131–140 of 211 posts
Let me just link to Matt Levine's take: https://www.bloomberg.com/view/articles/2016-09-09/wells-far... . TL/DR: The bank probably didn't benefit on net from the fraud, even before the fines. This is more a case of management setting unreasonable sales goals and creating a terrible work environment than a conspiracy to commit fraud against bank customers.
I watched a lot of his testimony before the Financial Services Committee on CSPAN. So I am unsurprised. He took a fairly savage beating. For some reason, the fact that Wells Fargo is a really big enterprise cut no ice with the various Congresscritters. FWIW, I am not a "break up the banks" guy[1] mainly because of things written and said in podcasts by Charles Calomiris, author of "Fragile By Design" along with Steph…
"Canada has very close to only one bank.." That's not even close to accurate: https://en.wikipedia.org/wiki/List_of_banks_and_credit_union... https://en.wikipedia.org/wiki/List_of_banks_and_credit_union...
https://en.wikipedia.org/wiki/Big_Five_%28banks%29
RBC was biggest by quite a margin and for a long time.
I highly recommend listening to a recent episode[1] of Planet Money. This was by no means an accident. As a short summary of one employee's plight: Ashley, working for them and making only $35k per year in San Francisco, was continually harassed to sign people up for accounts they didn't want. An old man comes in, pensioner, $200 in overdraft fees due to being duped into excess accounts. She dips into her own savings…
I just listened to this episode last night, by chance.
She speculates that she is on a blacklist, because she's having trouble finding work. But there's a more charitable (to the other banks) explanaton: she was a very low level employee who, true or not, just got fired for a massive fraud under investigation in the public eye. Maybe they're simply thinking "this might not be the best hire right now" and move to the next resume, of which there are probably many.
Because, as much as people in management are responsible, there were also front line employees actively committing fraud here. They are also responsible. In fact more so. Her case is not the norm.
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I would be fine with "Wells Fargo CEO John Stumpf Ordered to Pay Back Fraudulent Fees to Wells Fargo Clients, Out of Own Pocket" (possibly down to some wealth limit, say, he can keep the $35K he apparently pays to his employees if his fortune is not enough to restore the damage). I am not a big believer in jail as punishment (as opposed to "place we keep people who are dangerous to others, for the good of society at…
Punishments need to be out of proportion to the financial damages they do when they erode public trust, which is a good held in common (and the key to prosperity in the west). This is why someone who runs a charity scam should be punished more than someone who simply mugs people.
Then, in the case where employees started reporting that they were forced to do the activity to keep their jobs, nothing was done. This seems more like a lever that can be pulled here:
Prevent banks from having ineffective whistleblowing processes by mandating use of a FINRA whistleblowing program. The person in the top comment being fired would get protected by Finra for her future employability, and Wells Fargo and other banks would take whistleblowing far more seriously. I admit it sounds very simplistic, but is there something crucial I'm missing here? I can't see how one would file charges at the top executives for "incompetantly making an internal ethics line" and "setting too difficult sales goals, causing an unintended fraudulent effect".
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Perhaps you can refinance? Lots of banks offer no-fee refinances. I used Cash Call (not that they have an amazing reputation) but they did a good job with my refi.
... and then it's very likely that you will end up back with Wells Fargo, since they are one of the few banks that service mortgages. Most finance companies sell your loan shortly after originating it.
I highly recommend listening to a recent episode[1] of Planet Money. This was by no means an accident. As a short summary of one employee's plight: Ashley, working for them and making only $35k per year in San Francisco, was continually harassed to sign people up for accounts they didn't want. An old man comes in, pensioner, $200 in overdraft fees due to being duped into excess accounts. She dips into her own savings…
> This was by no means an accident. Thank you for pointing this out. I keep seeing comments to the effect of "Wells doesn't make any significant profit from opening bogus accounts (unused accounts are typically unprofitable to the company), so the executives couldn't have wanted this." These comments reflect a misunderstanding of modern executive compensation and the incentive structures set up for executives in larg…
A whole new way to think about startup acquisitions!
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I suspect Warren Buffet may have pushed for Stumpf's resignation/termination, as well as other damage control measures. This is a similar situation to the Solomon scandal, although Buffet has a smaller stake in WFC.
Was WF one the banks he took a stake in after the 2008 crisis?
> Berkshire Hathaway (BRKB) owns nearly 470 million shares of Wells Fargo (WFC), a 9.5% stake. Buffett also personally owns a little more than 2 million shares in the bank. The combined value of that investment has dropped by nearly $1.5 billion since Friday.
I could see why he might be upset.
[1]: http://money.cnn.com/2016/09/14/investing/warren-buffett-ber...
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Remember WF was one of the banks that failed the stress tests after the 2008 financial crisis. I've been trying to get away from WF for a while now, but no other bank can fill its shoes in terms of online services and ubiquity. Yet it has a culture of predatory capitalism where "your loss is our gain".
I never wanted to do business with WF in the first place, but I bought a house a few years ago and the mortgage company sold my mortgage to WF. Being forced to be someone's customer against your will sucks.
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> Will any of his earnings and bonuses be clawed back? They already have clawed back a lot of his bonus http://money.cnn.com/2016/09/27/investing/wells-fargo-ceo-cl...
I did notice that story, but that's only impressive if they don't entirely cancel out the effect by giving him a gigantic golden parachute, which, tragically, would be the expected behavior here.