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Business/Finance See other Business/Finance Articles Title: Why I Wasn't Surprised by Wells Fargo's Scam Why I Wasn't Surprised by Wells Fargo's Scam Management wants us to believe "just 5,300 bad apples can spoil the bunch" at America's favorite bank... By Shah Gilani, Capital Wave Strategist, Money Morning • @WallStreet_II • September 19, 2016 By now we all know that Wells Fargo & Co. (NYSE: WFC), one of America's premier banking giants, got slapped with $185 million in fines to settle charges of widespread fraud. Or was it a screw-up? Maybe management, compliance officers, risk monitors, and auditors simply failed to catch thousands of employees who happened to be engaged in a massive and likely criminal enterprise going back five years. In fact, this was encouraged by pervasive "trickle-down" bankster culture that puts a premium on profit above, well, everything else. Wells Fargo just managed to get caught at it. The truth of this isn't pretty… Wells Fargo Won't Be Popular Much Longer big bankSan Francisco, Calif-based Wells Fargo & Co. calls itself "a diversified, community-based financial services company." Magazines Global Finance and The Banker call it 2016's best U.S. bank. Brand Finance calls it the most valuable bank brand on Earth. CEO John Stumpf was even named 2015's "CEO of the Year" by Morningstar. In other words, the Wells' media accolades are plastered on thick and heavy. It's broadly admired (or at least it was), even by an American public who are sick to death of big banks and who, by now, can largely see through them. Despite the warm, fuzzy feeling Wells seems to give Americans, this is a big bank: Its $1.9 trillion in assets are handled by 269,000 "team members" who deal with 70 million customers out of 8,800 locations. I've got some more big numbers to talk about… Wells Fargo has long prided itself in its ability to cross-sell its customers different banking and financial services. Customers with multiple accounts and services are considered "sticky" customers who aren't inclined to leave the bank. The company reports that its customers use an average of 6.15 services, the highest in the industry. Cross-selling isn't just a way to keep customers, it's a way to make more money – a lot more – out of each customer. In fact, cross-selling really shines out in Wells' financial and proxy statements. It shines out so much that cross-selling bonuses and commissions account for between 3% and 15% of sales associates' salaries. The practice is so important to Wells that many employees reported being fearful of losing their jobs should they miss sales goals. A Los Angeles Times investigation, published in a Dec. 21, 2013, article by E. Scott Reckard, titled "Wells Fargo's Pressure-Cooker Sales Culture Comes at a Cost," lays bare aggressive tactics pushing banker sales teams to cross-sell products like checking and savings accounts, overdraft protection, credit cards, mortgages, and wealth-management products to existing customers. In the article, Reckard writes, "The relentless pressure to sell has battered employee morale and led to ethical breaches, customer complaints, and labor lawsuits." Employees reported being forced to work after-hours and weekends to make up missed quotas. The Times reports one branch manager was constantly told she'd "end up working for McDonald's" during hourly browbeatings masquerading as "conference calls." And now we know that 5,300 "team members," bankers, and branch managers who allegedly set up bogus accounts for customers who never authorized them, to rip customers off and pad their own salaries and bonus payments (and perhaps save their jobs or have a weekend off once in a while), all over the past five years, and all in offices across the country. Five years. Across the country. This wasn't someone's fly-by-night quick get-over, get-rich scheme. Now, three-and-half years after the Los Angeles Times' investigation, we know 2 million unauthorized accounts were opened by employees who simply made up addresses – physical and email – so statements wouldn't go to those customers. They made up telephone numbers, stole customer data, and forged signatures to open new product accounts. In a statement last week, Oscar Suris, Wells' head of corporate communications, said upon analyzing 93 million accounts it was discovered, though it was unclear, that roughly 2 million accounts may not have been properly authorized. Of those roughly 2 million accounts, 1.5 million were deposit accounts and 565,000 were credit card accounts. Worse, 115,000 had fees associated with them. I guess management never thought to look a revenue stream in the mouth. Those in Charge Had to Have Known The Consumer Financial Protection Bureau, which fined Wells Fargo a CFPB-record $100 million as part of a settlement agreement, says the unauthorized account openings occurred from May 2011 through July 2015. In addition to the CFPB fine, Wells paid $35 million to the Office of the Comptroller of the Currency, and $50 million in penalties to the Los Angeles city attorney's office to settle their lawsuit against the bank. Why it took so long for the CFPB and Los Angeles to stop what amounted to identity theft, forgery, and fraud at Wells is another story. And this had been going on for some time. well-fargo-graphic According to Wells spokesperson Mary Eshet, the employees in question were "86d" by the bank over the past five years. They've known this was a problem, and that extended much further than just a few rogue operators here and there. In fact, Well's chief financial officer, John Shrewsberry, stated last week 10% of the 5,300 fired workers were managers, including branch managers, and that two-thirds of them were located in the southwestern United States. And so it happens that the business of customer cross-selling becomes the business of selling out customers. It's the ultimate responsibility of one person, whom Fortune magazine ranked as the 27th most powerful woman in the country in 2015… Meet Wells Fargo's Sandbagger-in-Chief Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: BTP Holdings (#0)
This is not new, it has been going on in banks all over the country. Wells Fargo just got caught.
No fooling. The real scam is called, "fractional reserve banking". "When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke
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