
Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation - helloworld
http://www.bloomberg.com/news/articles/2016-09-20/wells-fargo-expands-account-review-to-2009-and-2010-stumpf-says
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ghughes
Lifecycle of a banking executive:

1\. Commit fraud on a massive scale

2\. Say "I accept responsibility" but fire subordinates

3\. Ride off into the sunset with obscene personal wealth

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oneloop
Well, he said he will accept what the board says. If the board doesn't tell
him to return his bonus, they should get sued by the shareholders.

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FullMtlAlcoholc
He's the chairman of the board most likely stuffed with hand-picked cronies
for exactly this situation.

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rce
This activity was quite costly to the bank and Stumpf didn't benefit from it.
Banks aren't popular, but I don't want a world where you can go to jail for
making a mistake or being bad at your job.

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gmunu
Matt Levine gives a great rundown of this
[https://www.bloomberg.com/view/articles/2016-09-09/wells-
far...](https://www.bloomberg.com/view/articles/2016-09-09/wells-fargo-opened-
a-couple-million-fake-accounts) ; you're exactly right, this wasn't Wells
Fargo cheating customers. It was Wells Fargo putting some pressure on their
employees who turned around and gamed the system in a way that earned the bank
almost no money and mostly didn't cost their customers anything. Yes, some of
the customers got some fees charged to them, but they were mostly small and
most of the customers with accounts opened didn't lose anything.

That this should cause the CEO, who was several layers up the org chart from
the person who came up with a bad retail bank employee performance metric, to
go to jail is madness.

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panic
The CEO was the one pushing the metric. This wasn't just a localized problem.

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ChristianGeek
He also stated that he never considered firing the head of the unit
responsible for the problem. I mean, come on.

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tommymachine
The previous Wells CEO gave a talk at stanford GSB in 2009 in which he
explained the company's core strategy in consumer financial services:
distributing decentralized products and services through cross-selling. [1]

Since cross-selling has been core to the Wells Fargo business model for many
years, and proven an effective growth mechanism over that time, it wouldn't
make much sense to just go round firing people over pursuing that mechanism
responsibly. What does make sense is adjusting course sternly when that
pursuit starts to look irresponsible, and it appears the current leadership is
doing that.

If Elizabeth Warren had the brains to understand the financial services
industry, she wouldn't have time to fling baseless legal allegations at
dinosaur incumbents like Wells Fargo. She would be too busy disrupting them.

With an institution as old and large as Wells Fargo, the problem isn't that
their strategy is bad. "How can it be bad when it's been good all these
years?" It's actually much deeper than that: their strategy is yesterday's
strategy, and that can be a big problem when you have the kind of
organizational inertia Wells does.

1\. [https://youtu.be/XTh4ELp2VDc?t=2678](https://youtu.be/XTh4ELp2VDc?t=2678)

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spacehome
I'm confused. My impression is that Wells Fargo made de minimus profit on
these practices and there's no evidence at all that Stumpf himself did
anything illegal (creating shitty incentive programs is just stupid, not
criminal). Maybe there should be a criminal investigation into Stumpf, but to
call for resignations and bonuses to be returned is premature, no?

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Ir0nMan
Of course. It's simply too early to say. However, Warren is known for her
political grandstanding. It's kinda her thing.

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spacehome
I guess I knew that when I wrote my comment. It would be nice if we all
collectively remember when politicians spout nonsense like that the next time
they grandstand or run for re-election.

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yodsanklai
I'm not familiar with the US legal system, but what senators have to do with
this? shouldn't it be the role of a prosecutor to deal with this case?

I also find the politicians quite hypocritical. Aren't they to blame if the
laws they voted for (or didn't vote for) are such that guys like Stumpf get
unpunished for their wrongdoings?

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zrail
Congress can hold hearings, they can issue subpoenas, and they can hold
someone in contempt of Congress.

There is currently no case. Congress is simply holding a hearing to roast the
guy for making some stupid decisions. If information comes to light that would
indicate criminal wrongdoing of a private citizen or a non-elected member of
the government during a Congressional hearing the justice department takes
over. For elected officials Congress (specifically the Senate) has the option
of initiating an impeachment trial.

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dalke
They can also change the laws.

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zrail
True, but that takes a heck of a lot more effort than berating a CEO for 30
minutes straight.

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dalke
Then it's a good thing they did more than that.

Even that meeting, titled "An Examination of Wells Fargo’s Unauthorized
Accounts and the Regulatory Response", was more than three hours long, and
with three other witnesses.

Why, it's as if it were part of a larger effort to change the laws.

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dboreham
Ahhhh. The headline refers to Elizabeth Warren. I was really confused as to
why Warren Buffet (a big Wells Fargo shareholder) would be making a public
statement like this.

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egberts5
That congressional hearing was by far the most toothless circus I've ever seen
on CSPAN. They're all in the tank with the banking industry.

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oneloop
Link please? From reading, it sounded like Elizabeth Warren spanked him.

And how can you not love Elizabeth Warren? <3

~~~
rhizome
Embedded here: [http://www.nakedcapitalism.com/2016/09/wells-fargo-ceos-
tefl...](http://www.nakedcapitalism.com/2016/09/wells-fargo-ceos-teflon-don-
act-backfires-at-senate-hearing-i-take-full-responsibility-means-anything-
but.html)

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hellameta
This is quite insane. Is it too early to toss around the idea that the US
government is slowly trying to take over the banking system?

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tommymachine
From a political perspective, attacking the Wall St label is an effective
"enemy of my enemy is my friend" strategy for gaining democratic power with
the lower classes -- the people who comprise a democratic majority. Nevermind
that the allegations won't stick, not necessarily because of government
conspiracy, but because they aren't smart allegations that attack real
problems.

Real problems are big and hairy. It's much easier to witch-hunt than it is to
solve real problems. The real problem might be that the products Wells Fargo
is cross-selling are outdated. It might be that cross-selling is an outdated
strategy. These are much harder problems to solve than locking up or fining a
CEO who made mistakes in leadership. That's much easier. Because every CEO
makes errors in leadership.

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im_down_w_otp
Maybe... maaaaaaybe.. the former will happen. The latter? Never.

