
Wells Fargo’s ‘Living Will’ Plan Is Rejected Again by Regulators - JumpCrisscross
http://www.nytimes.com/2016/12/13/business/dealbook/wells-fargo-regulators.html?ref=dealbook
======
fludlight
There are widely-corroborated allegations that Wells Fargo's flagship retail
division had their junior employees open _millions_ of unauthorized
accounts/financial products. _Thousands_ of employees that did not play along
were either fired or both fired and permanently burned with the self-
regulating body FINRA. Employees who refused to engage in fraud were fired
"for cause" and all anyone searching for their publicly-available disciplinary
record with FINRA saw that they were fired for "not following directions" or
somesuch.

Wells Fargo settled this issue with some regulatory bodies by either admitting
or not contesting the charges and paying record fines. But they did not settle
with _all_ of their regulators.

These crimes are heinous enough to warrant a RICO case against WF. Many
C-suite people plainly knew and encouraged or stood silent and should go to
jail.

Due to the size of WF and the length of time it has gone on, this cancerous
culture has spread, to some degree, to every other retail bank, but we can
still eliminate individuals who are obviously morally corrupt using a very
simple filter. The entire mid- and senior-level leadership of WF Retail for
the affected time period from Branch Manager on up should be barred from ever
working in banking again. WF only promoted people who actively and
enthusiastically engaged in fraud and we should have little sympathy or
compassion for people like that.

The retail bank should have its banking license revoked, which would result in
the entire holding company being pushed into bankruptcy and the non-retail
divisions sold off in a (semi)orderly fashion, if only to make an example to
the rest of the industry. Great care should be taken that this doesn't turn
into a Lehman-level fiasco that imperils the entire economy, but the
punishment should fit the crime, and, at the minimum, bondholders should lose
money. That is really the only way we can save our modern capitalism from
itself.

~~~
yummyfajitas
This is a gross misrepresentation of what happened. Thousands of WF employees
engaged in fraud that _harmed Wells Fargo_ in order to make themselves appear
more productive than they actually were and take money from WF. WF explicitly
instructed employees not to do this.

Matt Levine, as usual, has a very coherent summary of it:

[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)
[https://www.bloomberg.com/view/articles/2016-09-19/tough-
tar...](https://www.bloomberg.com/view/articles/2016-09-19/tough-targets-and-
short-term-projects)

RICO is used to target criminal organizations. There is no evidence whatsoever
that the employees who were ripping off WF conspired with each other.

You are literally blaming the victim here.

~~~
pjc50
So why has only WF seen this? Could it be that their internal controls on
account signup were deliberately lax? And why is there always someone on HN
willing to stand up for the poor helpless neglected multibillion dollar
business?

I'm reminded of "will no one rid me of this troublesome priest" (
[https://en.wikipedia.org/wiki/Thomas_Becket](https://en.wikipedia.org/wiki/Thomas_Becket)
). Not specifically asking that someone be murdered, but implying from a
position of power that it's something you really want to happen.

Similarly setting up an incentive system with targets that are unmeetable
without unethical practices then looking the other way when those practices
happen implies a certain amount of complicity. It's just really hard to
_prove_ , which is the intention, and why some offences are "strict
liability".

Not to mention that the use of punishment for not meeting unmeetable targets
is not the same as not giving out bonuses for not meeting them.

~~~
phil21
> So why has only WF seen this?

Why do you think only WF as seen this? They simply are the tall poppy that
went a bit too far.

The high metrics that purposefully cause employee turnover due to not being
long-term sustainable are more or less industry standard. These policies
always lead to at least some low-level fraud trying to game the numbers by the
retail level folks, but usually it's a dull roar and more an annoyance that
easily gets eclipsed by the additional sales benefit.

And not even the banking industry. The retail service industry. It's simply
how the game is played these days, Wells Fargo wasn't much interesting in this
respect, they were just ham fisted and clumsier than most.

If you ask any retail bank employee working at Wells Fargo vs. any of the
other retail majors wasn't a much different experience. Working as a retail
banker is also much more like working as a manager of Instant Oil Change
selling upsells than an investment banker deciding where to invest. I think
you'll find most folks prefer the Wells Fargo job over other majors; at least
my friends who were bank tellers/retail bank managers did.

~~~
zzzeek
I have a relative who was fired from Wells Fargo and who i know for a fact was
involved in this issue, and I can assure you, when Wells bought out the
smaller bank that this person was already working for as a branch manager, it
was a _completely different_ experience. People who had decades of experience
as successful branch employees had their lives turned upside down once they
became employees of Wells. it was an entirely unique situation.

------
wjossey
For anyone looking to learn more about the financial crisis, my two
recommendations are:

[1] Stress Test [https://www.amazon.com/Stress-Test-Reflections-Financial-
Cri...](https://www.amazon.com/Stress-Test-Reflections-Financial-
Crises/dp/0804138613) [2] Too Big To Fail
[http://amzn.to/2hvIZ1w](http://amzn.to/2hvIZ1w)

Too Big To Fail spends much of its time in the lead up to the crisis, and
documentation of the handling of the crisis by the major participants.

Stress Test reviews the handling of the crisis, but speaks much to the
aftermath and handling over the following four years.

Both are also great on audible, as Geitner reads his own book (which I always
prefer, no matter the quality of the orator).

~~~
myowncrapulence
Another good one:
[https://www.youtube.com/watch?v=T31UlBnkQr0](https://www.youtube.com/watch?v=T31UlBnkQr0)

"70% of the financial world's cost is regulation, 20% for the tech sector"

------
jwatte
Unless there is actual political will to curb the very powerful in the
interest of the less powerful, any scheme like this is unlikely to result in
much.

One of the make reasons the federal government is sometimes less effective
than we want, is that the powerful and paranoid want it that way. They put
hurdles in the way of government that would make any corporation very foul,
and then they blame the government for being slow.

Sure, the government is special because it has the power to compel citizens,
but that's what it's /for/. We can't do without it. (Well, the bottom 99.9%
can't)

~~~
wyager
> One of the make reasons the federal government is sometimes less effective
> than we want, is that the powerful and paranoid want it that way.

I'm not particularly powerful nor paranoid, but I also like there being checks
and balances on the government. I shouldn't really need to explain why that
is.

~~~
0xcde4c3db
Checks and balances haven't really worked the way they were designed to for
over 100 years. The political parties (which didn't exist in their modern form
when the Constitution was written) cut across the separation of powers, and so
hold much of the power to control how fast policy changes go. This is part of
why the Presidential election holds so much interest despite the President
nominally not having a great deal of power over domestic policy: we aren't
just electing someone to the office of President, we're also electing them de-
facto party leader and endorsing their interpretation of the party platform.

What we're seeing lately isn't the operation of checks and balances, it's a
mix of partisan obstructionism, officials across both parties deferring to
donors, and officials being out of touch with "the 99%" (most members of
Congress are millionaires and get VIP treatment from various companies, such
as expedited customer service).

~~~
wyager
> partisan obstructionism

This is just a negatively connoted way of describing one of the most
fundamental checks and balances we have. Politicians are _supposed_ to
obstruct each other. If it's not a manifestly good idea, it's generally better
if they don't do it.

------
moonshinefe
"the Federal Reserve and the Federal Deposit Insurance Corporation will
prohibit it from establishing new international units or acquiring a
subsidiary that is not a bank."

Yeah, that'll show those Wells Fargo bankers. They could cause the loss of
billions of dollars and millions of people's livelihoods, but gosh darn, they
can't establish new international units or acquire subsidiaries in some cases.

I consider that commensurate punishment, and on par with people selling a few
hundreds dollars in drugs going to jail for decades.

------
bogomipz
In case anyone missed this other Wells Fargo news this week.

Wells Fargo also signed up customers for life insurance policies without their
knowledge or permission.

[http://money.cnn.com/2016/12/12/investing/wells-fargo-
insura...](http://money.cnn.com/2016/12/12/investing/wells-fargo-insurance-
scandal-prudential/)

------
vinhboy
In about a month, I don't think this is going to matter anymore. I heard
somewhere that Trump plans on relaxing all these regulations anyways.

~~~
fnovd
>I heard somewhere that

That's not going to cut it. If you can't source it, don't say it.

~~~
vinhboy
Sure thing boss -- I can't edit my original comment to include sources. So
here it is

[1] [https://commercial.jpmorganchase.com/pages/commercial-
bankin...](https://commercial.jpmorganchase.com/pages/commercial-
banking/executive-connect/expectations-trump-administration)

[2] [http://www.salon.com/2016/12/01/house-bill-would-relax-
bank-...](http://www.salon.com/2016/12/01/house-bill-would-relax-bank-rules-
aimed-at-averting-crash/)

[3] [http://money.cnn.com/2016/12/06/investing/wells-fargo-
trump-...](http://money.cnn.com/2016/12/06/investing/wells-fargo-trump-
regulation-tim-sloan/)

~~~
Neliquat
Still do not see a source there, just some journalists making assumptions like
you are. Confirmation bias much?

------
siculars
I closed my WF account some time ago after the initial shit storm hit the
press. Where are the perp walks?

------
jmpnecmp1
I thought the living will for all the too big too bail, sorry fail, banks was
basically cut public and social funding and divert the tax direct to the banks
instead to ensure they can pay their bonuses and complete their financial
reach-arounds?

~~~
ionised
It is.

Socialise the costs, privatise the profits.

