
Wells Fargo Hit with $1B in Fines - smaili
https://www.npr.org/sections/thetwo-way/2018/04/20/604279604/wells-fargo-hit-with-1-billion-in-fines-over-consumer-abuses
======
kaizendad
OK, but Wells Fargo made $5 billion last year, and the activity they were
fined for took place over many years, which leaves me to ask: after the fines,
was this activity profitable or not? If it was profitable, do the fines
actually dissuade future dishonesty?

Also, apparently Wells Fargo thinks that 27,000 people lost their cars over
this. I bet none of those people will be made whole. Cars are really essential
things: lose your car and you may be unable to take a child to school, unable
to shop for food, or even unable to get to work. It's a pity that can't be
undone.

~~~
chiefalchemist
Will fines dissuade future dishonesty? Not likely. But jail time of the guilty
decision makers would.

Steal a candy bar? Go to jail. Knowingly ruin someone's life? No problem. The
shareholders pay for it.

~~~
avaika
Why massively put people in jail for everything?

In most countries jails are no good to prisoners. They are used to isolate
people from society, not to help people to become a better person. And society
is putting tones of money to support penitentiary system.

I believe for economical crimes people who took the decision should be fined a
lot and banned from taking positions where they can do the same things again.
No need to isolate them from society. At least for the first time. The same
for other crimes where people do not hurt or threaten to hurt other people.

~~~
arca_vorago
>The same for other crimes where people do not hurt or threaten to hurt other
people.

Isn't that the thing though? Don't these bankers actually hurt more people,
and hurt them worse, than any violent criminal could? So the person who hurts
one family gets jail but the one that hurts thousands "doesn't get to work in
the industry" anymore? That sounds like hogwash to me.

Has everyone just forgotten about the principle of equality under the law?

~~~
flyingcircus3
No, we've just gotten really good at interpreting our contract from the late
1700s really well.

The Lucas critique, or Campbell's law, both refer to the same concept. Any
metric that becomes a target is no longer a sufficient metric.

The Constitution has been our metric for 250 years. I don't have a superior
alternative, but it occurs to me that we've demanded it be a literal document,
but when its our own skin on the line, we suddenly forget the inconvenient
parts, and contort our minds to find absolution for something we are going to
do anyways.

------
aphextron
Something has happened to big banks along the way, where they no longer
actually provide banking services to their customers. When I walk into a Wells
Fargo branch now and sit down with a "banker" to take care of my accounts, it
consists of sitting next to them while they call 1-800-WELLSFARGO for me and
talk to a call center. There simply is no service anymore. I walked into my
local branch to open up an IRA last week before the tax deadline, and they
literally couldn't even do it for me in time because the person on the phone
said "we'll do our best effort, no guarantee." I walked up to the teller,
asked for a cashier check for the full amount in my accounts, and opened up an
account next door at a small local bank (First Republic). They were able to
sit down with me and immediately pull up all the paperwork to create and fund
an IRA account with no hassle at all right there, no phone call involved. It
was like night and day.

These huge banks have simply become way too big, and it serves no one's
interest but their own. They have zero incentive to provide actual customer
service anymore. There needs to be a massive restructuring of our system to
allow smaller banks to thrive and provide actual competition.

~~~
heurist
It's definitely an industry ripe for rebirth. For instance, I should be able
to partition my money into several lightweight accounts - one for groceries,
one for home expenses, investment, etc - and automatically have fractions of
my deposits sent to those accounts so my budgeting and money management are
handled without any effort on my part. I should have lightweight cards
available for each of those accounts with online card management
(request/terminate cards, track per-card spending); multiple cards per account
so I can give my wife full use of "grocery" card, and alerts/notifications
when I am spending too much in an account/not efficiently allocating the full
amount/potentially using a card improperly; financial projections; and so on.

Most consumer products and customer services should be totally accessible
through a web interface. All of this could be built on top of today's banking
infrastructure as a mostly-frontend service but instead I'm forced to give my
personal information to services like Mint (who can not and will not ever do
what I actually need it to do) or trust Random Startup #347 with access to my
bank account because banks are monoliths without technical capacity or
consumer-oriented business practices. I imagine some upstart will eventually
come along with a better solution but banking regulation (though absolutely
necessary in many ways) will hinder growth of any challenger.

If anyone has any recommendations in the meantime, please let me know!

~~~
manishsharan
I work for a large bank and can offer a tip. When you find yourself in this
situation -- please create an incident report by lodging a complaint with the
branch manager or online . Tweet if you must : your goal is to make sure that
an incident shows up in the CRM. Branch managers bonus is tied to customer
satisfaction parameters. This will not make you situation more bearable but it
will force the branch to be more responsive in the future.

~~~
__jal
No.

The correct answer is to close your account and move to a bank that actually
has an interest in providing customer service. (Credit unions are great.)

I have zero interest in some company's CRM, how they apportion money to
employees, or anything else of that sort. If a company cannot get meaningful
feedback about customers' reaction to their service, well, that sounds like
they have a serious business problem to solve, and expecting me to fix it for
free is, frankly, insulting and doomed to failure[1].

My rule in life with this sort of thing is simple. Don't do business with
assholes.

[1] Get back to me when WF's CEO's bonus depends on customers going out of
their way to provide feedback.

~~~
matwood
This is the correct answer. Many times people feel trapped in their bank
because it is a pain to move, but it’s not hard.

------
volandovengo
I've interacted a lot with the larger banks and been flabbergasted at how they
view the world.

Banks, big and small, regard the consumer operations of the bank as a cost
center, which they should do as little as possible to maintain. In fact - I
believe the only reason that they even have public facing consumer branches is
largely to get access to capital as cheaply as possible. Every proposed
improvement to the consumer experience is viewed in the light of "how is this
going to make the bank more money." If a direct line from improving the
customer experience to make more money can't be drawn, the bank won't do it.

Long gone are the days where banks provided a core function to the vast
majority of society. They just exist to enrich themselves.

~~~
PHPMyAdmin
> In fact - I believe the only reason that they even have public facing
> consumer branches is largely to get access to capital as cheaply as possible

I would agree with this. Banks nowadays– maybe not local independent banks or
credit unions– leverage your money to purchase investment vehicles on better
credit for their higher-profile clientele, and also as liquid capital to
dispense as needed.

> If a direct line from improving the customer experience to make more money
> can't be drawn, the bank won't do it.

Yep. I have an account at a sizable bank, and their mobile app has been broken
the half dozen times I've used it, across as many months.

It's the 21st century and a bank cannot figure out how to finance a proper
mobile management application.

~~~
saagarjha
To be honest, the same could be said about some Silicon Valley tech companies
as well…

------
bedhead
The government should've instead created a "fine" where they receive something
like half of Wells Fargo's profits for the next ten years or so. Then cap
executive compensation for the duration. Then force every board member to
resign and have a regulator on the board. All for the next decade. These one-
and-done fines that are paid by shareholders instead of management, even large
ones, do nothing...do something with _lasting_ consequences if you want to
punish, modify behavior, and put the fear of god into others considering
cheating.

~~~
traviscj
Your plan is to loop the government/regulators into the scam? What exactly is
that incentivizing and how does that improve things for the average bank
customer?

------
rectang
The executives responsible (principally Carrie Tolstedt and John Stumpf) not
only did not go to jail, they ended up money ahead to the tune of 8-9 figures,
even after clawbacks.

So if you're an executive, you know what to do...

And if you're a shareholder, is a billion dollar fine compared against 88.4
billion in 2017 revenue sufficient to sustain your motivation in an endless
fight against the backscratching director and executive culture?

~~~
ansible
You think that even in this day and age, anytime you're getting hit with a
_billion dollars_ in fines, you'd sit up and pay attention.

I'm not saying WF (or more importantly, their shareholders) actually cares.
But you'd think that they would at that level.

~~~
rectang
A billion ain't enough.

I don't have faith in Wells Fargo ownership or leadership to ensure ethical or
even legal behavior in the absence of sufficient incentives. The market as
currently set up encourages large scale misbehavior and destructive abuse by
Wells Fargo of its customers. The stockholders are insulated by distance from
the misery their company causes, and the executives outright make out like
bandits, even when they get caught.

This is ultimately a problem which can only be solved by voters and their
representatives inflicting meaningful punishment.

~~~
uxp
My parents opened an account for me with a bank when I was ~6 years old in
1988 that was swallowed up by Wells Fargo in the early naughts, which I
maintained until about 6 years ago. At around the time I withdrew all my money
and moved it to a local CU, I was going through financial hardships, and
frequently would have less than a hundred dollars to my name. I never had any
problems with them until then, when they would seem to hold up smaller debits
as pending, even if a deposit was made which was also held as pending, until a
larger debit was made and they were able to shift the order of transactions to
maximize overdraft fees.

For example, $50 balance, $25 debit, $20 debit, $100 deposit, $80 debit
resulting in a logical balance of $25 would be shifted to clear as a $50
balance, $80 debit (+$30 fee), $25 debit (+$30 fee), $20 debit (+$30 fee),
$100 deposit leaving a balance of -$65 and a daily fee until I could find more
cash to deposit and not use my debit card.

These transactions could happen over multiple business days, which made zero
sense. Even now that I have a more stable job and a comfortable pillow of cash
to fall back on, my CU seems to want to dictate where that money should go,
instead of me shifting it around. Just this week, I went into a branch to
withdraw some cash where the teller asked if I wanted to shift some savings
into a money market account, which I agreed to, but said I didn't have much
time that day to discuss it. Before I could go next door and get lunch, he had
moved the money and zeroed out the account, which (despite being a saving
account, is where my debit purchases get withdrawn from), managed to get me
two overdraft fees when I bought lunch.

I'm seriously considering purchasing another mattress to store my money. In
this day and age, there is no such thing as a bank. They are all financial
institutions.

~~~
ansible
And it is for reasons like you mentioned that I discourage everyone I know
from using debit cards for anything.

I only use credit cards for purchases, and _I_ control when the money moves
around. And I always pay the balance every month.

------
marricks
I heard this discussed in NPR as a reasonable fine because “it hit their
profits but they still made money that quarter” and “the CEO steppe down”.

How is that enough when so many people had their life totally screwed? It
should decimate their profits and high ups should serve federal time.

Id executives don’t fear the government over something so egregious were
opening the door to more of the same.

------
Bye_Felicia
disgusting.

conclusion: Bankers are above the law.

They should be in jail, along with the CEO. This isn't just white collar
crime. This was blatant, premeditated, financial fraud. Directed from the very
top to every single Wells Fargo office.

How is the public so stupid and uneducated, as to not be outraged?

All this does, is help to motivate the next generation of sociopaths. Zero
consequences.

~~~
FireBeyond
> This was blatant, premeditated, financial fraud. Directed from the very top
> to every single Wells Fargo office.

Oh no! No it wasn't! They never directed their employees to do anything
illegal or unethical in hitting those unrealistic account targets, and the
fact that hundreds (or more) tellers to do so the very same way is entirely
coincidence and not the executives' fault! /s

------
tinbad
I had high hopes for Bank Simple some time ago when they came out. Then they
got acquired by a bigger bank. This industry is nearly impossible to disrupt.
Just like the Oil companies back in the day, these banks are so big and
powerful that it's impossible to innovate in the current market conditions.

~~~
scotch_drinker
Big Oil was broken up by anti trust legislation. It's possible this comes back
around. Currently reading a biography on Brandeis who was one of the titans of
anti-trust in the 30s and 40s. I'm hoping that kind of regulation comes back
around.

~~~
uxp
How? The CFPB wasn't perfect, but like the ACA, many think that if legislation
is not perfect, it should not be enacted. That's the entire basis of the
Hastert rule, if the majority party isn't able to "secure" a majority of
votes, then bills shouldn't be voted on.

Isn't that the point of voting?!? Why are our representatives pre-voting on
bills to determine if they should even be argued, debated, amended and tried?
I'm reminded of something one of my senators said last year about the Russia
investigation (specifically the election interference, not "collusion"), in
context of them not wanting to investigate because the facts were not known.
THATS THE F __KING POINT OF AN INVESTIGATION YOU DIPSH*T, TO FIND FACTS.

Everyone needs to vote this november. I don't care if you vote Republican,
Democrat or any of the 3rd parties. Just vote. Get the old guys out. Disrupt
their legacy. We (software developers) hate the Waterfall method. We like
being Agile, whatever that means. Make our government operate the same way.
Iterate in small, meaningful chunks.

------
makecheck
Not sure how they calculate fines like these but it sure should work something
like the following:

$100M + [(entire bank profit gained from illegal activity) * 7.0] + [(number
of people screwed) * (average fees charged per person) * 2.0]

In addition, there should be a stipulation that the bank _cannot_ (in present
or future) pay the fee through employee layoffs or other cop-outs. Ideally,
the government is able to require fine payments to come directly from
executive compensation or by selling assets, etc.

My guess is it would come out to, let’s say, a hell of a lot more than this.

~~~
aerotwelve
> Ideally, the government is able to require fine payments to come directly
> from executive compensation or by selling assets, etc.

Interestingly enough, DF allows the government to do this if the bank is
considered "too big to fail", which is a classification they define precisely
in the bill.

But not before that.

------
djschnei
Where does the fine go? Does it get divvied up amongst the people affected by
WF's wrongdoing?

~~~
rb808
> Does it get divvied up amongst the people affected by WF's wrongdoing?

Are you crazy? The fines usually get distributed around different politicians
to spend on their favorite things. Like this
[https://www.usatoday.com/story/opinion/editorials/2014/07/14...](https://www.usatoday.com/story/opinion/editorials/2014/07/14/lohudreacts-
spend-pnb-paribas-fine/12634055/)

Which is why these fines will continue. Everyone hates the banks so the
regulators can just keep fining them for everything indefinitely, when they
run out of ideas they find some new problems with the 2008 mortgages again.

~~~
djschnei
Was mostly a sarcastic question ;)

This pattern can be seen everywhere...

1) politicians regulate an industry with the best intentions

2) industry becomes a safe haven for "the big fish" that can pay to play

3) Rinse and repeat for a while, creating bigger and bigger barriers to entry
into the marketplace. Politicians are happy, mega banks are happy.

4) Megabank inevitably does something reprehensible

5) politicians slap them with some fines. Fake remorse ensues...

6) go back to step 1

~~~
samstave
Stop paying taxes.

~~~
djschnei
Well, taxes go towards some stuff I appreciate... plus I would probably be
thrown in jail. So not sure that is a solution :p

~~~
samstave
Conscientious objection to taxation should be a thing though.

~~~
Analemma_
It is: it's called "renouncing your citizenship and moving to Somalia". Go
ahead!

Oh, you meant to say that you want to be able to object to taxation but still
freeload on all the benefits. Sorry, no.

~~~
djschnei
I object to most of the roughly 50% of my income that is taken from me and
can't say I've ever been called a freeloader... That's an interesting point of
view you have there; "either don't be a US citizen or never complain about tax
policy".

~~~
dumbfounder
"Conscientious objection" to taxes means you wouldn't pay taxes, it doesn't
mean you just complain about it. You can't do that and stay a US Citizen and
not go to jail.

~~~
djschnei
I guess I just don't care enough to ruin my life over it. It's a pretty
interesting thing to think about, actually. To think that a bloody revolution
was sparked over much less than what we put up with today... It's almost like
Stockholm Syndrome.

~~~
s73v3r_
That revolution was fought because there was no representation in the body
that levied the taxes. We do have representation in the body that levies taxes
now.

~~~
dumbfounder
Tell that to the people of Washington DC! (No voting congresspeople)

------
bigmattystyles
Was the fine expected to be much worse? They're trading up at the moment

~~~
nappy-doo
It's not as much as the fine was expected to be worse, just that the situation
is now resolved. WFC can put this behind them, and move on. AFAICR, this is
the last of the scandals that have rocked the bank. As soon as the cap on
their assets is lifted (likely before the end of the quarter), there's nothing
left in the queue holding the price back. As such, the company will be able to
take advantage of the higher interest rate environment we're moving into, and
the stock (already undervalued compared to its peers) will benefit as a
result.

Or, markets are irrational.

Take your pick.

------
otakucode
When a large fine is levied, there is only one question which actually
matters: Did the company profit more than the fine from the illegal actions?
If they did, then the fine will be written off as a 'cost of doing business'
and nothing will change. It wouldn't make sense to do otherwise. When dealing
with entities as large as Wells Fargo, they can often get away with anything
as long as it is profitable enough. Since their personhood doesn't extend to
the government actually being able to curtail their free movement or actions,
and fines are the only way they can be censured, the fact that the public
itself will balk at fines which are simply seen as "too large" can enable them
to get away with anything.

------
nodesocket
This only hurt old Wells shareholders (stock is up nearly 2% today on this
news). Meanwhile the Wells executives who clearly broke the law get off scot
free.

Martin Shkreli instead get's the book thrown at him, assets seized, and sent
to federal prison for much less.

~~~
dimal
He defrauded rich people. That can't be allowed.

~~~
DoreenMichele
He also gloated.

Someone pointed out to me once that the parable of the boy who cried wolf is a
story where not only did he lie, he also laughed in their faces and mocked
them for believing him. He gets eaten in the end.

------
jonathankoren
Marketplace reported this morning that while WF was fined $1B, they apparently
saved more than three times that amount due to the new tax law.

[http://www.latimes.com/business/hiltzik/la-fi-hiltzik-
wells-...](http://www.latimes.com/business/hiltzik/la-fi-hiltzik-wells-
fargo-20180420-story.html)

[http://www.latimes.com/business/la-fi-wells-fargo-
earnings-2...](http://www.latimes.com/business/la-fi-wells-fargo-
earnings-20180112-story.html)

------
vinhboy
It's hard for me think of wellsfargo as an "evil" company, because every time
I had to go into the branch, they have some of the nicest tellers and it's
always a pleasant experience.

~~~
dharmab
I felt sorry for the branch manager at by local branch when I closed my
account. She's a great person who really cares about her customers, unlike her
employer.

~~~
vinhboy
I think this raises a fair point. How can we punish the employers and not the
employees?

Maybe we should have jailed the executives or responsible party, so no one
dares to pull that kind of shit again.

------
JumpCrisscross
Critically, Well Fargo "submitted to an unprecedented order Friday that would
give the Office of the Comptroller of the Currency the right to remove some of
the lender’s executives or board members" [1]. TL; DR Senior management and
even Board members can be fired by the OCC.

[1] [https://www.bloomberg.com/news/articles/2018-04-20/wells-
far...](https://www.bloomberg.com/news/articles/2018-04-20/wells-fargo-said-
to-be-fined-1-billion-over-consumer-missteps)

------
ejlangev
Until people start going to jail for their illegal activity rather than just
paying out nominal fines I wouldn't expect their behavior to change. This is
at least the 3rd major fine Wells Fargo has paid in the last few years.

If only people remembered that the second half of the expression about "a few
bad apples" is that they "spoil the bunch."

------
Bricejm
A fine isn't going to hurt Wells, especially when it's about two weeks worth
of profit. If you want to teach a bank a lesson, you have to hit their
business model. If after a fraud is uncovered regulators instituted
restrictions to account openings instead of fines, you would see change. For
example, if Wells wasn't allowed to open a new account - of any kind - for six
months they would start to lose customers - and bankers - to institutions
without restrictions. That would change the industry.

------
degenerate
Gone are the days of Enron when the people responsible actually go to jail, it
seems :(

------
tzm
Relative to a salary of $90k / year, $1 billion fine is roughly equivalent to
a $1k fine.. or roughly a parking ticket in downtown SF.

------
matchagaucho
There doesn't appear to be any reparations for the actual consumers.

Where exactly do the fines go? A class action lawsuit would have served more
justice.

~~~
dredmorbius
This depends, but generally in Federal regulatory action, to the US Treasury.
Victim restituion is a separate issue.

[https://www.alternet.org/economy/bank-fines-and-
crime](https://www.alternet.org/economy/bank-fines-and-crime)

------
sol_remmy
Where are the proceeds of the fine going?

This "fine" should be returned to the American people and not used to fund
obscure government programs

~~~
aerotwelve
It is being returned to the victims as the law requires the CFPB to do.

------
scotch_drinker
WFC had net income of $5.9 billion in Q1 2018. A $1B fine is a joke that is
being played on the rest of us.

~~~
unethical_ban
It won't put them out put business, but I guarantee this is not a good look
for them or their board, even internally.

I have no sympathy for them, fyi.

------
LyalinDotCom
Maybe its a stupid question... but what do these agencies do with so much fine
money?

------
GrumpyNl
I dare you o steal a marsbar in the supermarket, three times please.

------
twhb
Does anybody have recommendations for good banks?

~~~
dredmorbius
As a general best bet: local credit union.

------
trumped
Will they take out a 0% loan to pay that?

------
cup-of-tea
What's really funny is this is a bank and the bank essentially printed that
$1bn itself anyway because banks control the money supply.

------
monster_group
So the government gets to keep $1B collected from WF. What about the people
who overpaid all those fees? Are they being refunded?

~~~
rgbrenner
The CFPD is required to use all money from fines for victim compensation, and
where that's not practical, they keep it to compensate future victims or they
can spend it on consumer education and financial literacy programs.

They are not permitted to spend the money on anything else.

------
meesterdude
What a great start! Keep it up!

------
pasbesoin
Remember: This isn't the Trump administration. This results from the
regulation that was put in place and the enforcement that was started
_before,_ and that his administration is busy trying to deconstruct.

Setting the political aspect aside, there seems to be a broader consensus that
this "bankster" behavior is bad and needs to be reined in.

And investment depends upon a certain degree of stability as well as reliable
financial and legal systems.

How this behavior is handled -- or not -- has more of an impact, down to
start-up ventures and their environments, than people sometimes stop to think
about.

