Wells Fargo Bank Scam

Anyone want to start a bank with me? All the profits and high pay of the big banks makes it look easy to start a bank and be profitable. I actually looked it up and only 1 of 1000 new banks have closed in their first three years of business.

NOHOME wrote: Anybody who does not believe this was planned, organized and managed from the top needs to come see the bridge I have for sale. It's a good one. I am letting it go cheap because I need to pay for my dogs manicure. Trust me.

I won't buy your bridge but as somebody with a lot of years in the finance industry, I will tell you this wasn't planned, organized or managed from the top. It's a side effect of a business plan that is too big to be planned, organized or managed.

This happened for all the other the reasons I previously mentioned. I guess it's just hard to explain it to somebody that hasn't worked for one of these types of companies.

I'll give you an example, I worked for a big bank (not WF) for 11 years. If 5,200 employees out of 260,000 opened accounts that stayed dormant to hit goals, the CEO's probably wouldn't noticed. Why? Because they are too busy doing high level strategy and planning stuff to notice. The people literally 12 levels underneath them are doing this stuff slowly and it's a systematic problem their internal auditors should have caught but didn't because they are huge, probably overworked and underpaid.

Something I'll reiterate about these employees that opened these accounts too, most of them probably meant no harm to the customer in their mind. If a teller that makes $26k a year can get a $400 monthly bonus but they need ONE MORE credit card application or they get nothing at all, they may open one more out of desperation. They may hope that the customer just closes it the next month and doesn't pay a fee and chalks it up to a miscommunication. That way they still get paid and the customer isn't out anything. That doesn't make it right but I'm just giving you some insight on how it really is from first hand experience working in risk management for financial institutions for 15 years. I get that you don't like big banks and think that are all a scam. I get it. I really do. I worked for one in the past for many years. But they are like McDonalds, Walmart etc etc. They exist because they can and because I know big banks inside and out, I can tell you that this wasn't a plan from the top down.

I got the impression it wasn't just bonuses involved, but people trying to keep their jobs. I really wish big business would stop trying to turn every low level employee into a salesperson.

In reply to crankwalk:

In a business this big though, on top of having federal agencies breathing down their necks, particularly after receiving billions of tax payer money that publicly went almost entirely to executive bonuses, there should be an entire branch of the business, bank or otherwise, in charge of CATCHING this E36 M3 though is the problem.

What I'm taking away, from your explanations, is that there is absolutely no oversight from inside the company AT ALL. With Wells Fargo in particular, there almost has to be one just to keep their publicly acknowledged drug cartel laundering and public fleecing in check. The "I couldn't possibly know" excuse doesn't fly, or should not be able to fly at all.

https://www.youtube.com/embed/exnaY0l4XsM I think this song says all that needs to be said on the topic.

In related news, the woman in charge of the business unit involved here is leaving the company. As punishment, she'll be given a $124.6 Million "golden parachute".

http://www.usatoday.com/story/tech/news/2016/09/12/wells-fargo-fine-carrie-tolstedt-consumer-financial-protection-bureau-bank/90287120/

I am reading "The Big Short" now. I HIGHLY recommend it.

I now hate Wall Street and all banks, though, so there's that.

tuna55 wrote: I am reading "The Big Short" now. I HIGHLY recommend it. I now hate Wall Street and all banks, though, so there's that.

The big revelation in that movie was towards the end when the light-bulb came on when the market was NOT imploding. That was the point where Michael Burry realized that it was not a case of Wall Street being stupid and not seeing that the market was a bubble, but rather that the entire bubble situation was a deliberate Ponzi scheme set up by Wall Street from the beginning. A Ponzi scheme that nobody would be able to prosecute, but rather would have to reward the perpetrators with taxpayer money so that they could put the pieces back together.

What amazes me even further is that as a follow up act to the housing bubble, after they got done digesting their bonuses for collapsing the world economy, Wall Street demanded that Washington reduce interest rates to zero so that any remaining savings in the hand of the middle class be delivered on a silver plate. And Washington made sure that happened.

Think about it, a guy sitting on a million dollar cash term deposit could live on about 50k risk free in 2007 and never touch the principle. Today,interest on a million dollars in the bank wont make car payments on a Camry.

The sequel is going to be neat cause there are no more reserves of cash to be had after this.

NOHOME wrote: ....The sequel is going to be neat cause there are no more reserves of cash to be had after this.

Oh come on now! After that huge debacle, they plugged all the holes (derivatives etc) and made sure that could never happen again...

...uhm...

NOHOME wrote:

tuna55 wrote: I am reading "The Big Short" now. I HIGHLY recommend it. I now hate Wall Street and all banks, though, so there's that.

The big revelation in that movie was towards the end when the light-bulb came on when the market was NOT imploding. That was the point where Michael Burry realized that it was not a case of Wall Street being stupid and not seeing that the market was a bubble, but rather that the entire bubble situation was a deliberate Ponzi scheme set up by Wall Street from the beginning. A Ponzi scheme that nobody would be able to prosecute, but rather would have to reward the perpetrators with taxpayer money so that they could put the pieces back together. What amazes me even further is that as a follow up act to the housing bubble, after they got done digesting their bonuses for collapsing the world economy, Wall Street demanded that Washington reduce interest rates to zero so that any remaining savings in the hand of the middle class be delivered on a silver plate. And Washington made sure that happened. Think about it, a guy sitting on a million dollar cash term deposit could live on about 50k risk free in 2007 and never touch the principle. Today,interest on a million dollars in the bank wont make car payments on a Camry. The sequel is going to be neat cause there are no more reserves of cash to be had after this.

Did not see the movie (or know that there was one) and I have not finished yet.

This is one of those moments when I start agreeing with Bernie Sanders.

I have a quote I like to throw around: Money is not complicated. If it starts looking complicated, someone is cheating.

RevRico wrote: In reply to crankwalk: In a business *this* big though, on top of having federal agencies breathing down their necks, particularly after receiving billions of tax payer money that publicly went almost entirely to executive bonuses, there should be an entire branch of the business, bank or otherwise, in charge of CATCHING this E36 M3 though is the problem. What I'm taking away, from your explanations, is that there is absolutely no oversight from inside the company AT ALL. With Wells Fargo in particular, there almost has to be one just to keep their *publicly acknowledged* drug cartel laundering and public fleecing in check. The "I couldn't possibly know" excuse doesn't fly, or should not be able to fly at all.

They absolutely have a department to regulate and investigate these things. Wells Fargo has an internal audit department as required by the FDIC. They have FDIC examiners that visit them yearly as well. I spoke about this in a previous post, See: overworked and underpaid for the internal auditors and for the FDIC, I'm sure they catch a lot but don't catch everything for something spread out this far.

eastsidemav wrote: I really wish big business would stop trying to turn every low level employee into a salesperson.

This. This more than anything. Shareholders demand results and it all rolls down hill to the lowest level. Great sales numbers are celebrated until it comes back that some aren't legit.

tuna55 wrote: I have a quote I like to throw around: Money is not complicated. If it starts looking complicated, someone is cheating.

For people who only earn and spend, money is not complicated. But it's a matter of scale in the same way that running a fruit stand may not be complicated, but running a government sure is.

crankwalk wrote:

eastsidemav wrote: I really wish big business would stop trying to turn every low level employee into a salesperson.

This. This more than anything. Shareholders demand results and it all rolls down hill to the lowest level. Great sales numbers are celebrated until it comes back that some aren't legit.

New ideas only transition into successful businesses through growth. So, logically, businesses consider ongoing growth to be additional success. Eventually the most 'successful' hit a critical mass where growth becomes the only metric worth pursuing.

nderwater wrote: Eventually the most 'successful' hit a critical mass where growth becomes the only metric worth pursuing.

This is why the Keynesian idea of the leisure economy has failed. Instead of becoming so efficient that companies can keep thousands of people employed at high wages and low hours, they just continue expansion with low wages and high hours, instead directing profits to shareholders and executives.

http://www.usatoday.com/story/money/markets/2016/09/11/wells-fargo-scam-latest-string-infractions/90139724/ said: The latest Wells Fargo alleged scam, however, opens a new front the types of frauds banks are accused of, Hockett says. More investigation is likely ongoing and will be critical to understanding how high in the organization the shadow account openings were known about and why it wasn't being monitored, Hockett says.

Well, I guess I have to dial back some of my moral outrage since I am a great advocator for an innovative culture as a pillar of any corporation, It is good to see a US company leading the world in something nowadays.

Whether or not upper management was ignorant of the activities within their company, they should be held accountable.

1988RedT2 wrote: Whether or not upper management was ignorant of the activities within their company, they should be held accountable.

This.

Crankwalk has the technical stuff right-- I'm sure that senior management didn't manage and organize a scheme that they expected would result in people on the front line creating fraudulent accounts, but they did create a scheme that encouraged them to do so. In my mind, it isn't much different than the VW scandal (especially if you listen to Bob Lutz's evaluation of it) where management created incentives to cheat and ignored the cheating when it happened so it could perpetuate itself to feed into profits. Intention is no excuse, though. If management was doing its job, it would have adjusted its program when it first started going the wrong way, apparently starting at least 5 years ago!! I agree that to give the person who was apparently in charge $125MM to walk away is ridiculous, though businesses acting stupidly isn't necessarily a crime. Problem is, the higher ups realize that if they hold that manager responsible, then they are culpable, too, and their big parachutes and options are then at risk. I heard that Warren Buffet lost $1.4 billion in value on WF stock as it dived because of this. What I don't get is why he and the other stockholders aren't taking a scythe to management, though maybe they are behind the scenes.

I read the Big Short and saw the movie and got a little different take on it. While Wall Street was (and is) a greedy bunch of morally-impaired predators, they aren't smart nor organized enough to create a grand scheme to destroy their business and the entire world economy just so they could rob the taxpayers. Having seen the crash somewhat from the inside, I can tell you it took far too many participants (right down to the strippers buying multiple houses) for a few folks to manipulate what happened. The message for me was never underestimate the ability of smart people to be supremely stupid when dollars get dangled in front of them. And you might think you are the only person who isn't sheeple, but chances are about one in 10 million against you.

Full disclosure, I've worked in banks all my life, once or twice for a "big" one, but I'm in a smaller one now. And you wouldn't believe the regulatory crap we have to go through on a daily basis because the big guys keep berkeleying things up.

Basil Exposition said: I heard that Warren Buffet lost $1.4 billion in value on WF stock as it dived because of this. What I don't get is why he and the other stockholders aren't taking a scythe to management, though maybe they are behind the scenes.

What I don't understand is why they have a single customer left after this? If you knew your kid's daycare run by pedophiles, would you keep going there?

link

Former employees fired for calling out the unethical practices they were encouraged to partake in? Kind of sounds like these weren't just rogue employees struggling to meet unrealistic expectations

I watched the whole 2 hour grilling that Stumpf went under. He basically told Washington to go berkeley themselves and walked out with over 200 million in his pocket.

I will bet you anything that under that bandaged hand, Stumpf had his middle finger stuck up loud and proud.

The ultimate joke is that whatever it cost to convene that committee of eunuchs, it will come out of the taxpayers money.I could retire on what they are going to expense at some restaurant after they dog and pony show is over for the day.

Dont worry about Fargo, the stock went up during the grilling and should be back to where it was by the end of the week. Fines don't amount to a days profit.

eastsidemav wrote: I got the impression it wasn't just bonuses involved, but people trying to keep their jobs. I really wish big business would stop trying to turn every low level employee into a salesperson.

I.e. Target "Would you like to make that purchase with a red card? Let's sign you up for one!"

Home Depot "Will you be making that purchase with your Home Depot card? No? You get 10% off!"

Just let me buy my E36 M3 and get on with my day.

About the finger thing. Had to go find the picture. Tell me Stumpf is not giving Warren the finger?

It bothers me deeply that on a certain level I admire this level of audacity and criminal creativity. Must be the Nigerian in me.