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.

Comments

Re:Death penalty

[Fly Swatter]

Pretty sure the OP meant corporate death penalty. They lose their status as a corporation, and all protections against liability that it includes.

Ideally it would basically make all shareholders members of a basic partnership, they would share in all expenses and liability that the corporation previously incurred - the partners wouldn't be able to get out fast enough plus no one would be willing to buy their share of the partnership. This would be better than imprisonment IMO.

Since this is a bank however, things get tricky as you can't have citizens losing their savings. In this case you'd have to treat it like the FDIC does a bankrupt bank - due the shear size of the bank it would become a circus trying to divide the customers up to other banks.

Re:Regulation

[zifn4b]

Now it's acceptable to sign people up for services they were never requesting and take money for them as long as they don't 'catch you'. What a wonderful new world we're headed for.

It's never been acceptable to commit fraud and that's precisely what that is. You go to federal pound me in the you know where prison and always have gone there if you commit such an act. That's where Bernie Madoff is right now and will be there until he dies.

Re:Regulation

[Local ID10T]

Now it's acceptable to sign people up for services they were never requesting and take money for them as long as they don't 'catch you'. What a wonderful new world we're headed for.

It's never been acceptable to commit fraud and that's precisely what that is. You go to federal pound me in the you know where prison and always have gone there if you commit such an act. That's where Bernie Madoff is right now and will be there until he dies.

And yet... that is exactly what happened in this case, and no bankers are going to jail.