Earlier this year, fears of bank runs and financial sector collapse spread through the media. Big banks absorbed regional banks, and for a while it felt as if consumers were in safe hands. There’s a fresh reminded, however, that safety is never assured in America’s traditional financial institutions.

There’s a lesson here: True security comes not from a bank’s size, but from its trustworthiness. It’s awfully hard to trust a bank, though, if it’s been caught with its hands in the proverbial cookie jar.

Wells Fargo is the poster child of big-bank bad actors, having been fined $67.8 million by the Federal Reserve Board for “unsafe or unsound practices relating to historical inadequate oversight of sanctions compliance risks.” Moreover, the Consumer Financial Protection Bureau (CFPB) ordered Wells Fargo to pay over $2 billion in “redress to consumers and a $1.7 billion civil penalty for legal violations across several of its largest product lines.”

The CFPB’s laundry list of charges against Wells Fargo included unlawfully repossessing vehicles and bungling borrower accounts, improperly denying mortgage modifications, illegally charging surprise overdraft fees, unlawfully freezing consumer accounts, and misrepresenting fee waivers. In CFPB Director Rohit Chopra’s estimation, Wells Fargo’s “rinse-repeat cycle of violating the law has harmed millions of American families.”

Courtesy: Financial Times

Even customers who closed their Wells Fargo accounts in protest and moved their funds to other big banks, aren’t necessarily safe from malfeasance. In a shocking but perhaps not entirely surprising development, the CFPB just required Bank of America to pay over $100 million to customers and $150 million in penalties to the CFPB and Office of the Comptroller of the Currency.

Chopra went after Bank of America just as he did with Wells Fargo. “Bank of America wrongfully withheld credit card rewards, double-dipped on fees, and opened accounts without consent… These practices are illegal and undermine customer trust. The CFPB will be putting an end to these practices across the banking system,” the CFPB director said.

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    Were you affected? It’s certainly possible if you’ve been a Bank of America customer. The company “harmed hundreds of thousands of consumers over a period of several years and across multiple product lines and services,” according to the CFPB.

    Among the charges are deploying a double-dipping scheme to harvest junk fees, withholding cash and points rewards on credit cards, and misusing sensitive customer information to open unauthorized accounts. This isn’t Bank of America’s first time on the hot seat, by the way, as the company had to pay fines for various infractions in 2014 and 2022.

    Courtesy: S&P Global

    There appears to be a pattern forming here, as the CFPB also fined U.S. Bank $37.5 million last year “for illegally accessing its customers’ credit reports and opening checking and savings accounts, credit cards, and lines of credit without customers’ permission.” If this trend continues, the safest strategy will be to hoard one’s wealth in cash under a mattress at home.

    Or, you can consider alternative ways to store and build wealth. There are plenty of reasons I’ve been pounding the table for gold and silver, and to a lesser degree, Bitcoin and Ethereum. The unfortunate actions of some mega-banks, mentioned here today, underscore the argument for owning precious metals and cryptocurrency.

    Cash is also fine for some purposes, but the aforementioned news items should raise the question of whether cash stored in a bank is as secure as most people assume it is. Meanwhile, cash stored at home loses value over time due to inflation while gold, silver, Bitcoin, and Ethereum have all gained a tremendous amount of value in the long term.

    So, feel free to store your wealth however you see fit, but be sure to conduct your due diligence before parking your capital with a seemingly reputable financial firm. Alternatively, once you discover the benefits of holding gold, silver, and cryptocurrency, you’ll at least have a wealth-preservation strategy you can bank on.

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