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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.
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.
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.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
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
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.
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.
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!
Back in the day, they started charging me a "check image" fee of 30 cents per check, for the luxury of having them use printer toner on my monthly statement. Of course, I had not requested that they start including check images on my statement, but that's another issue.
When I called to complain, the nice CSR told me should would waive this month's fee. However, she said it would take 3-4 months for the request to discontinue check images to make it through their system, so I could expect to continue to see additional charges going forward. Of course, she was unable to waive those future fees, so she said I'd have to keep calling back monthly to get those canceled.
I politely told her that the next time I called it would be to close the account. Magically no future fees showed up on my statement. A modern day banking miracle!
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!
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.
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.
We'll make great pets
Banking in the us **IS** regulated -- either by the federal government or one of the states depending on the bank's charter. ... Except for PayPal which is for some reason allowed to operate as an unchartered bank in the US.
Perhaps what you are in favor of is more effective regulation.
You can't see ANYTHING from a car, You've got to get out of the goddamned contraption and walk...Edward Abbey
Yes they do. Shareholders elect board members. If they know they will lose money should the company misbehave, they'll start taking their board member elections a lot more seriously.
Bullshit. Revoke their charter.
When banks merge, they're sometimes forced to transfer some of their customers to other banks. Take all of Wells Fargo's customer accounts and do that, parcel them off to other banks. Sell off the assets and loans to other banks. Take the proceeds, and any remaining liabilities and put them in a government owned "bad bank" to close out Wells Fargo's business.
Take the bank records and hand them to the justice department and state AGs, have them start combing through for fraudulently opened accounts, find the bankers who opened the accounts and charge them with fraud and identity theft. Sure, the executives and managers are responsible (and should be charged and imprisoned) for creating a criminal environment and doing nothing to stop it, even encouraging it - but the individual bankers are still responsible for fraud and should be held accountable with prison time.
Finally - nothing for the investors, they invested in a criminal organization, they voted for a criminal board, and so they get nothing. All Wells Fargo stock is cancelled. All assets and proceeds from sales go to the aforementioned "bad bank".
It's all doable, it's all possible. For my money, Wells Fargo will try to somehow weasel out of this penalty. First they'll try to get a Fed chairman appointed who will drop the penalty. Then, when that doesn't work, they'll try to hide assets and continued criminality in shell companies and subsidiaries. In about a year when that comes to light, maybe we'll finally see a big bank go down.
In the meantime, if you're trusting your money to Wells Fargo, Bank of America, Chase, HSBC, Citibank, or any of the other big banks, stop. Go find a bank that won't charge you a monthly fee, won't charge $35 for an overdraft, and isn't trying to defraud you. They're out there, they're not difficult to find.
The right to protest the State is more sacred than the State.
And if they sell the shares, with incumbent overall loss of asset value, then those with more shares in the bank are punished further. But maybe not far enough.
Wells Fargo is still fighting suits from the 2008 meltdown to this day, and Wells Fargo was part of the problem: fraudulent lending. None of this is new, it's just gone further berserk. Only rarely is there a bad reputation in banking, and Wells Fargo has one. But they don't care, and I doubt they ever will.
---- Teach Peace. It's Cheaper Than War.
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.
In public companies, the power the average shareholder has over a board election is about zero.
But collectively they have a lot of power. They can force out board members, and they can initiate a shareholder lawsuit. The Fed is forcing out some board members, but I doubt if that will be the end of it. The shareholders' lawyers will be squeezing those directors for everything they can get.
Shareholders can also chose to not buy shares in companies with ethically questionable policies, or even from companies that shield their board from shareholder influence. Corporations with transparent and accountable governance tend to perform better. Warren Buffett figured this out many decades ago, and investing in "clean" companies is a big reason why he is the 3rd richest man in the world.
That's like saying that if the President breaks a law, we should punish voters because they can just elect a new one.
Dumb analogy. Selling your shares is a lot easier than renouncing your citizenship.
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?...
Every investment is a gamble. Investing in a company that has stock that tanks or otherwise has to declare bankruptcy and being overextended means the investors get nothing is a risk that one must always accept. Whether they're outright complicit or not, investors (aka owners) are the last on the list for repayment and there's no reason they should expect a dime, especially if the company is criminally liable.
It really is no different than if you invested in the mob and lost all your money because the drugs were confiscated.
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.
"Ideally?"
All those who purchased shares in a publicly traded corporation, even prior to any criminal act, suddenly have their limited liability investment converted into a unlimited liability investment without having committed any wrongful act themselves.
No violation of the fifth, sixth, and eighth amendments there at all.
But we can all be happy that investing for retirement will suddenly place everything that you own, as well as your future wage income, at intolerable risk now that you're a potential general partner in hundreds or thousands of businesses.
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.
"You want to know how to help your kids? Leave them the fuck alone." -George Carlin
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!
Regulated,hmm, how many people went to jail, none, bwa hah hah, no regulation there chump, you have just been scammed. So how come I can not steal money for years, invest it for profit and when I am caught, pay apparently some of it back, pay a tiny fine, keep much of what was stolen and keep all the profits generated by that invested stolen money. That's not regulation against crime, that's regulated free loans for the rich and greedy.
When they start handing out custodial sentences I call that regulation, when they pay small fines for mass theft, I call that a permit fee for legalised crime.
Claim regulation, then how many went to jail, that is the only answer people want, who went to jail and how long will they be going there for. How about confiscation of assets associated with crime, you steal people's cars for a bag of weed, for conspired fraud against millions of citizens, where it the confiscation of assets of the executives involved who earned bloody bonuses based upon those crimes. Not even going to go for the bonuses. Wells Fargo just paid a permit fee to steal of customers, just like the next one they will pay and the one after that and on into the future, as long as they pay a kickback to pimp lobbyists and the string of politic prostitutes selling rides to corporations, riding the taxpayers into the ground.
HOW MANY WENT TO JAIL?!?
Chaos - everything, everywhere, everywhen
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.
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.
> The real money was in the risk-free inflation of their balance sheet.
Indeed. Except of course it was fraudulent. Thinking they could get away with opening Millions of credit accounts without anybody ever noticing is a surprising amount of hubris. Or is that normal in the banking sector?