Bullshit like this is why we have a socialist as a front-runner in the presidential election. From the Wall Street Journal:
Wells Fargo is nearing settlements with the Justice Department and the Securities and Exchange Commission over its long-running fake-account scandal, according to people familiar with the matter.
The bank could pay roughly $3 billion combined, some of the people said. The settlements could come as soon as Friday, the people said.
People familiar with the matter said the settlements are expected to be only with the bank, not with former executives. Regulators and prosecutors could still take action against individuals, these people said.
Charles Scharf, Wells Fargo’s new CEO, has said his priority is resolving the bank’s regulatory issues. The bank had previously disclosed the probe by the Justice Department and SEC, which is one of its biggest outstanding regulatory problems.
Investigators interviewed former executives including former Chief Executive Officer Timothy Sloan in connection with the probe, the Journal has reported.
The probe is related to the $185 million settlement the bank entered into with the Office of the Comptroller of the Currency, Consumer Financial Protection Bureau and Los Angeles City Attorney in 2016. That settlement brought to light that the bank had opened perhaps millions of fake accounts, spurring outrage among regulators, lawmakers and customers.
Three billion dollars may seem like a lot of money to most people, but to a large commercial bank it’s just another cost of doing business. Much like most of the fines for egregious wrongdoing in the financial sector. This is why wrongdoing in the financial sector never ends. Heck, it’s even subsidized.
The fact that a major financial institution could create millions of fake accounts in their clients’ names and even move their clients’ real money around without permission and still continue to exist is insane.
Wells Fargo has been a bad actor in financial services for a very long time. A former Wells Fargo executive pretty much invented the concept of cross-selling, or layering clients with multiple products, decades ago. Even back in the 1990s, the bank expected its employees to rope clients into at least eight Wells Fargo financial products – extra accounts, credit cards, auto loans, mortgages. The goal here is not just to increase the banks’ size, but to turn every client into a monthly fee machine.
For some in-depth writing on the sales culture within Wells Fargo, see the Los Angeles Times‘ Wells Fargo’s Pressure Cooker Sales Culture Comes at a Cost and How Wells Faro’s Cutthroat Culture Allegedly Drove Bankers to Fraud.
Wells Fargo employees had to constantly meet quotas for opening new accounts to survive and thrive at the company. Over time, they skipped talking to clients about products altogether and just started enrolling clients in new programs.
Wells Fargo employees opened at least 1.5 million new checking and savings accounts in clients’ names without permission. They opened more than half a million credit lines in clients’ names without permission. They enrolled clients in online banking services and started requesting debit cards as if they were clients.
Some employees even started enrolling homeless individuals in fee-accruing accounts. Fortunately for Wells Fargo, the company is based in areas with large homeless populations. Bogus accounts galore, and who cares if you ruin a homeless guy’s credit?
And they enriched themselves collecting performance bonuses in doing so.
Fraud of this scale does not happen accidentally. The bank had thousands of employees engaged in this behavior. That’s because the entire management structure of the bank both understood and encouraged it. To be employed at Wells Fargo across the years, you had to participate in fraud and theft. The corporate culture existed to weed out honest dealers.
This was institutional fraud. Usually ERP software is designed to detect and prevent fraud, but in Wells Fargo’s case, their electronic systems were designed to facilitate it. Employees could set clients’ PIN numbers to 0000, then gang-bang them with new services. (Not to mention how unstable that is from a general security perspective.)
In total, the bank is estimated to have opened 3.5 million fake accounts, which resulted in very real costs to consumers. They even started taking out bogus insurance lines through Prudential and Assurant.
If you as an individual stole someone’s credit card and made unauthorized purchases with it, you would be looking at jail time. But when a financial institution does it millions of times, it’s a footnote in their history.
I have no idea how Wells Fargo currently has any individual, business, or institutional clients at the moment, beyond the fact that we live in a era where the media cares more about trolling Donald Trump every hour of every day of every year than talking about stuff like this.
But the only way garbage like this is going to end is if the price is for the government to unwind a company, which the Federal Reserve and Treasury were given the authority to do in the wake of the financial crisis.
In fact, I think it says a lot about our financial system that Wells Fargo management felt free to engage in this sort of behavior literally in the aftermath of the financial crisis. They looked at all the damage liar loans caused, they looked at the milquetoast regulatory response, and said, hell yeah, we can do whatever we want.
I know a lot of people would celebrate if even one of these executives were thrown in prison. But this is hardly the work of a single personality. And that’s why innumerate socialists are invading politics.