
The Robber Bank: Can America Ever Rid Itself of Wells Fargo? - smacktoward
https://slate.com/news-and-politics/2020/03/wells-fargo-fines-penalties-never-stop.html
======
Mvandenbergh
"But that $3 billion represents only a small part of the bank’s takings from
just this one scam—customer money to which, by its own admission, it “was not
entitled.”"

This is totally incorrect. The best estimate of how much money was made from
the fake accounts scandal is... about $2m gross. That's for a pretty obvious
reason which is that it is very hard to secretly charge people money and very
easy to secretly open an account for them which then goes unused.

Essentially, WF did not really profit from this, it was the employees and
officers who were fleecing the company and fraudulently opening accounts to do
so.

Branch employees were incentivised to sell products like accounts and cards to
customers on the theory that WF profited from such sales. Compensation for the
employees was set based on an assumed / historical profit per cross-sold
product. Senior management had incentive packages that were also based on that
assumed link. But of course that was calibrated based on real accounts. Shadow
accounts that are setup but not used by the customer (because they don't know
they exist) do not and cannot produce profit for the bank. What the bank would
have seen over time was number of products sold going up but profit per
product going down. Since the former is a leading and the latter a lagging
indicator, it can be a long time before that becomes apparent.

From the point of view of WF, this was the dumbest possible fraud because it
didn't make them money. I bet that $2m in account opening fees actually comes
from the less experienced crooked branch staff because it seems like a rookie
mistake that would lead to you getting caught.

Of course there is no such person as "Wells Fargo", and from the point of view
of the branch and management employees whose compensation depended on these
cross-sales numbers, the scam worked just fine until they were caught.

~~~
brogrammernot
I fully believe that the former CEO didn’t actually know what was going on and
was just looking at top line metrics. You have this in many companies, not the
fraud part, but the mantra to be succcessful at whatever cost. In this
instance, that permutated down to the branch workers who were incentivized to
skirt the rules & meet the metrics set.

Kinda feels like the housing market when loan officers were paid a ridiculous
amount for variable interest housing loans versus fixed loans. The banks and
everyone were buying them up as that was their top line metrics but ignored
how it was actually happening.

I hold the CEO and other top executives there for staying ignorant but I
agree, this made minimal money for WF so I don’t think it was the true intent
of the CEO to have this happen but they should’ve looked into how markets with
not large enough populations had so many accounts. They didn’t and deserve the
punishment.

~~~
dv_dt
"incentivized" is a weak way to put it. Many employees tried to report the
problems, and some were even blacklisted from the industry for doing so while
others were threatened with blacklist.

[https://www.npr.org/sections/money/2016/10/07/497084491/epis...](https://www.npr.org/sections/money/2016/10/07/497084491/episode-728-the-
wells-fargo-hustle)

~~~
wayoutthere
"Snitches get stitches" extends to the corporate world too.

------
SpicyLemonZest
The article's lead is a lie. Slate reports that "$3 billion represents only a
small part of the bank’s takings from just this one scam", but that's simply
not true - as they quoted (!!), Wells Fargo was only accused of taking
millions. (The Warren quote they pointed to seems to also be a lie, but I
guess it's plausible that she has some principled reason for thinking that $12
billion of profits are "from" the fake account scam even though they're not
directly taken from customers.)

This doesn't fill me with trust that the article's other examples of
misconduct are reported honestly.

~~~
TuringNYC
The article seems vague (like when one is too lazy to do real research and so
things are kept wishy washy.) However the key paragraph was this:

>>> Warren has been fighting Wells Fargo’s misdeeds for more than a decade, as
she reminded Nevadans at the Democratic primary debate on Feb. 19, harking
back to a 2008 meeting with Las Vegans who’d lost their houses in the mortgage
crisis.

[https://www.investopedia.com/terms/r/robo-
signer.asp](https://www.investopedia.com/terms/r/robo-signer.asp)

[https://www.marketwatch.com/story/us-breaks-down-93-bln-
robo...](https://www.marketwatch.com/story/us-breaks-down-93-bln-robo-signing-
settlement-2013-02-28)

For those not familiar with this scandal, the banks signed false legal
documents attesting to reviewing documents which in fact they had not. Real
reviews would have revealed errors in some cases. Accordingly, hundreds of
thousands of foreclosures were unjust. However, without adequate legal funds,
homeowners could not fight the foreclosures and ended up losing homes w/o
cause in many cases.

~~~
jl2718
I understand how an injustice was committed upon whoever was underwriting the
loan, but please explain the injustice of foreclosing on someone who isn’t
paying their mortgage? What would justice look like to you? If it’s not
foreclosure, then who should pay for the house?

~~~
techsupporter
1) They were lying about what documents they did or didn’t have so Wells (and
others, but largely Wells) were foreclosing on the wrong house—like borrowers
who previously had a Wells loan but paid it off—or on people who were not past
due. That’s unjust.

2) Play by the rules. If the rules say you have to have a documented chain of
title and transfers of ownership of deeds of trust, do it. You and I would be
laughed out of court at best, arrested and charged with fraud at worst, for
doing what these people did. But they, because they did it at the behest of a
large bank and “who could really know any better?”, got almost completely away
with document fraud. Even if someone didn’t pay, the bank had no right to
foreclose if Wells couldn’t prove it owned or had the right to enforce the
loans. Everybody playing by the same rules and being rewarded or punished
under them is just.

------
travisoneill1
Right now I am trying to rid my business of Wells Fargo. They are charging us
$700 / month for services that would cost me around $200 from PNC. Their
pricing is so convoluted that it is impossible to understand, and their reps
take advantage of that. They quoted me an estimate of an additional $60 /
month to add positive pay verification for checks, but my bill went up $300.
And just to add insult to injury, they charge $1 for every time I need to run
a search on our account records. Oh and I amlmost forgot to add, I was locked
out of our account for a few days because of a rule change. I made the mistake
of using them out of convenience because my personal account is with them.
Don't make the same mistake as me. When you start a business avoid Wells Fargo
like the plague.

~~~
edoceo
Took my business almost five years to exit relationship w/WF (only a few
months ago). Banks are super-sticky. But grind that process homie!! Once my
account at WF closed I noticed the sun was brighter and I smile more often.

------
HumblyTossed
How can we reconcile this with still sending men to prison for 5 years for
selling dime bags of weed on the corner? Seriously, who's the bigger criminal
here? I get it, companies aren't people, blah blah. But _people_ make these
decisions and _those_ people should be punished.

~~~
SpicyLemonZest
I tend to agree. But the criminals who opened the fake accounts were
overworked low-level staffers with unrealistic sales quotas, so they're very
sympathetic. I don't think I've seen anyone even suggest they should be
prosecuted; the discussion has largely focused on their bosses and Wells Fargo
as a company, who fired them when the fake accounts were discovered.

~~~
HumblyTossed
> But the criminals who opened the fake accounts were overworked low-level
> staffers

At who's direction? How does low-level staffer at WF#1167 know low-level
staffer at WF#2826 2200 miles away? When would they share the information that
this is how you up your numbers? Upper management had to know. They had to
have encouraged this.

~~~
SpicyLemonZest
Even if that's true, and I think it's important to note there's no known
evidence for it, being asked to commit a crime doesn't normally diminish your
culpability for it. If your boss tells you to open a fake account, you're
obligated to say no, just as you would if your boss told you to go punch
someone or steal their wallet.

~~~
zentiggr
On the other hand, under the UCMJ generally subordinates that are forced into
compliance with unlawful orders are not punished anywhere near as harshly as
the superior officers that cause the situations.

Not that any institution gets it right or is spotlessly incorruptible, but the
general direction of UCMJ actions is the good of the service, not just being
punitive.

~~~
SpicyLemonZest
That principle seems to have been followed here. The individual fraudsters
were just fired, although some reports have indicated there’s a black mark on
their record; the CEO was fired, paid 17 million dollars, and is banned from
ever working for a bank in the future. (And he’s not even accused of having
ordered the fraud, just of not doing enough to stop it.)

~~~
zentiggr
I think you left off your sarcasm tag. Getting > 0 dollars as a consequence of
encouraging and abetting multiple scandals worth of malpractice is NOT what I
meant.

While rank and file employees who complied were and should have been fired,
his punishment should have been far more severe, at least forfeiting every
dollar of compensation and realistically serving time for fraud.

------
BitwiseFool
I'm doing my part by not having an account with them.

~~~
duxup
Yeah I left years ago.

It's telling that they have since sent me 3 different checks for what I think
were significant amounts ... for 3 different scams they ran while I was a
customer... 2 I had no clue about until they sent me the check.

------
NoblePublius
I was a victim in 2007 of Wells Fargo’s tactic of re-ordering debit
transactions from largest to smallest to maximize overdraft fees. I remember
screaming at a bank manager about this practice that he claimed he could do
nothing about. I closed my account that day and put my savings into a credit
union across the street.

------
treyfitty
Wells Fargo and American Express have a close knit history. As a matter of
fact, Butterfield Wells and Fargo were founders of AmEx.

It’s no surprise AmEx was caught doing the same thing:
[https://www.wsj.com/articles/amex-staff-misled-small-
busines...](https://www.wsj.com/articles/amex-staff-misled-small-business-
owners-to-boost-card-sign-ups-11583074800)

~~~
philwelch
While true, the Wells Fargo company that Wells and Fargo founded was taken
over in 1998 by Norwest, which ended up rebranding itself as Wells Fargo.

------
ehvatum
Interesting. I quit Wells Fargo last week to focus on my machining business. I
would have stayed on if they let me work remotely - it took at most 15 minutes
a day to do my c++ coding job. But, seeing as how it took 4 months to get
Python3 installed, and the SSD and 128GiB memory upgrades for my desktop were
apparently stolen from the “IT Workroom”, getting a laptop seemed like a
bridge too far.

I felt a little bad about quitting, but WF fires tens of thousands of people
at a time for no apparent reason...

------
deevolution
When will corporations, which are effectively treated as people, be placed in
jail and or executed?

------
citiguy
This is a puff piece for Elizabeth Warren.

~~~
mbreedlove
You're completely right.

> Sen. Elizabeth Warren, whose incisive and relentless questioning led to the
> resignations of not one but two Wells Fargo CEOs in connection with the
> scam, was not impressed with the announcement.

> Warren has been fighting Wells Fargo’s misdeeds for more than a decade

> Last month, banking regulators reported that John Stumpf—Sloan’s
> predecessor, whose nose Warren bloodied so effectively back in 2016

> A picture captioned "Sen. Elizabeth Warren questions Wells Fargo CEO John
> Stumpf"

> After Sen. Elizabeth Warren mopped the floor with onetime Wells Fargo CEO
> John Stumpf

> Sen. Warren demanded answers from the bank

> Warren’s popularity grew in no small part because of the effectiveness and
> vim with which she socked it to Sloan in October 2017

------
exabrial
Not defending Wells Fargo, but there's a quite a bit of fiction mixed in with
facts in this article; More of a hit piece on Warren Buffet and an
informercial for Elizabeth Warren.

~~~
busterarm
Buffett isn't exactly the cleanest financier out there. His company is famous
for owning the space of predatory finance options for low-income Americans.
He's specialized in it, in fact.

------
throwawaysea
Why should we be "getting rid" of Wells Fargo? That part isn't clear to me.
The magnitude of the false accounts was relatively small. There are probably
worse things happening in the banking world. Is there such a focus on this
because it is easy to understand relative to other complex issues in the
financial world? Or is this just a piece to advertise for Elizabeth Warren?
When I see phrasings like "Sen. Elizabeth Warren mopped the floor..." it comes
off as unprofessional and nakedly biased reporting, rather than factual
reporting.

