New Boss Same As The Old Boss

I last looked at the litigation against Wells Fargo over its overdraft practices three years ago. At that time, federal district court judge William Alsup had ruled against the bank on the issue and awarded plaintiffs $203 million in damages. While the Ninth Circuit overturned the judge's decision as to certain federal law claims, it also ruled that Wells Fargo's conduct violated California's unfair competition law and sent the decision back to Judge Alsup to determine the damages for that claim. Well, guess what? The judge ruled that the damages are $203 million.

Are you as amazed as I was?

“Because Wells Fargo misrepresented the posting order and overdraft charges to its customers, the appropriate form of restitution is to restore the unexpected charges to Wells Fargo’s customers,” Alsup said in a May 14 order. He also said customers were entitled to interest on the award as of Oct. 25, 2010, the original date of the judgment.

Fear not, big bankers and those who love them: this case ain't over by a long shot.

Richele Messick, a Wells Fargo spokeswoman, said the bank is disappointed with the judge’s decision.

“We don’t believe that the ruling is in line with the facts of this or the law and plan to appeal,” she said.

If that statement sounds familiar, it's because it is. Here's Ms. Messick's public statement from 2010:

“We’re disappointed with the judge’s ruling,” said Richele Messick, a bank spokeswoman. “We don’t believe the ruling is in line with the facts of the case.”

Ms. Messick said Wells Fargo’s method of processing transactions was “appropriate and consistent with customers’ interest and the laws and rules of governing regulatory authorities.”

Ms. Messick then excused herself, grabbed a fire extinguisher, and spread a load of CO2 on her burning pants.

Even assuming that the bank's litigation costs are well into eight figures by now, sending partners' kids to Harvard and buying Beamers for a regiment of associates, that's still a cheaper alternative than shelling out $203 million, with interest. Assuming the bank has adequately reserved for the liability, then the longer this drags on the more scorched the earth becomes under the plaintiffs' feet and the more the plaintiffs' lawyers will have invested in the case without being compensated. At some point in the future, they may settle for what the bank believes is a relative "bargain."

Plus, you know, it's the principle of the thing.