumer Financial Protection Bureau, the bank has also admitted it charged mortgage customers unnecessary fees and forced auto loan borrowers to buy insurance they did not need.

Those matters are not part of Friday’s deal, and Justice Department officials declined to comment on whether they intended to take more action against the bank.

Wells Fargo is still under investigation by the consumer bureau over its practice of abruptly closing customers’ accounts, and has said in regulatory filings that the authorities are looking into improper fees it charged wealth management customers.

Friday’s deal is also unrelated to a continuing criminal investigation of former Wells Fargo executives’ individual roles in the sales practices scandal. On Jan. 23, the Office of the Comptroller of the Currency fined former top executives millions of dollars each for overseeing the bank while it abused customers. A former Wells Fargo chief executive, John G. Stumpf, agreed to pay $17.5 million, while others are fighting the cases brought by the regulator. One of them, Carrie L. Tolstedt, Wells Fargo’s former head of retail banking, faces a $25 million fine.

Justice Department officials said the settlement also did not include similar conduct that fell outside the 14-year period.

In early 2018, the Federal Reserve imposed growth restrictions on Wells Fargo that will be lifted only after the bank has shown its regulators that it has made significant changes to prevent bad behavior like the fake account scandal. Since taking over in October, Mr. Scharf has not offered any hints about when that goal might be accomplished.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Wells Fargo’s Ex-Chief Fined $17.5 Million Over Fake Accounts

Westlake Legal Group 23wells-facebookJumbo Wells Fargo’s Ex-Chief Fined $17.5 Million Over Fake Accounts Wells Fargo&Company Stumpf, John G Office of the Comptroller of the Currency Frauds and Swindling Fines (Penalties) Banking and Financial Institutions

In a rare example of personal accountability for corporate wrongdoing, Wells Fargo’s former chief executive, John G. Stumpf, was fined $17.5 million on Thursday by the bank’s main federal regulator, which also took punitive action against seven other executives for the bank’s toxic sales culture and illegal acts.

In a settlement with the Office of the Comptroller of the Currency, Mr. Stumpf also agreed to a lifetime ban from the banking industry for his role in the company’s misdeeds, which included foisting unwanted products and sham bank accounts on millions of customers. Two other former senior executives agreed to lesser fines and restrictions on their work in the industry, and the regulator said it was taking enforcement action against five others.

Regulators sharply rebuked the former leaders for favoring profits and other market rewards over protecting their customers.

“The bank had better tools and systems to detect employees who did not meet unreasonable sales goals than it did to catch employees who engaged in sales practices misconduct,” the office said.

All told, the regulator was seeking tens of millions of dollars in personal fines from the executives, who could face even more serious consequences: A Justice Department investigation into the actions of Wells Fargo and its leaders remains open.

While it is not unusual for companies to face regulatory or even criminal charges, senior executives — particularly chief executives — usually avoid personal repercussions. The largest American banks, for example, have all paid many billions of dollars to settle civil cases stemming from their mortgage securitization activities in the lead-up to the 2008 financial crisis, but their chief executives have not given up a penny to regulators.

The fine against Mr. Stumpf was the largest against an individual in the O.C.C.’s history, according to a spokesman for the office. But the regulator sought a larger penalty — a $25 million fine — from Carrie L. Tolstedt, the bank’s former retail banking leader, who is fighting the agency’s civil charges against her.

Ms. Tolstedt, who left the bank in 2016, “acted with the utmost integrity” and will be vindicated by “a full and fair examination of the facts,” her lawyer, Enu Mainigi, said in a statement.

Mr. Stumpf, in a sworn statement to the O.C.C., blamed Ms. Tolstedt and others for what he acknowledged was “systemic” misconduct throughout the bank.

Wells Fargo’s problems erupted into public view in late 2016, setting off a crisis that continues to reverberate more than three years later. Mr. Stumpf, the chief executive at the time, was quickly ousted. His successor, Timothy J. Sloan, resigned last year after failing to quell the bank’s turmoil.

The eight executives charged on Thursday “failed to adequately perform their duties and responsibilities” and contributed to problems that stretched back more than a decade, the regulator said.

Wells Fargo’s new chief executive, Charles W. Scharf, said in a memo to employees on Thursday that the bank would stop all payments to the former executives, if any were pending.

“This was inexcusable. Our customers and you all deserved more from the leadership of this company,” wrote Mr. Scharf, who joined Wells Fargo in October.

“We are reviewing today’s filings and will determine what, if any, further action by the company is appropriate with respect to any of the named individuals,” he added. “Wells Fargo will not make any remaining compensation payments that may be owed to these individuals while we review the filings.”

Wells Fargo has been operating since early 2018 under a set of growth restrictions imposed by the Federal Reserve, a rare move that has hobbled the bank’s turnaround efforts. It is one of a dozen enforcement actions that Wells Fargo is working to resolve, Mr. Scharf has said.

This is a developing story. Check back for updates.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Big Banks Were the Loudest Optimists. They’re Getting Quieter.

Westlake Legal Group 15banks2-facebookJumbo Big Banks Were the Loudest Optimists. They’re Getting Quieter. Wells Fargo&Company United States Economy Solomon, David M JPMorgan Chase&Company Goldman Sachs Group Inc Dimon, James Corbat, Michael L Company Reports Citigroup Inc Banking and Financial Institutions

The heads of America’s largest banks have been some of the country’s most prominent optimists over the past two years, shooing away questions about the potential effects of President Trump’s trade policies, cheering his tax cuts and offering periodic reassurances that things would all work out for the American economy.

But manufacturing activity and job growth are slowing, and trade talks with China have so far produced only an interim agreement that still has to be written and signed. And bankers are starting to worry.

“Of course there’s a recession ahead — what we don’t know is if it’s going to happen soon,” Jamie Dimon, the chief executive of JPMorgan Chase, said during a call on Tuesday with journalists to discuss the bank’s third-quarter earnings.

Even as his bank announced record-high revenue, Mr. Dimon warned that the strong position of consumers in the United States had come under pressure from “increasingly complex geopolitical risks, including tensions in global trade.”

The warning was new: Just six months ago, during another discussion of the bank’s earnings, Mr. Dimon had predicted that United States economic growth “could go on for years.”

“We’ll just have to wait and see,” he said on Tuesday.

JPMorgan’s quarterly earnings were no worse for wear. The bank took in a record $29.3 billion during the third quarter and earned $2.68 per share, beating analysts’ expectations by 23 cents. Its deposits grew by 3 percent compared with the same period last year.

The report from Goldman Sachs, which also announced third-quarter results, along with Citigroup and Wells Fargo, was less rosy. The bank’s net earnings of just under $1.9 billion for the quarter were 26 percent lower than the same period last year and 22 percent lower than the second quarter of 2019. Goldman also announced that it had set aside $291 million for credit losses, a 67 percent increase from last year.

The bank’s chief executive, David Solomon, shrugged off some of the recent turmoil on Wall Street, which has included disappointing debuts by tech companies like Uber and botched initial public offerings like WeWork, saying he believed the I.P.O. market was in fact healthy. But, he said, the bank is closely watching “where we are in the economic cycle” as it manages risks across the firm.

Citigroup’s chief financial officer, Mark Mason, said on a call with journalists that the bank had begun making adjustments to its business operations to accommodate changing economic conditions.

“We’ve been very thoughtful about the pacing of our hiring,” he said.

Citigroup’s revenue was $18.6 billion, slightly lower than the previous quarter but a bit higher than its third-quarter revenue a year ago. But its corporate lending revenue decreased by 6 percent from a year earlier.

Citigroup’s business customers have been showing “pause,” Mr. Mason said, “in terms of whether they actually want to invest in building out facilities or operations, pause in terms of whether they want to consider entering into new markets.”

That was a subtle but significant admission that the slowdown was affecting Citigroup’s business.

The bank’s chief executive, Michael Corbat, had been saying for months that its global footprint allowed it to take advantage of shifting trade routes so that the president’s tariffs did not actually hurt the bank. He offered a more troubled view on Tuesday during a call with analysts.

“It has caused a slowdown in terms of trade,” Mr. Corbat said of the trade war. “If we could start to get some clarity on some of these things, where I think businesses can have some more surety on the future, our trade business would definitely benefit from that.”

Wells Fargo reported $22 billion in revenue for the quarter, slightly more than the $21.9 billion it generated in the same three months a year ago, and said it had $50 million left over from what it had set aside for loan losses in the most recent quarter.

And the bank’s chief financial officer, John Shrewsberry, pointed to a different concern that was closer to home for his business clients. “To date, while our customers are cautious, the most common concern they identify is their ability to hire enough qualified workers,” he said on a call with analysts.

Wells Fargo, the country’s fourth-largest bank, is still operating under growth restrictions imposed by its regulators, and its per-share earnings of 92 cents were lower than analysts’ expectations because of expenses from legal woes stemming from a series of scandals that began to come to light in 2016.

The bank has continued to stumble lately. Its chief executive stepped down suddenly in March not long after lawmakers grilled him over lingering problems, and The New York Times reported in August that customers whose accounts had been closed were still being charged fees for activity after the closing date. The bank’s interim chief executive, C. Allen Parker, told analysts that Wells Fargo was still looking into the matter.

The bank’s new chief executive, Charles W. Scharf, starts next week.

Wells Fargo reported a $1.6 billion charge for legal expenses related to “one of the largest lingering issues related to sales practices,” Mr. Shrewsberry said, but he declined to go into details.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Wells Fargo Has a New Chief Executive. His Job Won’t be Easy.

Westlake Legal Group merlin_153328275_4d546c33-dcc1-428c-8744-1b69c8ae379d-facebookJumbo Wells Fargo Has a New Chief Executive. His Job Won’t be Easy. Wells Fargo&Company Scharf, Charles W.

Wells Fargo has finally found someone willing to take the hardest job in banking.

The scandal-plagued bank that has spent months searching for a new chief executive announced on Friday that a longtime banking veteran, Charles W. Scharf, had agreed to take the post.

The hiring of Mr. Scharf, 54, brings an outsider into Wells Fargo, making good on a promise its board made earlier this year. The previous chief executive — an internal hire — stepped down after lawmakers in Congress grilled him over persistent problems at a bank that once had a sterling reputation.

Mr. Scharf, who resigned on Friday from his job as chief executive of BNY Mellon and previously ran Visa, will take over on Oct. 21, the bank said.

In a statement, Mr. Scharf said he felt “energized” to take on his new role, and acknowledged that the bank was “in the midst of fundamental change.”

It will be a monumental task. Wells Fargo has been operating under growth restrictions imposed by its regulators early last year in an effort to get the bank to root out bad management practices.

“I am committed to fully engaging with all of our stakeholders including regulators, customers, elected officials, investors, and communities,” Mr. Scharf said in a statement.

Mr. Scharf’s initial pay package, which includes a base salary of $2.5 million and a $5 million cash incentive, could be worth as much as $27 million in cash and stock.

Timothy J. Sloan, the previous chief executive who resigned abruptly in March, was paid more than $150 million over the course of his last eight years at the bank and received a retirement package worth about $24 million.

Before spending two years as chief executive of Bank of New York and four years as head of Visa, Mr. Scharf held numerous top roles on Wall Street. He helped oversee JPMorgan Chase’s private investment arm and was chief executive of its retail financial services division. Earlier in his career he was chief financial officer at Citigroup’s investment banking business.

“This is a real interesting career opportunity for him because of what it will do for his reputation if he is able to get his arms around what is happening at Wells,” said Bert Ely, a banking consultant. “This is the challenge of a lifetime.”

Wells Fargo’s search for a leader was not easy. The bank, which has been struggling to regain its footing since it revealed in 2016 it had opened millions of fake accounts in customers’ names, needed someone willing to endure greater-than-normal scrutiny by regulators. There were times during the search when the most likely candidate seemed to be C. Allen Parker, a lawyer who was made interim chief executive when Mr. Sloan abruptly left.

The bank’s main regulator, the Office of the Comptroller of the Currency, said on Friday it had informed Wells Fargo in writing that it did not object to the choice of Mr. Scharf, a highly unusual revelation. “The O.C.C. does not comment on specific supervisory matters pertaining to particular institutions,” a spokesman, Bryan Hubbard, added.

There were signs that Wells Fargo’s board had sweetened the deal for Mr. Scharf, who has been living and working in New York. He will not move to California to preside over the bank from its San Francisco headquarters, according to the announcement, but will remain in New York.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Elizabeth Warren Wants Wells Fargo to Explain Fees on Closed Accounts

Westlake Legal Group 21warren1-facebookJumbo Elizabeth Warren Wants Wells Fargo to Explain Fees on Closed Accounts Wells Fargo&Company Warren, Elizabeth Prices (Fares, Fees and Rates) Frauds and Swindling Banking and Financial Institutions

Senator Elizabeth Warren of Massachusetts has asked Wells Fargo’s interim chief executive to explain the bank’s policies for charging overdraft fees on transactions in accounts its customers believed to be closed, costing them hundreds or even thousands of dollars.

In a letter to C. Allen Parker on Monday, Ms. Warren asked how much money the bank had collected over the past five years by charging overdraft fees on empty accounts past the dates on which accounts were supposedly closed. The practice was disclosed in a New York Times article last week.

Ms. Warren, one of the banking industry’s harshest critics and a candidate for the Democratic presidential nomination, suggested the zombie account problem indicated that Wells Fargo had not lived up to its promises to fix its corporate culture. A series of scandals in recent years has sullied the bank’s once-sterling reputation and cost it more than $1.5 billion in penalties.

“These new revelations raise grave concerns that despite these assurances, Wells Fargo is still fundamentally broken and has not only continued to scam customers out of thousands of dollars with impunity, but has even targeted customers who were attempting to leave the bank — and may have been victims of previous scams — to unfairly collect one final set of lucrative fees for Wells Fargo,” Ms. Warren wrote.

Wells Fargo has been operating under a growth freeze imposed early last year by one of its regulators, the Federal Reserve, after the bank was caught in scandals that included secretly opening accounts in customers’ names, forcing financial products on them and charging them unnecessary fees.

The bank has remained a frequent target of lawmakers and regulators since settling investigations into those and other problems. Mr. Parker took over the company after Timothy J. Sloan abruptly resigned in March following a hearing at which Mr. Sloan was closely questioned about the bank’s lingering corporate culture problems.

The Times article published last week revealed the bank had continued to collect fees on supposedly closed accounts even though two employees complained it was hurting some of Wells Fargo’s most vulnerable customers.

Wells Fargo acknowledged on Monday that it had received Ms. Warren’s letter, but did not provide further comment.

The letter also asked for information that would help illustrate how widely known the issue was inside the bank, such as when employees first realized it existed and whether it had been described to regulators.

Ms. Warren asked for a response by Sept. 3.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Wells Fargo Closed Their Accounts, but the Fees Continued to Mount

Xavier Einaudi did not want to wait for Wells Fargo to send him a check.

The bank informed Mr. Einaudi that it was closing all 13 of the checking accounts it provided his roofing company, CRV Construction, for a reason it called “confidential.” The letter said the accounts would be closed on June 27, and he would be mailed a check for the balance in his accounts.

Mr. Einaudi went to his branch and collected the money, so he did not have to wait for a check to arrive in the mail. But the accounts did not close on the preset date.

For weeks after the date the bank said the accounts would be closed, it kept some of them active. Payments to his insurer, to Google for online advertising and to a provider of project management software were paid out of the empty accounts in July. Each time, the bank charged Mr. Einaudi a $35 overdraft fee.

Mr. Einaudi called the bank’s customer service line. He went to his local branch. Nobody could help him. “They told me, ‘The accounts are closed out — we cannot do anything,’” he said.

By the middle of July, he owed the bank nearly $1,500.

“I don’t even know what happened,” he said.

Current and former bank employees said Mr. Einaudi got charged because of the way Wells Fargo’s computer system handles closed accounts: An account the customer believes to be closed can stay open if it has a balance, even one below zero. And each time a transaction is processed for an overdrawn account, Wells Fargo tacks on a fee.

The problem has gone unaddressed by the bank despite complaints from customers and employees, including one in the bank’s debt-collection department who grew concerned after taking in an estimated $100,000 in overdraft fees over eight months. It is not clear how many people have been affected, but aggrieved customers have brought complaints to the Consumer Financial Protection Bureau, griped on the discussion sites Reddit and Quora and voiced their displeasure through the “Community” section of Wells Fargo’s website — a public comment feature that is now disabled.

A spokesman for the bank said he could not comment on specific accounts for privacy reasons, but said the bank reviews accounts to protect customers and was “committed to doing so in ways that minimize the risk and impact to our customers.”

“As a company, we are focused on continually improving this process,” said the spokesman, Jim Seitz.

Wells Fargo takes employee complaints seriously, Mr. Seitz said, and encourages clients to engage directly with it to fix problems. “Wells Fargo works hard to foster a culture that is centered on doing what is right for our customers and exhibiting high ethical standards and integrity,” he said.

Wells Fargo has been trying to rebuild its credibility after a series of scandals. The bank has paid more than $15 billion in settlements since the financial crisis to resolve investigations into misdeeds including the creation of fraudulent accounts in customers’ names and requirements that auto-loan borrowers pay for unnecessary insurance.

ImageWestlake Legal Group merlin_151771137_f1f98e23-cb2e-41d3-806b-18bdd97caba0-articleLarge Wells Fargo Closed Their Accounts, but the Fees Continued to Mount Wells Fargo&Company Frauds and Swindling Debt Collection Customer Relations Banking and Financial Institutions

Wells Fargo has paid billions of dollars in settlements since the financial crisis to resolve issues including the creation of fraudulent accounts in customers’ names and requirements that auto-loan borrowers pay for unnecessary insurance.CreditJeenah Moon for The New York Times

The bank is searching for a new chief executive after its previous chief became a lightning rod for critics in Congress, and it is still operating under restrictions imposed by the Federal Reserve that bar it from increasing its assets until it improves its oversight practices.

Wells Fargo’s customers have complained about reopened accounts, but banks can have a good reason to reactivate an account. Bank of America and JPMorgan Chase warn their customers — albeit in fine print — of the possibility that their accounts could be reopened if, for example, the bank receives a deposit bound for a closed account.

When Wells Fargo decides it will close an account, it usually informs customers in a letter that lists two important dates. The first is the date deposits can no longer be accepted. The second, which is two weeks after the first, is the date after which no more withdrawals will be honored and the account will be closed.

“Any payments you make to others that are automatically withdrawn from your accounts will be discontinued after your accounts are closed,” the letter says. The New York Times reviewed four such letters.

But two current and two former employees said Wells Fargo had set up its computer system to keep such accounts open if they have a balance — whether positive or negative — even after the closing date.

Most banks program their systems to stop honoring transactions on the specified date, but Wells Fargo allows accounts to remain open for two more months, according to current and former employees. Customers usually learn what happened only after their overdrawn accounts are sent to Wells Fargo’s collections department.

If the customers do not pay the overdraft fees, they are reported to a national database like Early Warning Services, which compiles names of delinquent bank customers. That often means a customer cannot open a new bank account anywhere, and getting removed from the lists can take hours’ worth of phone calls.

One current Wells Fargo employee who spoke on the condition of anonymity said two workers in a debt-collection office complained about the problem through the bank’s anonymous ethics hotline late last year. One, a member of a 40-person office, had collected an estimated $100,000 as a result of the practice, making up 5 percent of the employee’s total collections over an eight-month period.

There are several ways the balance of an ostensibly closed account can fall below zero. They often involve an unexpected payment from the account, such as a gratuity later tacked on to a restaurant bill paid with a debit card. But fraud is another common culprit, according to current and former employees.

Matthew Valles, a former employee who is suing the bank claiming he was wrongfully fired, said he tried to raise an alarm about the overdraft problem in 2017, because it seemed to most frequently affect fraud victims, who often had little or no money to begin with. And a current employee recalled receiving a complaint from a fraud victim who said he was told he owed $4,000 in fees after his checking account was closed.

Fraud victims are particularly vulnerable to the overdraft problem: Those that are tricked into depositing bogus checks, for example, can easily end up having their accounts closed with a negative balance because they unwittingly spend the money before the fraud is discovered.

Anna Tchorbadjiev was handed a paper bag with thousands of dollars in cash when she found out her account was being closed.CreditNoemie Tshinanga for The New York Times

Wells Fargo has faced scrutiny before over its handling of accounts of fraud victims. The bank disclosed in August 2017 that the federal consumer bureau was investigating it for closing fraud victims’ accounts without determining whether they had done anything wrong.

The overdraft problem hits those who are financially challenged the hardest, yet they are the least likely to realize they have been wronged, said Chris Peterson, a law professor at the University of Utah who is also a senior fellow at the Consumer Federation of America.

“They don’t know who to complain to,” he said. “They don’t know how to explain what the problem was, and they don’t have the time and resources to deal with getting involved.”

Mr. Einaudi still does not know why his accounts were closed, despite repeated requests since early May. He knew he was incurring overdraft penalties only because the inaccessible business accounts were still visible when he logged into his personal accounts.

Another Wells Fargo customer, Anna Tchorbadjiev, is receiving calls from the bank about debits and overdraft penalties it says she owes since her checking account was closed in February.

Ms. Tchorbadjiev, 23, said she learned her account had been closed when she visited a Wells Fargo branch in Manhattan to withdraw some cash before brunch with friends. (Mr. Seitz said: “We take appropriate steps to notify our customer of account closures in advance.”)

Ms. Tchorbadjiev, a freelance assistant to real estate brokers who also works as a model, had $40,000 in her account. She refused to leave without the full amount. Eventually, bank employees handed her a paper bag containing stacks of bills.

“Just a straight-up paper bag like people use for lunch,” Ms. Tchorbadjiev said. “It was almost like something out of a movie.”

Weeks later, representatives of Wells Fargo began calling. They said Ms. Tchorbadjiev owed $3,000 in debits and overdraft fees incurred since her visit, and the bank had reported her to a national database.

Ms. Tchorbadjiev said it took her a month of phone calls to get the report removed so she could set up an account elsewhere. In the meantime, the bank keeps calling about what it says she owes.

“I’m not going to deal with them,” Ms. Tchorbadjiev said.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Dear Walmart C.E.O.: You Have the Power to Curb Gun Violence. Do It.

The following is an open letter to Doug McMillon, the chief executive of Walmart.

Dear Mr. McMillon,

The massacre at your store in El Paso over the weekend was a tragedy.

So were the shooting deaths, days earlier, of two Walmart employees, at a Walmart store in Mississippi. So, too, was the mass shooting early Sunday in Dayton, Ohio — and the multitude of others in recent years.

It is clear that this country is suffering from an epidemic that law enforcement and politicians are unable or unwilling to manage.

In the depths of this crisis lies an opportunity: for you to help end to this violence.

You, singularly, have a greater chance to use your role as the chief executive of the country’s largest retailer and largest seller of guns — with greater sway over the entire ecosystem that controls gun sales in the United States than any other individual in corporate America.

What happened over the weekend is not your fault — but it is your moral responsibility to see that it stops.

The legally purchased weapons that were used in the mass shootings did not come from Walmart. But guns in America travel through a manufacturing and supply chain that relies on banks like Wells Fargo, software companies like Microsoft, and delivery and logistics giants like Federal Express and UPS. All of those companies, in turn, count Walmart as a crucial client.

ImageWestlake Legal Group merlin_158904741_d92bd717-b8c9-4a44-9613-a2c4690e76fb-articleLarge Dear Walmart C.E.O.: You Have the Power to Curb Gun Violence. Do It. Wells Fargo&Company Walmart Stores Inc National Rifle Assn McMillon, C Douglas mass shootings JPMorgan Chase&Company gun control Goldman Sachs Group Inc firearms El Paso, Tex, Shooting (2019) Dimon, James Cook, Timothy D Apple Pay Apple Inc

A Walmart in Arizona. The company is the country’s largest seller of firearms.CreditQ Sakamaki/Redux

Economists have a term for the kind of influence you wield: economic leverage.

Walmart has used this leverage for years over its suppliers, partners, distributors, rivals — even cities and states.

Now you have the chance to use that clout to help fix a system that is clearly broken, to solve a crisis whose costs are measured in lives, not just in profits and losses.

Other chief executives are already stepping up. For example, Marc Benioff of Salesforce recently pushed his company to stop working with retailers that sell automatic and certain semiautomatic firearms, high-capacity magazines for ammunition and a wide variety of accessories.

You have already stopped selling handguns and assault-style weapons and raised the age limit to 21 to buy a gun from your stores (though you still sell rifles and certain other types of guns). I commend you for that.

Some critics have suggested that Walmart stop selling guns entirely, but you can use your influence over gun makers for good.

You could threaten gun makers that you will stop selling any of their weapons unless they begin incorporating fingerprint technology to unlock guns, for example. You could develop enhanced background checks and sales processes and pressure gun makers to sell only to retailers that follow those measures.

You have leverage over the financial institutions that offer banking and financing services to gun makers and gun retailers as well as those that lend money to gun buyers. You could use your heft to influence banks and credit card systems to change their processes around tracking gun sales. They have none.

El Paso’s Walmart Supercenter, is a popular destination for shoppers from Ciudad Juarez, Mexico.CreditCelia Talbot Tobin for The New York Times

Jamie Dimon, chief executive of JPMorgan Chase, wrote an email to his employees Monday calling on them to “recommit ourselves to work for a more equitable, just and safe society.” Call Mr. Dimon. Tell him you need his help to use the financial system’s plumbing to create a world-class method of tracking gun sales with built-in safeguards. He has resisted — but you are one of his clients.

Then call Tim Cook, Apple’s chief executive, who says he is heartsick about the violence. “It’s time for good people with different views to stop finger pointing and come together to address this violence for the good of our country,” he wrote on Twitter on Sunday.

Mr. Cook should listen to you — after all, Walmart sells vast quantities of his company’s products. Apple already bans the use of Apple Pay to buy guns and ammunition online, but it hasn’t extended that policy to in-store purchases. Shouldn’t it? And now Apple is preparing to launch a credit card with Goldman Sachs and Mastercard. They could establish a policy from the get-go not to conduct transactions with retailers that sell guns or only those that follow a best-practices protocol.

And what about calling C. Allen Parker, Wells Fargo’s interim chief executive? Wells Fargo is the bank to the National Rifle Association, the leading force against reasonable gun laws.

Now that there have been killings at your stores, you have a business interest in telling Wells Fargo that as long as the bank works with the N.R.A., you won’t work with it. Wells Fargo boasts on its website about a Walmart-sponsored arrangement to provide financing to your suppliers. Maybe it’s time to reconsider that partnership. Or you could go further and consider no longer accepting Wells Fargo-issued credit and debit cards in your stores. Give Mr. Parker the stark choice between working with the N.R.A. and doing business with the country’s largest retailer.

Over the past decade, Walmart has spent tens of millions on lobbying efforts in Washington, much of it to push for lower corporate taxes, which have juiced your profits. You’ve also lobbied to combat the opioid epidemic and to support veterans.

It would be easy for you, and other chief executives, to argue that controlling the gun violence epidemic is Washington’s responsibility, not yours. But in an era of epic political dysfunction, corporate executives have a chance to fill that leadership vacuum.

The 22 people who died in your store this past weekend deserve more than words of consolation to their families. They deserve a leader who is going work to make sure it never happens again.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Foreign-Owned Banks’ Results Could Sweeten Further Under Tax Law

WASHINGTON — President Trump’s tax cuts have been very good to big banks. For foreign-owned banks, they could get even better.

The cuts allowed America’s largest banks to save an estimated $16 billion collectively in taxes last year, a windfall that helped those firms reward shareholders through stock buybacks and dividend payments.

The savings flowed largely from changes to the corporate rates, which fell to 21 percent from 35 percent under the new law. For years, domestic banks’ effective tax rates had been higher than those of many other companies’, so when they fell, those institutions enjoyed outsize benefits.

Foreign-owned banks reaped benefits as well, though the structure and reporting of their global financial operations make them more difficult to quantify. Late last year, they won a potentially lucrative victory in a proposed Treasury Department regulation that puts into effect a part of the 2017 tax law that established a global minimum tax on multinational corporations. Analysts say the proposed regulation, which companies must apply even though it has not been made final, could allow foreign banks to largely avoid the minimum tax.

[Earnings reports this week showed that the five biggest banks in the United States continue to benefit from the tax cuts.]

The regulation effectively provided a carve-out that would allow foreign banks to reduce or avoid a new tax, known as the base erosion and anti-abuse tax or the BEAT. Treasury’s rule would allow foreign banks to minimize their tax liability by sending large payments back to their headquarters in the form of interest payments, which would not be counted toward the minimum tax.

Many foreign banks, and an industry lobbying group, welcomed the proposal — and quickly pushed Treasury to expand it further, by exempting even more transactions between banks and their overseas affiliates from the tax. The final regulations will be decided this summer.

“There’s a lot of uncertainty” about the anti-abuse tax, said Andrew J. Silverman, a tax analyst at Bloomberg Intelligence. “But a lot of companies are taking comfort from the fact there are a lot of big exceptions to it.”

Financial filings, corporate earnings call transcripts, and industry and company letters to Treasury officials underscore the degree to which the tax cuts have helped banks financially. Some of the ways appear to go against the intention of the Republicans in Congress who drafted and approved the law in a two-month flurry at the end of 2017.

The favorable treatment for banks is contributing to a steep decline in corporate tax revenues, which has helped sharply increase the federal budget deficit. Corporate receipts were down more than 25 percent, or nearly $60 billion, through June for the 2019 fiscal year, compared with the 2017 fiscal year, before the tax cuts took effect. The budget deficit is on track to top $1 trillion in 2019, a 28 percent increase from 2018.

The 10 largest United States banks — a group that includes JPMorgan Chase, Wells Fargo and Goldman Sachs — had a combined income tax expense of $35 billion last year, equivalent to 20 percent of their pretax earnings. Their average effective rate in the five years through 2016 was 29 percent. If last year’s pretax income had been taxed at that rate instead of the post-tax-cuts rate, the banks’ income tax expense would have been $51 billion, or $16 billion more.

Money saved from having a lower tax rate helped pay for a surge in stock buybacks and dividend payments to shareholders. Last year, the 10 largest American banks distributed over $104 billion to their shareholders in these two ways, an increase of 25 percent from nearly $84 billion in 2017.

ImageWestlake Legal Group merlin_156105849_d23b994f-50e9-4edd-b379-09a2a607851f-articleLarge Foreign-Owned Banks’ Results Could Sweeten Further Under Tax Law Wells Fargo&Company United States Trump, Donald J Tax Cuts and Jobs Act (2017) JPMorgan Chase&Company Income Tax HSBC Holdings PLC. Goldman Sachs Group Inc Federal Taxes (US) Federal Budget (US) Corporate Taxes Banking and Financial Institutions

Proposed rules from the Treasury Department could allow foreign banks to reduce what they owe under a global minimum tax included in the 2017 tax law.CreditPatrick Semansky/Associated Press

Some banks are reporting tax rates well below the 21 percent statutory rate. Wells Fargo said this week that its effective tax rate — the rate reported on financial statements — was just over 17 percent in the second quarter. JPMorgan’s rate for the period was just shy of 15 percent, in part because the bank enjoyed a tax benefit after tax audits were resolved.

Those savings continued to pad bank profits in the second quarter, according to financial filings released this week, and helped to offset weakness in trading revenue. Citigroup’s larger-than-expected earnings per share, for example, were almost entirely the result of the corporate rate cut and its stock repurchases.

Large foreign banks doing business in the United States disclose income tax expenses for their American subsidiaries, but it is not clear how useful they are for assessing whether the United States tax bill has had an effect on their tax rates. That’s partly because they don’t have to break out, in public disclosures, their liability under the BEAT.

Those banks received what many analysts saw as a break from Treasury in December, when it issued preliminary regulations governing the BEAT., which is part of the tax law’s overhaul of how the United States taxes companies that operate in more than one country. That overhaul has taken a political and public-opinion back seat to the corporate rate cut and changes in individual taxes, but it has drawn intense activity from business lobbyists seeking to shape the new rules to minimize their tax bills.

The BEAT is meant to curb a practice known as “earnings stripping,” in which multinationals avoid American taxes by shifting profits to other branches of the company operating in lower-tax countries overseas — often in the form of interest payments.

It is a sort of minimum tax, forcing companies that send their profits offshore to pay at least some American tax on them.

But in its December regulations, which provided nearly 46,000 words of details on how the provision applies to companies, Treasury essentially said certain interest payments made by foreign-owned banks are not subject to the calculations that determine that minimum tax. The move alarmed some former congressional aides who were involved in the tax effort. They said the exemption ran afoul of lawmakers’ intent in passing the tax overhaul.

The law’s authors tried to balance the international provisions to favor neither American-based companies nor foreign-owned ones. Throughout its drafting, they repeatedly asked the congressional Joint Tax Committee to run tax models to simulate the effects on both types of companies, eventually finding a near-50-50 balance. The Treasury regulations, which included the exemption that foreign banks had pushed for, could upset that balance.

Foreign banks received the regulations warmly but asked Treasury to go even further, in the name of fairness. The Institute of International Bankers, an industry lobbying group, told Treasury officials in a letter that it “wishes to express its appreciation for the strides made by the proposed regulations.”

The institute went on in the letter to push Treasury for further tweaks, in final regulations, that would reduce potential bank liability under the tax even more. Those highly technical changes would, if adopted, essentially exclude an even broader set of payments between banks and their foreign affiliates from the minimum tax calculations.

Bank reactions to the December regulations have been mixed, in part because some foreign banks are structured in ways that expose them to more BEAT issues than others. UBS officials reported that they expected not to incur any liability under the minimum tax, in light of the regulations. Credit Suisse said in February that it expected to still have to pay the tax, which it expected would add about 2 percentage points to its effective tax rate.

Treasury is expected to issue final regulations this summer, and the banks are still trying to win favorable changes to the preliminary rules.

“We continue to have discussions with Treasury about the unique nature of foreign banks operating in the U.S. and how various aspects of the proposal impact our U.S. operations,” said Chris Rosello, United States head of public affairs for HSBC.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Safe Deposit Boxes Aren’t Safe

In the early 1980s, when Philip Poniz moved to New Jersey from Colorado, he needed a well-protected place to stash his collection of rare watches. He had been gathering unusual pieces since he was a teenager in 1960s Poland, fascinated by their intricate mechanics. His hobby became his profession, and by the time of his relocation, Mr. Poniz was an internationally known expert in the history and restoration of high-end timepieces.

At first, he kept his personal collection in his house, but as it grew, he wanted something more secure. The vault at his neighborhood bank seemed ideal. In 1983, he signed a one-page lease agreement with First National State Bank of Edison in Highland Park, N.J., for a safe deposit box.

Over the next few decades, the bank — a squat brick building on a low-rise suburban street — changed hands many times. First National became First Union, which was sold to Wachovia, which was then bought by Wells Fargo. But its vault remained the same. A foot-thick steel door sheltered cabinets filled with hundreds of stacked metal boxes, each protected by two keys. The bank kept one; the customer held the other. Both were required to open a box.

In 1998, Mr. Poniz rented several additional boxes, and stored in them various items related to his work. He separated a batch of personal effects — photographs, coins he had inherited from his grandfather, dozens of watches — into a box labeled 105. Every time he opened it, he saw the glinting accumulation of his life’s work.

Then, on April 7, 2014, he lifted the thin metal lid. Box 105 was empty.

“I thought my heart would fail,” Mr. Poniz said. He paused in his retelling of the memory. At age 67, he has a strong Polish accent and speaks English carefully. He struggled to find the right words to describe the day he discovered his watches were missing. “I was devastated,” he said. “I was never like that in my life before. I had never known that one can have a feeling like that.”

There are an estimated 25 million safe deposit boxes in America, and they operate in a legal gray zone within the highly regulated banking industry. There are no federal laws governing the boxes; no rules require banks to compensate customers if their property is stolen or destroyed.

Every year, a few hundred customers report to the authorities that valuable items — art, memorabilia, diamonds, jewelry, rare coins, stacks of cash — have disappeared from their safe deposit boxes. Sometimes the fault lies with the customer. People remove items and then forget having done so. Others allow children or spouses access to their boxes, and don’t realize that they have been removing things. But even when a bank is clearly at fault, customers rarely recover more than a small fraction of what they’ve lost — if they recover anything at all. The combination of lax regulations and customers not paying attention to the fine print of their box-leasing agreements allows many banks to deflect responsibility when valuables are damaged or go missing.

“The big banks fight tooth and nail, and prolong and delay — whatever it takes to wear people down,” said David P. McGuinn, the founder of Safe Deposit Specialists, an industry consulting firm. “The larger the claim, the more likely they are to battle it for years.”

In the days after Mr. Poniz found his box empty, he began piecing together what had happened: Wells Fargo had apparently tried to evict another customer for not keeping up with payments, and bank employees had mistakenly removed his box instead. After drilling No. 105 open, the bank shipped its contents to a storage facility in North Carolina. After Mr. Poniz discovered the loss, Wells Fargo sent back everything it had in storage, but some items had vanished.

ImageWestlake Legal Group 19boxes-02-articleLarge Safe Deposit Boxes Aren’t Safe Wells Fargo&Company Robberies and Thefts New Jersey Diamonds Capital One Financial Corporation Banking and Financial Institutions Bank of America Corporation

On April 7, 2014, Philip Poniz lifted the thin metal lid of Box 105. It was empty. “I thought my heart would fail,” he said.CreditAndrew White for The New York Times

In a six-page report filed with the Highland Park Police, Mr. Poniz described the watches, coins, documents and other items that were gone. Using auction records and sales reports, he estimated that their combined value was more than $10 million. That would make it one of the largest safe-deposit-box losses in American history.

Moviemakers love safe deposit boxes much more than bank executives do. On film, they’re an essential tool for spies — Jason Bourne, for example, retrieved cash and passports from a Swiss box with the help of a device implanted in his hip — and a magnet for cunning thieves. Cinematic burglars have raided highly secured vaults by tunneling in (“The Bank Job”), drilling through a wall (“Sexy Beast”), disabling alarms (“King of Thieves”), taking hostages (“Inside Man”) or simply blowing off the doors (“The Dark Knight”).

Real-world criminals have tried similarly spectacular attacks. In Conroe, Tex., someone cut through the roof of a bank last year and looted its safe deposit vault. Robbers took a similar route three years ago into two banks in Brooklyn and Queens, where they left empty boxes scattered in their wake. (Four men were convicted of the crime, which netted them more than $20 million in cash and goods.) But such capers are rare. Of the 19,000 bank robberies reported to the F.B.I. in the last five years, only 44 involved safe-deposit heists.

Banks increasingly regard safe deposit boxes as more of a headache than they’re worth. They’re expensive to build, complicated to maintain and not very lucrative. The four largest American banks — JPMorgan Chase, Bank of America, Wells Fargo and Citigroup — rarely install them in new branches. Capital One stopped renting out new boxes in 2016. A dwindling number of customers wanted them, a bank spokeswoman said.

“All of the major national banks would prefer to be out of the safe-deposit-box business,” said Jerry Pluard, the president of Safe Deposit Box Insurance Coverage, a small Chicago firm that insures boxes. “They view it as a legacy service that’s not strategic to anything they do, and they’ve stopped putting any real focus or resources into it.” He estimates that about half of the safe deposit boxes in the country are empty.

The number of bank branches in the United States has been steadily declining — down 10 percent in the last decade — and safe deposit boxes are being relocated, evicted and sometimes misplaced. In Maryland, a large bank closed several branches and lost track of hundreds of safe deposit boxes, according to a lawsuit filed by a customer who said he lost gold and gems valued at $500,000. In Florida, a customer accused Chase of losing her box and all of its contents — coins, jewelry and family heirlooms worth more than $100,000. (She sued; a federal judge ruled that she had waited too long to file her negligence claim and decided in the bank’s favor.) In California, a Wells Fargo customer said the bank accidentally re-rented her box; the diamond necklace and other jewels she had in it were never found.

When such cases go to court, the bank often has the upper hand. Lianna Saribekyan and her husband, Agassi Halajyan, leased a large safe deposit box at a Bank of America branch in Universal City, Calif., in 2012. They filled it with jewelry, cash, gemstones and family heirlooms that they wanted to keep safe as they renovated their home. They paid $246 for a one-year rental. Nine months later, Ms. Saribekyan returned to the branch and discovered that her box was gone. The Bank of America location was closing, employees told her; the bank had drilled open all of its safe deposit boxes. (The bank said it sent multiple letters to customers about the branch closure. Ms. Saribekyan said she never received them.)

When Bank of America retrieved her items from its storage depot, many were missing. The bank’s own before-and-after inventories, written by its employees, showed discrepancies, according to court records. Among the items that vanished, Ms. Saribekyan said, were 44 loose diamonds, a gold-and-diamond necklace, valuable coins and more than $24,000 in rare United States currency.

She sued the bank in Los Angeles Superior Court, seeking $7.3 million. Bank of America sought to have the case dismissed, citing language in its lease agreement stating that the renter “assumes all risks” of leaving property in the box. But in 2017, after a monthlong trial, a jury awarded Ms. Saribekyan $2.5 million for her lost items and an additional $2 million in punitive damages. Bank of America then challenged the verdict, arguing that any recovery should be restricted by the terms detailed in its rental contract: “The bank’s liability for any loss in connection with the box for whatever reason shall not exceed ten (10) times the annual rent charged for the box.”

One of Mr. Poniz’s remaining timepieces.CreditAndrew White for The New York Times

Judge Rita Miller agreed. She reduced the compensation for lost items to $2,460 and cut the punitive damages to $150,000.

“We were shocked, furious and in disbelief that such a thing could happen,” Mr. Halajyan said. “The attorneys were throwing stupid counterarguments at us, asking, ‘Why would you put so many valuables in the safe deposit box?’ We were like, where else do you want us to put it? The word ‘safe’ is supposed to mean ‘safe.’”

A Bank of America spokeswoman declined to comment on the case.

The company’s restrictive terms aren’t unusual. Wells Fargo’s safe-deposit-box contract caps the bank’s liability at $500. Citigroup limits it to 500 times the box’s annual rent, while JPMorgan Chase has a $25,000 ceiling on its liability. Banks typically argue — and courts have in many cases agreed — that customers are bound by the bank’s most-current terms, even if they leased their box years or even decades earlier.

No regulator formally tallies customer losses in safe deposit boxes. Mr. Pluard, who tracks legal filings and news reports, estimates that around 33,000 boxes a year are harmed by accidents, natural disasters and thefts. He often gets phone calls from people who are fighting their bank for compensation. “I tell them it’s hard, almost impossible,” he said. “What drives banks’ conduct is regulatory oversight, and none of the regulators pay any attention to safe deposit boxes. This just falls through the cracks. If the banks do something inappropriate, it’s very hard for customers to get any sort of relief.”

The Office of the Comptroller of the Currency, the banking industry’s main federal overseer, said it had no grounds to get involved. “No provision of federal banking law expressly regulates safe deposit boxes,” said Bryan Hubbard, an agency spokesman.

And the scant protections offered by state laws are often simply ignored — as Mr. Poniz discovered when he began searching for the missing contents of his empty box.

For over a decade, Mr. Poniz’s Box 105 sat at the bottom of a seven-foot shelf in Wells Fargo’s Highland Park vault, accessible via a metal-barred door with an old-fashioned crank. But halfway up a different wall in the vault was another Box 105 — a product of the bank’s having consolidated several branches’ safe deposit boxes into a single location and having kept their original numbering. Bank employees got them mixed up, and emptied the wrong one.

“There’s no question that Wells Fargo drilled the box and took the contents out of it, put in storage and then returned it,” John North, a lawyer representing the bank, said at a court hearing last year. “The underlying dispute is, was everything returned or not?”

That isn’t really in dispute. When Wells Fargo employees opened Mr. Poniz’s box, they created an inventory that included 92 watches. When workers at the bank’s storage facility in North Carolina counted the items, they listed only 85. Also missing were dozens of rare coins that were listed in the first inventory, but not the second. According to Mr. Poniz, photographs and family documents also disappeared.

“My impression about safe deposit boxes was that it was like you were putting things in Fort Knox,” Mr. Poniz said.CreditAndrew White for The New York Times

Oddly, the bank returned to him five watches that weren’t his. “They were the wrong color, the wrong size — totally different than what I had,” Mr. Poniz said. “I had no idea where they came from.”

New Jersey law requires a bank to bring in an independent notary when it opens and empties a safe deposit box, and to place the box’s contents in a sealed package signed by the notary. The disappearance of the coins and watches suggests that Wells Fargo — which in recent years has admitted to systematically ripping off customers with fake accounts, hidden fees and a variety of unwanted and unnecessary financial products — didn’t follow that law.

“Wells Fargo is reviewing the facts and circumstances of this case,” said Jim Seitz, a bank spokesman. “We cannot comment further due to pending litigation.”

Mr. Poniz hired lawyers. One of them, Kerry Gotlib, said he pressed the bank to find the missing items. It couldn’t. He asked for a financial settlement; the bank said no. So Mr. Poniz sued in New Jersey’s Superior Court.

Wells Fargo sought to move the case into arbitration, a venue that keeps disputes out of the public record and tends to favor companies over the individuals challenging them. For nearly two years, the two sides battled over that request, until a judge ruled in November 2018 that the case should remain in court. Wells Fargo appealed, prolonging the dispute.

The lawsuit appears nowhere near resolution, and Mr. Poniz already has run up tens of thousands of dollars in legal fees. “The bank has spent a tremendous amount of resources and put them into defending the case, instead of stepping forward and saying, ‘We made a mistake here, let’s make it right,’” said Craig Borgen, another lawyer representing Mr. Poniz.

The watches that vanished were the largest and most visually striking in his collection, Mr. Poniz said. There was a Tiffany watch that tracked the moon’s phases on its gold dial, and an early Breguet engraved with the coat of arms of the Duke of Orléans.

The highlight was a rare 19th century pocket watch, whose face was dotted with pearls and rubies and concealed a pop-up bird, slightly larger than a thumbnail, that twittered and sang. Such “singing bird” watches rarely come to market. One of the last, in 1999, was sold at auction for $772,500 to the Patek Philippe Museum in Geneva.

Mr. Poniz, who spent a decade working at Sotheby’s and now consults for Christie’s as a horological expert, had hoped that the singing-bird watch would one day be the centerpiece of an auction of his own collection. He considered the trove to be his retirement fund.

“My impression about safe deposit boxes was that it was like you were putting things in Fort Knox,” he said. “Nothing could happen to it.” He doesn’t think that anymore.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com