Some of the nation’s top banks are facing another bad week, legally and financially as they are subjected to increased scrutiny and demand for reparations from federal regulators. Wells Fargo faces a continued inquest into the extent of its accounts fraud scandal as regional and municipal governments, including Hillsborough County, look further into their interests with the banking giant. A top financial regulator in Massachusetts is now charging Morgan Stanley with unethical conduct following a claim of a sales contest among Morgan Stanley brokers pushing securities-backed loans onto clients. Additionally, German banking giant Deutsche Bank is facing slipping stocks and credibility as it struggles to reach a conclusion with U.S. courts over an up to $14 billion fine for mis-selling mortgage-backed securities, according to a report from Reuters. The report states that Deutsche Bank’s U.S. stock-holdings fell about 2.8 percent.

Déja Vu with Morgan Stanley?

Though Morgan Stanley vehemently denies the charges put forth by William Galvin, Secretary of the Commonwealth, that the company is guilty of unethical conduct, it does not deny the existence of the sales contest. The contest involved cross-selling banking products, mostly securties-based loans, to Morgan Stanley’s brokerage clients. Glavin’s claim asserts that this cultivated a “high pressure” environment to meet contest goals that was against Morgan Stanley’s corporate policy. Morgan Stanley did suspend the contest after the contest was discovered to be inconsistent with corporate policies, but maintain that no accounts were opened without customer understanding and consent.

Tensions Running High

Public opinion and federal regulators are taking a vigorous and critical look at big banking tactics following the Wells Fargo scandal. With the aftermath of the 2008 financial crisis still looming in the economy’s rear-view, regulators and banking customers raise concerns over fundamental flaws in ethical banking procedures and continue to examine banks’ financial interests.

Big banks on Wall Street had been left unchecked for too long and the introduction of sub-prime lending tactics sealed the fate of U.S. financial stability. A culture of smoke-and-mirrors misleading consumers, coupled with a dire lack of regulatory oversight allowed big banks to run rampant. Years of bad banking tactics caught up with the U.S. economy in 2008, resulting in the worst economic recession seen in the country since the “Great Depression” of the 1930s. The effects were devastating.

The Effect

The fall-out left the country reeling. As Wall Street’s house-of-cards collapsed, consumers and legislatures were left scrambling to figure out what happened. Businesses folded, people lost jobs and housing, investments were liquidated and stocks bottomed out. As the dust began to settle and the economy eventually showed signs of re-righting itself, legislators gave the accountable parties a stern talking to and, for their part, big banks promised to change. And it seemed that way for a while…

Business as Usual for Big Banks

The recent scandal involving Wells Fargo’s accounts fraud has demanded a refreshed scrutiny of big banking ethics and practices and what we are finding is troubling. It seems that no lesson has been learned at all and big banks continue to be a breeding ground for greed and deceit. Wells Fargo is just the latest of the nation’s largest banks cultivating a pervasive, toxic culture. A report in Reuters shows that recently, in addition to illegal financial practices, banks also use coercion and bribery as regular means of business.

Broken Promises

Clearly, big banks have not learned the harsh lessons of the 2008 financial crisis. They continue to take advantage of consumers by taking money out of people’s pockets to line their own. Don’t be intimidated or mislead by big banks. If you believe that you have been victimized by big banking tactics or have suffered a financial loss at the hands of investment banks, contact Savage Villoch, PLLC today and get the tools to fight back.