Wells Fargo isn’t a right fit for Northern

Aaron Loudenslager

Many campuses across the country have student credit unions. I think it’s about time that NMU looked into getting one.

Wells Fargo, one of the four biggest banks in the United States, is the new financial institution on campus. They came onto campus when TCF Bank left because of “the state of the economy.” University officials sent out notices to financial institutions in the area and Wells Fargo made a successful bid to come to NMU’s campus.

Wells Fargo has one of the best customer ratings among bigger financial institutions, especially among the Big Four. Still, the amount of Wells Fargo customers who think Wells Fargo puts customer interests before profits is only a resounding 40 percent. When customers of credit unions were asked the same question regarding credit unions the number jumped to 70 percent.

Why would customers think Wells Fargo isn’t putting consumers’ interests ahead of profits? A look at the facts tells it all. Wells Fargo has a policy that most banks nowadays incorporate when you open an account with them. It’s one that TCF Bank also incorporated into their banking practices.

Looking at the fine print, in the account contract there is something in the Wells Fargo consumer contract termed “binding arbitration.” This essentially means that any disagreement you have with the bank (Wells Fargo), including disagreement about the meaning of binding arbitration, you must go in front of an arbitrator, where you will not be guaranteed the same benefits and rights that you would get in a court of law.

In essence, you have waived your constitutional right to take Wells Fargo to a court of law before your peers. You will now have to pay your attorney by the hour, which will discourage you from taking any action against Wells Fargo, even if they break the law. It is too expensive for most people to contest. That’s the point though: it lowers the bank’s court costs.

Banks claim they need binding arbitration or they won’t be able to be competitive. Why could the eight biggest banks afford $26 million to lobby the federal government after the worst economic collapse since the Great Depression, in order to make the Dodd-Frank Act more favorable to large financial institutions instead of everyday consumers?

Credit unions are not-for-profit, meaning they serve their members first instead of maximizing profits. Credit unions have over 80 million members in the U.S. and they didn’t need government bailouts or have the need to put binding arbitration clauses in their contracts.

Wells Fargo did get a federal bailout to the tune of $25 billion in Troubled Assist Relief Program payments, yet they can’t even give their customers a fair deal. Instead they force their customers to sign mandatory binding arbitration agreements. Why did Wells Fargo need a federal bailout?

Maybe it was because they had over $5 trillion in risky financial instruments, called derivatives, but only a little over $1 trillion in assets.

Students at NMU deserve better than Wells Fargo. Institutions on campus, public or private, should benefit students and the campus community, not exploit them.

Wells Fargo has shown that it puts profits over people by taking federal bailout money, lobbying the federal government with money that could be spent on its customers and employees, engaging in risky financial derivatives, and putting anti-consumer clauses in its agreements like binding arbitration.

I think it’s self-evident that credit unions put customers first fulfill that duty and hopefully a student credit union will be established on campus.