Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation • Hacker News Board

Re: Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation

#11

Post by gmunu » Wed, Sep 21, 2016, 8:19 AM UTC

rce wrote: post #9

This activity was quite costly to the bank and Stumpf didn't benefit from it. Banks aren't popular, but I don't want a world where you can go to jail for making a mistake or being bad at your job.

Matt Levine gives a great rundown of this https://www.bloomberg.com/view/articles/2016-09-09/wells-far... ; you're exactly right, this wasn't Wells Fargo cheating customers. It was Wells Fargo putting some pressure on their employees who turned around and gamed the system in a way that earned the bank almost no money and mostly didn't cost their customers anything. Yes, some of the customers got some fees charged to them, but they were mostly small and most of the customers with accounts opened didn't lose anything.

That this should cause the CEO, who was several layers up the org chart from the person who came up with a bad retail bank employee performance metric, to go to jail is madness.

Re: Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation

#12

Post by panic » Wed, Sep 21, 2016, 8:33 AM UTC

gmunu wrote: post #11

rce wrote: post #9

This activity was quite costly to the bank and Stumpf didn't benefit from it. Banks aren't popular, but I don't want a world where you can go to jail for making a mistake or being bad at your job.

Matt Levine gives a great rundown of this https://www.bloomberg.com/view/articles/2016-09-09/wells-far... ; you're exactly right, this wasn't Wells Fargo cheating customers. It was Wells Fargo putting some pressure on their employees who turned around and gamed the system in a way that earned the bank almost no money and mostly didn't cost their customers anything. Yes, some of the customers got some fees charged to…

The CEO was the one pushing the metric. This wasn't just a localized problem.

Re: Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation

#13

Post by Ir0nMan » Wed, Sep 21, 2016, 8:44 AM UTC

spacehome wrote: post #10

I'm confused. My impression is that Wells Fargo made de minimus profit on these practices and there's no evidence at all that Stumpf himself did anything illegal (creating shitty incentive programs is just stupid, not criminal). Maybe there should be a criminal investigation into Stumpf, but to call for resignations and bonuses to be returned is premature, no?

Of course. It's simply too early to say. However, Warren is known for her political grandstanding. It's kinda her thing.

Re: Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation

#14

Post by ChristianGeek » Wed, Sep 21, 2016, 10:06 AM UTC

panic wrote: post #12

gmunu wrote: post #11

Earlier quoted context omitted.

Matt Levine gives a great rundown of this https://www.bloomberg.com/view/articles/2016-09-09/wells-far... ; you're exactly right, this wasn't Wells Fargo cheating customers. It was Wells Fargo putting some pressure on their employees who turned around and gamed the system in a way that earned the bank almost no money and mostly didn't cost their customers anything. Yes, some of the customers got some fees charged to…

The CEO was the one pushing the metric. This wasn't just a localized problem.

He also stated that he never considered firing the head of the unit responsible for the problem. I mean, come on.

Re: Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation

#15

Post by dalke » Wed, Sep 21, 2016, 11:17 AM UTC

rce wrote: post #9

This activity was quite costly to the bank and Stumpf didn't benefit from it. Banks aren't popular, but I don't want a world where you can go to jail for making a mistake or being bad at your job.

We are in a world where being bad at your job can send you to jail, for criminal negligence.

Are you arguing that you want to get rid of all of those criminal laws, leaving only civil laws?

Bear in mind that Wells Fargo's agreement requires arbitration and prevents class action suits (http://www.reuters.com/article/wells-fargo-accounts-arbitrat... ), leaving very little external check on systemic failures due to high-level negligence.

Re: Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation

#16

Post by dboreham » Wed, Sep 21, 2016, 11:56 AM UTC

Ahhhh. The headline refers to Elizabeth Warren. I was really confused as to why Warren Buffet (a big Wells Fargo shareholder) would be making a public statement like this.

Re: Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation

#17

Post by yodsanklai » Wed, Sep 21, 2016, 12:01 PM UTC

I'm not familiar with the US legal system, but what senators have to do with this? shouldn't it be the role of a prosecutor to deal with this case?

I also find the politicians quite hypocritical. Aren't they to blame if the laws they voted for (or didn't vote for) are such that guys like Stumpf get unpunished for their wrongdoings?

Re: Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation

#18

Post by zrail » Wed, Sep 21, 2016, 12:24 PM UTC

yodsanklai wrote: post #17

I'm not familiar with the US legal system, but what senators have to do with this? shouldn't it be the role of a prosecutor to deal with this case? I also find the politicians quite hypocritical. Aren't they to blame if the laws they voted for (or didn't vote for) are such that guys like Stumpf get unpunished for their wrongdoings?

Congress can hold hearings, they can issue subpoenas, and they can hold someone in contempt of Congress.

There is currently no case. Congress is simply holding a hearing to roast the guy for making some stupid decisions. If information comes to light that would indicate criminal wrongdoing of a private citizen or a non-elected member of the government during a Congressional hearing the justice department takes over. For elected officials Congress (specifically the Senate) has the option of initiating an impeachment trial.

Re: Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation

#19

Post by hellameta » Wed, Sep 21, 2016, 12:25 PM UTC

This is quite insane. Is it too early to toss around the idea that the US government is slowly trying to take over the banking system?

Re: Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation

#20

Post by tommymachine » Wed, Sep 21, 2016, 12:26 PM UTC

ChristianGeek wrote: post #14

panic wrote: post #12

Earlier quoted context omitted.

The CEO was the one pushing the metric. This wasn't just a localized problem.

He also stated that he never considered firing the head of the unit responsible for the problem. I mean, come on.

The previous Wells CEO gave a talk at stanford GSB in 2009 in which he explained the company's core strategy in consumer financial services: distributing decentralized products and services through cross-selling. [1]

Since cross-selling has been core to the Wells Fargo business model for many years, and proven an effective growth mechanism over that time, it wouldn't make much sense to just go round firing people over pursuing that mechanism responsibly. What does make sense is adjusting course sternly when that pursuit starts to look irresponsible, and it appears the current leadership is doing that.

If Elizabeth Warren had the brains to understand the financial services industry, she wouldn't have time to fling baseless legal allegations at dinosaur incumbents like Wells Fargo. She would be too busy disrupting them.

With an institution as old and large as Wells Fargo, the problem isn't that their strategy is bad. "How can it be bad when it's been good all these years?" It's actually much deeper than that: their strategy is yesterday's strategy, and that can be a big problem when you have the kind of organizational inertia Wells does.

1. https://youtu.be/XTh4ELp2VDc?t=2678