Trump Cracked Down on Illegal Immigrant Banking; His SEC Let Wells Fargo Off the Hook - National Legal And Policy Center
Start with two dates. On February 20, 2025, the Sinaloa Cartel, the Gulf Cartel and six other criminal syndicatesofficially became terrorist organizationsunder United States law. AnyAmerican bankthat touches. . .
Start with two dates. On February 20, 2025, the Sinaloa Cartel, the Gulf Cartel and six other criminal syndicatesofficially became terrorist organizationsunder United States law. AnyAmerican bankthat touches their money now faces sanctions and the threat of criminal charges. On March 5, 2025 — thirteen days later — theSecurities and Exchange CommissiongaveWells Fargo & Companypermission tosilence its own shareholderson a question about the bank’s exposure toillegal immigrationand cartel money. Here is what happened in between those dates, and why it should bother anyone who owns a share of an American bank. What NLPC askedAny investor who owns enough stock for long enough can put a question on a company’s annual meeting ballot. Every shareholder gets to vote on it. It is one of the few ways the actual owners of a corporation can force management to answer for something. National Legal and Policy Center owns Wells Fargo stock. In September 2024, NLPCsubmitted a question intended for the 2025 ballot: tell us what the bank stands to lose from doing business with people who are in this country illegally. The request was modest. Not a policy change. Not a demand to close anyone’s account. Just a report — an honest accounting for the people who own the company. Nothing confidential about customers or their private information, and nothing that would tip off a competitor. NLPC asked the obvious question. How does Wells Fargo expect to get paid back on a loan when the borrower can be deported or fired the moment his employer learns he cannot legally work?And NLPC raised something the bank would rather forget. In 2019, a Wells Fargo employeepleaded guiltyto laundering millions of dollars for Mexican drug cartels. What Wells Fargo didWells Fargo did not answer the question. It hired one of the most expensive law firms in America,Gibson, Dunn & Crutcher, to make the question disappear. There is a rule that lets a company throw a shareholder question in the trash if the SEC agrees the subject is too routine to bother voting on — the daily grind of running a business, the stuff management handles without asking permission. The rule exists so investors can’t hijack an annual meeting over the color of the carpet. Gibson Dunntold the SECthat a bank’s exposure to illegal immigration and cartel money was that kind of routine matter. Housekeeping. Not worth a shareholder’s time. The SECagreed. Wells Fargo threw the question out. Shareholders never voted. What the President had just donePresident Trumphad spent his first weeks in office saying the opposite. Marco Rubio and Donald Trump/PHOTO: White House (CC)On his first day, he signedExecutive Order 14157, ordering his cabinet to brand the drug cartels as terrorist organizations. Secretary of StateMarco Rubiomade it official on February 6. The designations took effect February 20. TheTreasury Departmentwasted no time telling banks what this meant for them. Its sanctions officewarned every financial institution in the countrythat they now faced sanctions and criminal liability, and ordered them to check whether their safeguards were good enough. Handling money for a terrorist organization is a federal crime. Which cartels? The Sinaloa Cartel among them — one of the outfits whose money ran through a Wells Fargo teller’s hands. Two days before that, on February 19, Trump signedanother orderdirecting every federal agency to hunt down and shut off any benefit flowing to illegal aliens. And the day before that, February 18, he signedan orderputting the so-called independent agencies — the SEC among them — under his supervision, and declaring that his reading of the law binds federal employees. Three straight days. Three presidential orders. All of them pointing at the same thing. Two weeks later, SEC staff called NLPC’s proposal to hold Wells Fargo accountable “ordinary business” that should be of no concern to shareholders. And this was Trump’s SEC. Mark Uyedahadbeen running the agency as acting chairmansince January 21. Paul Atkinswould not be sworn in for another six weeks. The people who buried NLPC’s question worked for the same President who signed those orders. What the government says nowThis week the administration said out loud what NLPC said two years ago. On Monday, three federal banking regulatorstold every bank in Americathat lending to people who cannot legally work here is dangerous. Deport the borrower, or fire him when his papers don’t check out, and the loan goes bad. Banks were told to build that danger into how they approve loans and how much cash they set aside for losses. TheWall Street Journalreportedthat officials point to cartels and money launderers exploiting the banking system as the reason for the crackdown. That guidance grew out ofan executive orderTrump signed two months ago, which says loans to people without work authorization create a “structural ‘ability to repay’ deficiency” that threatens the whole banking system. Strip out the government language and that was NLPC’s question, word for word. How does the bank get paid back?What it costNone of this was a surprise waiting to happen. NLPC’s proposal cited former Wells Fargo employees whotold theLos Angeles Timesback in 2017that the bank pushed them to sign up illegal immigrants for accounts. It cited theBiden administration‘s2023 threatto punish banks that turned down applicants over immigration status — the pressure that pushed lenders into this business in the first place. The warning signs were in plain sight. NLPC sought to put them on the annual meeting ballot. Wells Fargo’s lawyers swept them away, and the SEC held the dustpan. Owners of Wells Fargo still don’t know what this exposure is worth, because no law forces a bank to count it. The one tool that could have helped pry the number loose was a shareholder vote. Whatever the bill turns out to be, shareholders will pay it. They were never allowed to ask for a tally.