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Wells Fargo Penalties Since 2000: $22B

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Re: Wells Fargo Penalties Since 2000: $22B

#61

Post by danuker »

charlescearl wrote: post #55

Instead of wasting resources punishing arbitrary capitalists (the next Wells CEO is no doubt biding its time), the state should seize some portion of the bank's operations and use them for the creation of operationally resourced public banks [1]. Then use this as a basis for the creation of plan for responsible community re-investment. As Lenin observed: " It is absurd to control and regulate deliveries of grain, or…

Normally, I'm a capitalist.

But when large companies get to control every aspect of one's life, and one is practically forced to use a bank, and banks are an oligopoly, I favor state intervention.

The money supply, controlled mostly by commercial banks, dictates whether we are in a boom or a recession. Credit scores are instruments of surveillance. Banking policies against certain activities (legal ones) impose de-facto bans on those activities, ostensibly to reduce the risk of illegal activities.

As long as banks have enormous power over individuals, and as long as there is little competition, the state must regulate them.

Re: Wells Fargo Penalties Since 2000: $22B

#63

Post by mschuster91 »

mschuster91 wrote: post #39
blippage wrote: post #4

As Nassim Taleb observed, the problem here is no skin in the game. Bankers keep the upside, but shareholders have to carry the can. It's an agency problem. The fix to all this is dispensing some good solid jail time.

> Bankers keep the upside, but shareholders have to carry the can. While I'm not against throwing corrupt bank execs in jail, shareholders could also take their job seriously and only send people to the board of directors that actually hold the company officials accountable. Unfortunately, an increasingly large amount of stocks is held by "neutral" investors (=passive ETFs) or neutral-ish investors (pension funds, in…

To u/gowld: you seem to be shadow banned or immediately downvoted to oblivion, not sure what's the case here (and vouching for it didn't help?).

To reply to your point... I agree that broad market funds are a problem, but I would not place the blame on the buyers. We can't expect people to be hobby traders for their retirement funds and it's incredibly risky as well, if going by the regular loss porn on r/wallstreetbets. The problem for me rather lies in the system that the US have set up in the first place by forcing people to invest into the stock markets for their retirement - it gives an insane amount of political leverage to the big corporations (i.e. at least S&P 500), as politicians always have to consider the impact of a political move (e.g. the banning of ICE car sale) on the stock markets because sending the stocks for affected companies tanking has a real impact on voters' retirement security.

Re: Wells Fargo Penalties Since 2000: $22B

#64

Post by Ensorceled »

itsoktocry wrote: post #47
Ensorceled wrote: post #29

Earlier quoted context omitted.

> Shareholders hold shares by choice, so they don't "have to" do anything. That's not how pensions, ETFs, index funds or pretty much anything works.

> That's not how pensions, ETFs, index funds or pretty much anything works. Yes, it's exactly how that stuff works. Why is it not the pension managers responsibility to make sure his clients are not invested in these things if there is financial risk? Or, if you decide to invest in a market-wide ETF, you are explicitly choosing to take the bad with the good. I love how people think you can outsource decision making t…

> Why is it not the pension managers responsibility to make sure his clients are not invested in these things if there is financial risk?

That's the problem, there is no financial risk, check out Wells Fargo stock price.

These are social problems these companies are spinning off, any financial problems are externalized.

> I love how people think you can outsource decision making to absolve yourself of responsibility.

Real "and yet you participate in society" vibes.

Can you respond with a detailed plan for how my 80 year old father can get his pension plan to divest itself of misbehaving companies.

Be specific.

Re: Wells Fargo Penalties Since 2000: $22B

#65

Post by pclmulqdq »

kqr wrote: post #60
blippage wrote: post #4

As Nassim Taleb observed, the problem here is no skin in the game. Bankers keep the upside, but shareholders have to carry the can. It's an agency problem. The fix to all this is dispensing some good solid jail time.

Graeber has an observation on a different part of this: the penalties are never greater than the profit that triggered the penalties. We're basically telling the bankers that "it's okay as long as the government gets a cut of the loot".

I'm assuming that's exactly the message the government wants to send. They keep saying it over and over through "administrative actions" and bailouts where the alternative would be arrests and bankruptcies.

Re: Wells Fargo Penalties Since 2000: $22B

#66

Post by tjpnz »

blippage wrote: post #4

As Nassim Taleb observed, the problem here is no skin in the game. Bankers keep the upside, but shareholders have to carry the can. It's an agency problem. The fix to all this is dispensing some good solid jail time.

I like the idea of prison time but that's only going to happen with an impartial legal system that treats everyone the same; regardless of wealth, upbringing or Ivy League attendance among others.

In the meantime how about fining companies so much that the bank will become insolvent if they don't give a crap and passing laws (if they don't exist already) to force a halt in trade for x-days/weeks?

Re: Wells Fargo Penalties Since 2000: $22B

#67

Post by gyulai »

blippage wrote: post #23
blippage wrote: post #4

As Nassim Taleb observed, the problem here is no skin in the game. Bankers keep the upside, but shareholders have to carry the can. It's an agency problem. The fix to all this is dispensing some good solid jail time.

My other suggestion is that to practise banking, one needs a license, which can be revoked. Now that I think of it, Taleb's suggested that banking should be a civil servant job. So, no financial engineering or bonuses, just boring paperwork. In the wake of the financial crisis of 2008 (IIRC), the role of regular banking and hedge fund activities was split in two. The idea is, of course, that if all the fancy derivati…

> In the wake of the financial crisis of 2008 (IIRC), the role of regular banking and hedge fund activities was split in two.

This thing comes and goes in waves.

IIRC the requirement that retail banking and proprietary trading not be mixed was already part of the Glass-Steagall Act that came in the wake of the great depression. Clinton repealed it, which somehow played a role in the Citigroup-Salomon Brothers merger.

After the 2008 financial crisis, the "Volcker Rule" was a regulatory effort to bring back this separation, but it took long to implement, is still not fully rolled out (there are exceptions granted, allowing banks a very long time period to trade out of positions they previously held), and there's already talk of rolling it back again.

Re: Wells Fargo Penalties Since 2000: $22B

#68

Post by sgjohnson »

blippage wrote: post #23
blippage wrote: post #4

As Nassim Taleb observed, the problem here is no skin in the game. Bankers keep the upside, but shareholders have to carry the can. It's an agency problem. The fix to all this is dispensing some good solid jail time.

My other suggestion is that to practise banking, one needs a license, which can be revoked. Now that I think of it, Taleb's suggested that banking should be a civil servant job. So, no financial engineering or bonuses, just boring paperwork. In the wake of the financial crisis of 2008 (IIRC), the role of regular banking and hedge fund activities was split in two. The idea is, of course, that if all the fancy derivati…

> So, no financial engineering or bonuses, just boring paperwork.

Nobody really wants that. We all want to get high on new and inventive financial instruments, to fund our increasingly "chase that paper" lifestyles.

In theory it sounds great, in practice the whole world lives in the fast lane now.

Re: Wells Fargo Penalties Since 2000: $22B

#69

Post by smallerfish »

rixrax wrote: post #12

But look at Bank of America[0]. 4x that meager $22B of WFC. Or Chase[1], which is only slightly worse than WFC. BK and USB are almost poster childs with only ~1B of penalties each[2][3]. [0] https://violationtracker.goodjobsfirst.org/?parent=bank-of-a... [1] https://violationtracker.goodjobsfirst.org/parent/jpmorgan-c... [2] https://violationtracker.goodjobsfirst.org/parent/us-bancorp [3] https://violationtracker.goo…

...and then look at (for example) Charles Schwab, fined "only" $833M in that time period, with over half of that coming from TD Ameritrade, with the offense prior to acquisition. There are much less predatory institutions out there.
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