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Wells Fargo Hit With 'Unprecedented' Punishment Over Fake Accounts (cnn.com)
An anonymous reader quotes CNN:
The Federal Reserve has dropped the hammer on Wells Fargo, [handing] down unprecedented punishment late Friday for what it called the bank's "widespread consumer abuses," including its notorious creation of millions of fake customer accounts. Wells Fargo won't be allowed to get any bigger than it was at the end of last year -- $2 trillion in assets -- until the Fed is satisfied that it has cleaned up its act. Under pressure from the Fed, the bank agreed to remove three people from the board of directors by April and a fourth by the end of the year. It is the first time the Federal Reserve has imposed a cap on the entire assets of a financial institution, according to a Fed official. "We cannot tolerate pervasive and persistent misconduct at any bank," outgoing Fed Chairwoman Janet Yellen said in a statement. Friday was her last day on the job....
Wells Fargo admitted that its workers responded to wildly unrealistic sales goals by creating as many as 3.5 million fake accounts. The bank has also said it forced up to 570,000 customers into unneeded auto insurance... About 20,000 of those customers had their cars wrongfully repossessed in part due to these unwanted insurance charges. In August, Wells Fargo was sued by small business owners who say the bank used deceptive language to dupe mom-and-pop businesses into paying "massive early termination fees." The company was in the headlines again in October for charging about 110,000 mortgage borrowers undue fees.
One U.S. congressman argued that the harsh penalty "demonstrates that we have the tools to rein in Wall Street -- if our regulators have the guts to use them."
Wells Fargo has also spent $3.3 billion on legal bills in just the last three months of 2017.
Wells Fargo admitted that its workers responded to wildly unrealistic sales goals by creating as many as 3.5 million fake accounts. The bank has also said it forced up to 570,000 customers into unneeded auto insurance... About 20,000 of those customers had their cars wrongfully repossessed in part due to these unwanted insurance charges. In August, Wells Fargo was sued by small business owners who say the bank used deceptive language to dupe mom-and-pop businesses into paying "massive early termination fees." The company was in the headlines again in October for charging about 110,000 mortgage borrowers undue fees.
One U.S. congressman argued that the harsh penalty "demonstrates that we have the tools to rein in Wall Street -- if our regulators have the guts to use them."
Wells Fargo has also spent $3.3 billion on legal bills in just the last three months of 2017.
n/c
This is why everything must be regulated.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
Back in the mayhem of 08 and 09 I remember both parties talking about death penalties for banks that pulled shenanigans that harm the economy. This seems like the perfect test case for that death penalty and they didnâ(TM)t do it.
I was actually wondering today who the hell still banks with Wells Fargo in 2018? They are the 3rd largest bank in the US. There must be tons of people and businesses that still work with them. I don't get it.
What? You mean somebody is going to jail?? Customers will be compensated?? The bank is turning over a new leaf?
Say it ain't so!
“He’s not deformed, he’s just drunk!”
In what world is this a harsh penalty, considering the scope and graveness of the transgressions? It's barely even a slap on the wrist!
Just a cap, for screwing over thousands of people? That's not even a slap on the wrist. Management should be in jail and the bank should have to pay penalties to the customers they wronged. Large penalties.
No bank doing business in America, whether it is domestic or foreign or sovereign, should have assets more than 2% of our GDP.
No investment bank should have FDIC insured deposits.
All retail banks with FDIC insure deposits should have equal access to investment banks.
Courts are ruling corporations are people. All the hard won freedoms and liberties of real citizens is being usurped by these corporations. Once these corporations become more powerful than the government, it is game over for real citizens.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
on how long it will be before Trump & Co. declares that this 'impedes US business' from making America great again?
The Market knows what's best for the country!
Finally we find out how big a company has to get before the government cares about abuses of power:
*puts pinky to corner of mouth*
TWO TRILLION DOLLARS
When the price of real estate goes up 10% are they forced to give away 10% of their real estate? When their customers pay their bills, which include some percentage of profits, where do their profits go?
Troll is not a replacement for I disagree.
One U.S. congressman argued that the harsh penalty "demonstrates that we have the tools to rein in Wall Street -- if our regulators have the guts to use them." Uh, no it does not. Wells Fargo has been nailed time and again for abuse yet they continue to do it. The only way to stop it is to make the executives subject to criminal punishment with jail time. Instead, they get away scot-free with a generous golden parachute. This makes me really cheer when the market goes down!
n/c
No, bad. If you want it to matter, you punish the people who made the decisions and the people who should have known about it. You also punish the CEO and possibly other board members--just like you fire the captain of a navy ship that gets in an accident even if it's not their fault. You do NOT punish the shareholding public, because they don't actually have meaningful control over what the bank does. This is just stupid.
In retrospect, its very ironic. Wells Fargo didn't actively pump up and create sham mortgages and was considered one of the few good larger banks at the time - in the mean time their Execs goals only mentality had their employees creating fake accounts etc...
In the past (prior to the financial crisis) the highest WF officers knowingly associated with this behavior would have been marched off to prison. None of that, just like the financial crisis, none of the actual actors get punished, again...
The financial sector in the US is extraordinarily highly regulated, even after some relatively recent attempts to deregulate some aspects of it.
If anything, I think this matter shows just how pointless regulation so often is.
Regulation doesn't actually prevent incidents from happening.
Regulation doesn't provide any real remedies if something has happened.
All that regulation does is increase costs, without any benefit being gained for these costs.
Even worse, these increased costs caused by regulation mean that it's much harder for anything resembling real competition to happen in the sector.
It's extremely rare to see a new entrant in the US consumer financial sector, and in fact we've actually seen a lot of consolidation take place.
Time and time again we've seen that the best environment for everyday consumers is when there are many players, with lots of competition not just on price, but also on the quality of service.
In summary, regulation has proven itself to not work, and in fact it has proven itself to be harmful in many ways.
Suggesting more regulation just indicates shortsightedness, I think.
If someone fraudulently creates an account in someone's name and then incurs charges on that account, that's at least fraud and probably ID theft. If anyone here reading did that, we'd be talking to a judge or sitting in a cell (eventually). Wells Fargo does it to millions and a few people lose their jobs. If corporations want to be considered "people" then they have to be accountable as "people". Equal Justice Under The Law must be applied to these at least a few of these C level executives before I'll believe that we all can expect the same treatment for the same offense.
Why can't we go back to using jumpers to configure slot adapter cards? Why? I say!
and the company needs to die. There is no other remedy that will purge all of the greed that this institution has used to justify this behavior. It cannot be effectively punished which will otherwise correct or otherwise bring it back into a socially acceptable direction.
It's far past time to institute a corporate death penalty. With the courts neutered w.r.t. other financial remedies, this is what we are left with.
Their entire business is founded upon defrauding and entrapping "customers" into paying pays. Capping them at 2 TRILLION dollars is not even a fucking punishment, they would be well below that if they even just stopped the sleazy bullshit. The only correct solution is to force them to close down and throw their entire board in jail for life. "Harsh" would be executing the board members after extensive torture, but even that is debatable.
I don't know why everybody doesn't just use a credit union. They're non-profits, so they simply have no reason to pull the kind of crap that Wells Fargo did to hundreds of thousands of people.
If you hate banks, remember: you do have another choice.
I get a no fee credit card, free checking, and much better service.
BoD needs jail time. $3B fine for each as well.
Banking is about trust and keeping it and doing what is BEST for the customer. Clearly, WF didn't do that. They need to be shot in the chest ... and try to survive for a few years on life support, perhaps dying.
A temporary cap.
--fyngyrz*
* Anon due to mod points, because Slashdot moderation rules are stupid. Soylent News does it better. A lot better.
My point is, if things like this can happen, then it isn't yet regulated *enough*. Companies have long proven they will find any way to take advantage, legal or not, as long as the penalty is worth the reward. Therefore regulation cannot leave any opening.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
https://christogenea.org/system/files/audio/ChrSat20180113-Protocols_of_Satan_34.mp3
THERE has yet to be a convention, commitee, forum, or otherwise that has ever contrasted the damages allegedly done by a corporation or Limited Liability guised as an artificial person to distribute blame or remediation bwyond forfeiture of it's initial investments.
iirc, 500 years of judicial pondering has only promulgated investment power of a corporation to equivocate as freedom of speach not bribery/lobbying/solicitting. There has yet to be a competitive application of criminal jurisprudence to a corporate charter.
the penalty for defrauding joe-sixpack becomes higher than the profit the fraud yields will this ever change. Especially with the banking communities "We're too big to fail" attitude.
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All the bankers involved with his should be shacked up with their ass as the glory hole of their local sex club for the night. Let the misery of that night and whatever they catch linger in their minds for the rest of their lives.
Also make sure to put out full page ads for this occasion so everyone who wants to fuck their banker in the ass can, and there will be a line out into the streets.
They got slapped on both wrists. That's really harsh.
That regulations exist is insufficient. You also need agencies with the authority, autonomy, mandate, and resources to enforce the regulations evenly across the sector without political interference or regulatory capture by the sector. Clearly, this isn't currently the case. Wells Fargo are getting a slightly more strenuous version of a slap on the wrist that the sector typically enjoys: So called "light touch" regulation. It's a joke and the banks know it.
No jail.
No dip into the fortunes of the people who directed the fraud.
No keeping these thieves from working at another financial institution.
No systematic attempt to fix the sabotaging of the careers of the workers who refused to commit fraud.
https://www.nytimes.com/2016/1...
This little bit of Old Harry's Game is spot on: https://www.youtube.com/watch?...
If they were serious they would withdraw WFB's business license.
It's not highly regulated if the regulated get to choose who regulates them and how the laws are enforced. There needs to be a firewall between the regulators and those that are regulated, and *one* of the components of that wall needs to be that the regulators are from time of appointment forwards until death and beyond forbidden to accept any form of remuneration from the regulated. I'm also dubious about giving them *any* input into who would be an appropriate regulator, but since this needs to be a public process, that's probably unconstitutional. So just forbid them spending any corporate money to campaign either in favor or against any candidate.
I think we've pushed this "anyone can grow up to be president" thing too far.
This was Janet Yellen's final act before retiring.
That's what made it possible: the fact that she was free to take the action because she didn't care about future career prospects.
The real "Libtards" are the Libertarians!
This is what a Fascist economic system looks like.
Why is Snark Required?
I remember this like it was yesterday and its becoming even more common.
Man Sues BOA for trying to foreclose on their house that they paid cash for
Criminals need to be in jail. We have a lawless society when the feds simply hand out fines and restrictions.
Why Wells Fargo? They are the only national bank with a solid presence in Alaska. There is no other national choice.
Ally is a branchless bank offering deposit accounts across the USA. So if you rarely handle cash, why not go with a credit union or an out-of-state bank such as Ally?
That's exactly why my "Trap Money" is with Wells Fargo!!!
Those who control many shares, and thus stand to lose a lot of money if the company does wrong, have a lot of power in electing the board.
And they are bad for the economy. They lend gladly when the economy is hot making it hotter. And refuse to lend when the economy is bad making in worse. When a bank goes bad it is killed.
No company or bank or institution should be allowed to have assets totaling more than 2% of the GDP of our country.
Assets and GDP have nothing to do with each other.
That's like saying mass and weight have nothing to do with each other. The thing relating them is a constant of proportionality, in this case the gravitational constant and the planet's radius. Likewise, by Schwarzschild's formula, the maximum mass of a spherical body before it becomes a black hole is proportional to the body's radius, with a constant of proportionality related to the gravitational constant and the speed of light.
140Mandak262Jamuna is trying to establish the financial analog of Schwarzschild's formula relating the maximum assets of a company (in dollars) to a single market's GDP (in dollars per year). Here, the suggested constant of proportionality is 2% of a year or one week.
Regulations mean jack shit if overstepping them isn't fined in a way that makes those that overstep them rethink that option. If I make 1000 bucks breaking a law and the possible fine is 100 bucks, don't expect me to follow the law. If the fine is lower than the revenue, it's not a fine, it's part of the calculation.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Surely credit unions are extremely uncompetitive
maybe your damaged brain is grasping this concept but your brain is apparently not connected to reality
Wells Fargo is ANOTHER example of why there needs to be regulation.
The economic concept of "self interest" can mutate easily into "greed". When that happens, destructive behaviors are the result.
To think we can have a marketplace without any oversight or regulation is at best naive; more likely wilfully ignorant.
An effective "democracy" creates the illusion the people have a say in their government.
As is common, no one goes to jail, and others pay the fines (shareholders). Again those who commit the crimes get a way scott free leaving others to pay for their crimes. America, the best government money can buy.
You have it backwards: it is the LACK of regulation which allows companies to merge, thus depriving consumers of choice and competitive prices, and henceforth becoming too big too fail.
That's almost half of annual GDP. Sounds too big to fail. Is this a good thing and should we worry about what happens if Wells Fargo assets grow to more than annual GDP?
The regulations don't deal with the core destructive and problem-causing issues which are also massively profitable. All regulations which have any teeth are walked back by politicians. See "How Wall Street defanged Dodd Frank". Now, Dodd-Frank was a joke for a lot of reasons, but the big reason was its intentional complexity and incompleteness and its unwillingness to deal with core issues. But even the pieces of Dodd-Frank that had small teeth were defanged.
Back in 2008, the big issue was lenders not having 'skin in the game' - they could make loans and shed all repayment risk when they sold off the loan to investors or the government. It's a license to print money and a perverse incentive to create bad debt. If you google "QRM safe harbor and risk retention", you'll get some history (QRM = qualified residential mortgage). There was an attempt to make lenders retain some small portion of repayment risk, instead of the government taking all of it, but that was walked back, as the above search will tell you.
The current Wall Street economic model is "privatize the profits and socialize the losses." Not a thing was done to address that. "Too big to fail" was never addressed - the biggest banks are even bigger today than in 2008 ("In the US, since the crisis, the six largest US banks now control nearly 70 per cent of all the assets in the US financial system, having increased around 40 per cent (against overall asset growth of only 8 per cent). JP Morgan, the largest US bank, has over $2.4 trillion in assets, larger than most countries." -- The Independent)
So. Instead the regulations are along these lines: Instead of just outlawing robbing people, they outlaw robbing people at 12 Noon. The rest of the day is fine. But then they add, 'well you can't rob people at 3 PM either'. And so on. They refuse to deal with the core issues (i.e. "you can't rob people"), instead nibbling ineffectually around the edges.
"Complexity breeds loopholes." That's the point of complex regulations - to breed loopholes. It's fantastic because it keeps competitors out of the business, because you need vast legal and accounting departments to stay abreast of the regulations. And it does little to stop the destructive behavior.
Simple, effective regulations like Glass-Steagall, instituted during the Great Depression, worked for generations. But they were slowly weakened, then eliminated.
Simple, clear regulations, which don't require massive regulatory departments in companies in order to comply, are the most effective. Wall Street companies today, the ones whose heads have lunch with Federal Reserve heads, and to whom central bankers and Treasury officials go to work after their term expires, don't want simple, clear regulations.
How much does Trump owe wells-fargo?
I think we all know this type of behavior was encouraged from the top down. You don't have this much fake account creation without this being some sort of internal scheme. The problem lies deeper then just Wells Fargo, where we seem to have a expectation of constant and rapid growth no matter what for these enterprises. There is no such thing as just rolling along at a reasonable pace.
Exactly. We need criminal laws, not regulation. Why are people not in jail over this? If people lost their car or their home over this it should be prosecuted as criminal fraud. Such widespread actions indicate a culture of corruption that should be prosecutable under RICO or an equivalent statue, which place supervisors and management in the docket along with the individual employees who actually implemented the fraud.
You want these white collar criminals to take things seriously? Criminal prosecution, not fines and more regulation is the answer.
Anything else will make this shit happen again.. and again... and again
What great idea for a game and movie. A group of sick fucks with nothing better to do but hunt Wells Fargo Executives,
Let me see if I have this right. No fines. No one is jailed.
Basically, they can't go out and play. They have to stay in their room and only play with the toys they already have.
Seems Wells Fargo is plagiarizing government bureaucracies
as in you have 89 days to divest of enough assets to bring your net worth to 1.5Trillion (oh and you can't close any branches).
Or as part of the fight on poverty you must begin opening NO Monthly Fee accounts to anybody with assets less than or equal to 90% of the National Poverty Line (also waive the neat Gotcha Fees).
You have it backwards: it is the LACK of regulation which allows companies to merge, thus depriving consumers of choice and competitive prices, and henceforth becoming too big too fail.
Funny...it's not "lack of regulation" that prevents me from starting an ISP in my shitty town where CenturyLink is the only option and provides 5 down 1 up on paper, but in actuality it ends up being about .6 down and .2 up...for $50/mo. There are over 150 people in this town who have *NO OTHER OPTION*, and regulations and laws are *exactly* what prevents be from buying 1,000 megabit fiber transport for ~$2,500/mo and ~$500/mo transit via Hurricane Electric and then splitting that 1,000 megabits into 5 megabit chunks for $45/mo and selling that to customers while earning $9k/mo gross (~$6,000 net) to pay off the loan to purchase equipment and employees to install it. Oh, and don't forget all the taxes I have to pay to the government or they'll waco my ass for providing you something you want without giving the maffia their cut...
Regulation and taxes are *exactly* the problem.
OK, but that is not far enough. Those persons removed should be banned from ever sitting on a board ever again, or holding a C-level position at any American company, and should be forced to pay restitution equal to 100% of their pay, less the average Wells Fargo employee salary (~$55k/year) starting when the unreasonable sales goals were set, and 100% of any severance package, to the victims of the scams.
It is high time to put the fear of God in these lawless dirt bag MBAs with an "anything goes for a dollar" mentality...
If you disagree, please post your argument. (-1, Overrated) isn't your personal censorship tool for views you don't like
what the article mentions and no one pays attention to - the real crooks here is not Wells Fargo... It's the lawyers who are getting 3.3 billion.
Because the level of "identify Fraud" by opening fraudulent accounts in someone name by a bank institution was certain unprecedented.
The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. The RICO Act focuses specifically on racketeering, and it allows the leaders of a syndicate to be tried for the crimes which they ordered others to do or assisted them in doing, closing a perceived loophole that allowed a person who instructed someone else to, for example, murder, to be exempt from the trial because they did not actually commit the crime personally.
This is not their first offense. These banks (Wells Fargo, HSBC, et al) are now criminal syndicates and are charged, pay fines, but no jail time. Companies don't commit crimes/fraud people do. Send them to prison.
This is fraud on a massive scale. Why aren't the managers responsible for it going to jail?
^THIS. So much THIS!
If I had mod points, you'd have them.
Um...really?
Where is the punishment? Oh, we've basically said you can't make any acquisition purchases until you fix you ways. Um, that's NOT punishment.
"Unprecedented Punishment" would be the government doing its job. That means, board members don't resign, they're tossed into jail. That means fines.
20,000 cars repossessed by their corrupt system. At let's say $20,000 each that is $400,000,000. What should the punishment be? Plus all the other fraudulent crap. Considering that a minor traffic offense often results in a $400 ticket, which equates to around 10% of an average U.S. worker's monthly gross. An equivalent fine for minor infraction would be around $750 million. However, in this case, Wells Fargo's actions were egregious and far from a minor infraction, causing tens of thousands great financial harm. And they're a repeat offender. So let's make it closer to a repeat DUI. That would put it around $7.5 billion.
So let's see the "unprecedent punishment" of treating a corporation as a person and hitting their executives with jail time, and their finances with a fine that is simply equivalent to what an individual would be hit with $7.5 billion seems reasonable to me.
I think the Fed has some smart people but you would think they would know that fines do not work.
The people that made the decision to commit the fraud do not pay them.
The bank just beats the stock holders and then takes this as a loss.
If they want it to matter they need to put bankers in jail and hand out 10 year industry bans for the ones that escape jail.
This would kick them where it counts.
“The few who understand the system, will either be so interested from it’s profits or so dependant on it’s favors, that there will be no opposition from that class.” - Rothschild Brothers of London, 1863