Saturday, September 10, 2016

Wells Fargo fraud- biggest story you didn't hear about

Here's some great weekend reading from Charlie Pierce at Esquire, and it deals with the biggest story that wasn't covered widely enough- Wells Fargo's systematic theft performed on their own customers, leading to a $190 million fine levied this week. Pierce notes that this is a great reason why Wall Street shouldn't be trusted with anything resembling a social good, and a great illustration of why Republican calls for "de-regulation" are such ridiculous policies.
On Thursday, federal regulators said Wells Fargo (WFC) employees secretly created millions of unauthorized bank and credit card accounts—without their customers knowing it—since 2011. The phony accounts earned the bank unwarranted fees and allowed Wells Fargo employees to boost their sales figures and make more money. "Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses," Richard Cordray, director of the Consumer Financial Protection Bureau, said in a statement.
Again, the CFPB is the brainchild of Senator Professor [Elizabeth] Warren, whom the Republicans brilliantly kept from being its director so that she could run for the Senate, where she can really stick it to them, day after day. It has saved ordinary Americans billions of dollars already.

The Republican Party considers the CFPB to be an example of "onerous regulation" and has vowed to kill it dead so that Americans can be free to get swindled by these sharpers.
The scope of the scandal is shocking. An analysis conducted by a consulting firm hired by Wells Fargo concluded that bank employees opened over 1.5 million deposit accounts that may not have been authorized. The way it worked was that employees moved funds from customers' existing accounts into newly-created ones without their knowledge or consent, regulators say. The CFPB described this practice as "widespread." Customers were being charged for insufficient funds or overdraft fees—because there wasn't enough money in their original accounts. Additionally, Wells Fargo employees also submitted applications for 565,443 credit card accounts without their customers' knowledge or consent. Roughly 14,000 of those accounts incurred over $400,000 in fees, including annual fees, interest charges and overdraft-protection fees.
And Charlie rightfully points out that maybe this is a logical outcome from a financial sector that encourages "innovations" like these to keep profits rolling in.
Apparently, it is the position of WF that 5,300 of its employees all had the same great idea for massive consumer fraud largely independent of one another. The problem is, even if this were true, and it's not entirely implausible that some variation of the argument might be, this says something truly awful about the company's upper management and the culture that has developed at all levels of the institution. A den of thieves, with elevators and Christmas bonuses. The truest thing that Bernie Sanders said in his stump speech always was that the basic business plan of this industry is fraud. It also was one of the few examples of understatement he allowed himself.
And funny, I didn't hear corporate media run a series of stories on this. Wonder why that is? (Actually, I don't wonder)


  1. Maybe I missed it. Who is going to jail?

    1. None that I can tell. And that is a very valid point, because purse-snatchers go behind bars. How are these guys any different, if not worse?

  2. Are the people who had bogus accounts created in their names going to receive compensation?

    1. Article indicates that $5 million is going to defrauded customers. I have no idea if that's above or below what they had stolen from them with these fake accounts.