Wow. I can see how a bank would want to stretch for a long term customer, especially after years in community banks. That loan, however, is beyond belief!

After looking over the Wells comment, looks like the commenter will not only have privacy issues (if she can identify the borrower, so can other people), but Wells has some issues of its own.

I have commented before that banking has seen a significant decrease in regulatory attention; here is yet more evidence that supports this conclusion.

What other kinds of obligations was Wells and other banks collateralizing and selling on the market? Credit card consolidation loans secured by fourth lien positions on cat boxes?

My final comment is that banks have a fiduciary duty to their depositors to book responsible credits and thereby protect their depositors. Perhaps Dr. Warren can comment, but doesn't Wells have a similar duty to the Wall Street investor to whom they sold the CDO?

And why do you assume the email is bona fide and not a figment of Ellen's imagination?

Of course, why should we assume that Warren's unnamed bankruptcy attorney isn't a figment of her imagination and the borrower a figment of the imaginary attorney's imagination too? At least Ellen's numbers add up.

The problem with this thread from the beginning is that Warren's story--imaginary or not--was clearly incomplete or inaccurate. The borrower's debt increased by $25,200, but fees were just $1,300 and cash received by the borrower just $4,850. What accounts for the additional $19,000 in outstanding debt? Ellen fills in the gap by explaining (accurately or not) that the $19,000 went to pay credit card balances. Warren's story, however, implies that Wells Fargo simply pocketed the money. If that's true, then Wells Fargo's behavior is deplorable--robbery pure and simple. But if Wells Fargo didn't pocket the money and instead used it to pay the borrower's credit card debts, then Warren's story approaches libel and Wells Fargo deserves an apology from the professor.

I should say that I think Warren in general does very admirable work and I believe many of her observations on the financial difficulties of the middle class are spot on (I especially recommend the book she wrote with her mother, The Two Income Trap). Her recent post, however, was sloppy and misleading--and unfortunately its flaws undermined the very point she was trying to make.

I'm not "turning on anyone". I'm simply asking for authentication, which the last I looked had not been forthcoming.

Have you looked at Ellen's profile? Nothing. For all I know you might be Ellen as well as destor23.

I think that anyone who doesn't accept anything they read on the internet, particularly by an unidentified person on a discussion board, without initial skepticism doesn't understand the internet.

The letter also explains that the people at Wells Fargo "follow Prof. Warren's publications and speeches most carefully."

Pretty smart folks at Wells Fargo I'd say. I also follow Ms. Warren's publications closely as a better source of information on consumer debt would be difficult to find.

I hate credit cards. I have a restaurant and of course everyone pays by credit or debit. Every transaction I am charged a percentage. This adds up into the tens of thousands of dollars. I am a small business and I try to curb my costs. I have to take credit cards, I have to have terminals that cost at least $800.00 to run transactions. I am obligated by the credit card companies to take any transaction whether it be for $1000.00 or $1.00. I have some customers whose cards are declined and then they pull out a bunch of cards and pick one out and say, " Here try this one". When I went to college orientation for my son at the Univ of MN, they pushed us to get a TCF card and link it to his student ID to pay for all his expenses. Damn, I had to graduate from college, get a job before I was even considered for a credit card, and then I had to get a dept.store card Sears and work my way up to Visa. I cannot tell you how many creditors I have had call, looking for some of my former employees that are behind in their balances. I would also like to be able to make a purchase in a major store with cash or a check and not be asked, " Would you like to open a store name credit card?". I allways reply , " No, I dont like receiving bills in the mail, so I lke to pay now." That usually brings a smile to the cashier.
I wish consumer education was a mandatory course for high school students. I had to have a course in order to graduate from high school in Illinois back in 75. I have never regretted having to take that course, it taught me about budgeting and finances and consumer loans.

As I mentioned before, I find it implausible that Wells Fargo would officially sanction this kind of detailed response. It sounds like Dr. Warren is trying to get to the bottom of it, so good.

Regardless, the letter has a certain truthiness to it, so I'll just comment on that. The issue that interests me is this interface between legitimate banks and speculators. The whole thing amounted, in my opinion, to money laundering. Speculators extended credit and created money like a legitimate bank, without being regulated like one.

I doubt that Wells Fargo would write the loan described in that letter if it had to risk eating the loss. The ability to sell the note to speculators for a fee, while facing no risk at all, enabled Wells Fargo to say "yes" to anybody.

religious sect may degenerate into a political faction,' wrote James Madison, but the new American nation would nevertheless be protected against the ungovernable combination of religious fervor and political power as long as the Constitution prohibited the federal government from establishing any particular creed as preeminent.
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