WELLS FARGO LEARNED NOTHING FROM THE 2008 RECESSION

…A classic Wells Fargo Bank Building in San Francisco, CA

 

The largest retail US bank is having to pay $185 million in federal fines, plus restitution for its customers.

 

As a political op-ed writer, you may understand how difficult it is to be writing a column or blog in an election year, and not be writing about Donald Trump.

With “The Donald” and his campaign, it almost impossible to not be writing about the most ridiculous campaigner since Sarah Palin, and how he is still as close in the polls as he is to Hillary.  This is the worst set of presidential choices for the American voting public in many years, when it comes to having someone that you can believe in.

 

Now, this is not comparing Hillary as being more qualified to Donald Trump.  But with her long political history and the attitude toward her and her untrustworthiness, having to choose between these two for some people really is making the Independent candidate and the Green candidate look pretty good.

 

But with what has gone on with the questionable police killings of the Black men in Charlotte, North Carolina and Tulsa, Oklahoma, and with the disgusting programs that Wells Fargo Bank got caught being a sponsor of, there are unfortunately more ugly subjects to write about in the news.

 

The killings of the two Black men is one issue that is still so fresh, that I am setting those aside until more information is available to the public.

 

But the Wells Fargo debacle is just one more item to be added to what the nation’s banks and Wall Street have done to the American public.  And it’s another one where no one really responsible has gone to jail for the damage they have caused.

 

As to his case, here we go again.

 

First, let me tell you what they did and who got punished for what the top management caused over their years of mismanagement.

 

First, back in 2011, the Wells Fargo top management came out with a new sales program for their branches.

 

The branches were being instructed to “cross sell” any customer that came in to open a checking and/or savings account.  The branch personnel were instructed to convince the new clients to also open a credit card account, a safe deposit box, a business account, etc.  In fact, the instruction was that anyone that came in to open any account, should be approached to also open as many as 8 Wells Fargo additional accounts.

 

Can you believe it!  Eight separate accounts.  That included possibly opening not just one credit card account, how about opening a credit card account for every member of the family?  Hell, if it was the mother or father of eight children, a bank employee could fulfill his bogey of 8+ accounts by opening a credit card account for every child, even if most of them were under 18 years of age.

 

The point is that this program required the employees, in order to meet their goals, they finally started opening accounts for people, even without their knowledge.  They were opening these accounts and the customers were then being hit with service fees that they didn’t know why they were happening.

 

Finally, the class-action suits started, and everything about the program has since come to a head.

 

Of course, the bank response has been to fire 1000 employees a year that participated in opening the accounts.  It is now up to over 5000 employees let go over the past 5 years.  However, not one senior bank executive has been fired.  Only low-level branch personnel that followed managements directions were fired.

 

In fact, the vice president that met with the Wells Fargo CEO every week for the past eight years, that was responsible for managing the whole program, she was allowed to retired with a multiple million dollar retirement package, of which, none of it has been requested to be returned.

 

The CEO and Chairman of Wells Fargo, John Stumpf, was required to meet this week with the US Senate Banking Committee where he apologized for the program.  He also received a real dressing down and tongue lashing from Senator Elizabeth Warren (D-Mass).  But of course, he’s not returning any of the millions he received due to the perceived initial success of the program, and he definitely is not stepping down.

 

Ms. Warren actually demanded that Mr. Stumpf resign, but he made no response that would indicate that was going to happen.  Even if this scandal, bad as it is, isn’t the worst event to occur in the financial world of late, it did happen with the largest retail bank in the nation.  But even more appropriately, Ms. Warren also insisted that Carrie Tolstedt, the executive who was directly responsible for Wells Fargo’s consumer banking unit, should have to give back some of her millions in her retirement fund.  Or at least some of the tens of millions of dollars in compensation she took based on the so called “success” of the program.  But as expected, Chairmen. Stumpf offered only non-committal answers on any of those points.

 

The total cost to customers of this program at the nation’s largest retail bank was $2.4 million in unauthorized fees between May 2011 and July 2015. And now, Wells Fargo itself has been made to pay, to the tune of $185 million in fines as part of a settlement with federal authorities and those in its home state, California, plus restitution for its customers.

 

The bank says it has halted the sales program that led to these abuses, and as I stated, they have fired many of the low-level employees involved.  But, nothing has happened to any of the management personnel that were directing the employees to pursue those customers, and that were also getting incentive payments for what their employees did to meet their goals.

 

Wells Fargo failed totally with this program, and the more individual accountability is brought to bear upon it as a result, that is the better for us all. The example of going after the bank should create a strong incentive for everyone in banking to behave better, both at Wells Fargo and elsewhere. 

 

But just as no one in upper management seems to be paying for this abuse, it is doubtful that after these initial actions, all will just go back to “banking business as usual”.

 

Copyright G.Ater  2016