10 ms·

How Elizabeth Warren Took Down the CEO of Wells Fargo, and Why It Matters

253 points by xenophon 10y ago

wheelerwj 10y ago
Look I love Elizabeth Warren but this whole article is really over the top. > leaders of financial institutions are painfully aware that there are consequences They were fined lousy 280m and the CEO was allowed to resign a full 3 years after it was first reported. Really, REEAAALLLY painful stuff there.
- AstroJetson 10y ago
  Its becoming cases of the wheels of justice turn, they turn slowly but they turn. The rate they are turning has become much faster (never --> 3 years is a big speed improvement) and the people that are getting caught in those wheels is a much higher level. 5 years ago clerks, now a CEO.
  - wheelerwj 10y ago
    Then maybe we should ditch the wheels and use Hammers of Justice instead? The ceo PERSONALLY made more money during the scam than entire bank was fined. really epic stuff here, I mean, Really, way to dish out the pain!
    - dmix 10y ago
      The difference is he didn't personally direct people in a criminal way for personal profit. The fact heads didn't role is what is the real issue here. There should have been a strong internal house cleaning after this became known to the top. But they apparently didn't react in a satisfactory way. This is where the CEO was at fault. He didn't send the right signal that this type of behavior will result in a skewering. And he (and others at the top) deserved to lose their job as a result. But to claim he was knowingly profiting from some sort of criminal conspiracy is unhelpful hyperbole. Whether or not the people who created this internal culture and ignored the malicious behavior of thousands should be criminally liable is another issue. But he was certainly separated enough from it where anything beyond a shameful career ending is a bit much.
    - tedunangst 10y ago
      The bank was also fined many times more than it made from the scam.
      - wheelerwj 10y ago
        i mean, i guess if you dont factor in 100% stock price increase they didn't make that much money.
- cortesoft 10y ago
  And keep his stock valued at $109million..... I am sure he is quite distraught.
- samstave 10y ago
  The pain is only in the risk to their pocketbook. Not any other actual risk...
  - wheelerwj 10y ago
    most of us are entrepreneurs,so we should all appreciate the value of the corporate vail. But this is criminal identity theft. all of us would expect real consequences for that kind of activity.
prions 10y ago
Can we remove: -"Why x matters" -"What we know" -"Slammed" and -"Number x will shock you!" from all news headlines?
- anigbrowl 10y ago
  I wish. Newspapers seem to have decided that the best way to attract readers is to imitate the magazines that live near the supermarket checkout.
  - willtachau 10y ago
    Can you blame them? It's ultimately driven by users. If we didn't click on these article titles, the publishers wouldn't use these ridiculous formats.
vonklaus 10y ago
This is good. Articles like this however always seem to recall the subprime mortgage crisis, when "too big to fail" sheltered CEOs and banks from much fallout. I would like to express to Sen Warren, and others, that a more fragmented & transparent financial system is important-- but much less than the broadband & tech sector. Google has 1.6B[0] users of a total of 3.8[1] internet users. too big to fail is 42% of the world using "core" services from one institution. The data is hard to find and I am on mobile but the consolidation of global broadband & wireless provideres attempted or closed between 2015-2016 was nearly 1 Trillion. A rollup of unprecedented levels. [0]http://m.wolframalpha.com/input/?i=+total+active+users+google&x=0&y=0 http://m.wolframalpha.com/input/?i=+total+active+users+googl... * While this is Alexa's visits total, subsets of Google's 10-k (which doesnt break this out because they are facing heavy competition) adjust to uniques. If someone finds better data, I will adjust, but this seems to be the accepted active user base of google. [1]http://m.wolframalpha.com/input/?i=total+internet+users&x=0&y=0 http://m.wolframalpha.com/input/?i=total+internet+users&x=0&...
- DINKDINK 10y ago
  The difference in your comparison though is the internet still works if Google goes under. If a TBTF bank goes under [1] the financial system can halt/implode. Which is the main argument to break up the banks to a level where there isn't total-system fragility. [1] due to their own reckless behavior / Capitalism on the upside, Socialism on the downside.
  - samstave 10y ago
    Well, I am going to call BS as if we had regulation regarding consolidation of banks, then we would have a larger eco-system in the financial areas: [0] Here is my problem with banking, if naive, please inform me: Banking should be treated like any other base infrastructure. Financial infrastructure is critical. It is not ok for the foundation of modern commerce and civilization to be controlled by so few. We need to revamp our financial situation. period. http://www.motherjones.com/files/images/big-bank-theory-chart-large.jpg http://www.motherjones.com/files/images/big-bank-theory-char...
  - 10y ago
stanfordkid 10y ago
I absolutely love Senator Warren. That being said, the notion that the stock price of Wells Fargo could be significantly impacted by this scheme (which is central to Ms. Warren's argument) is not well founded. Wells Fargo makes 86 billion in revenue per year. Even if 10 million accounts were made and each made a thousand dollars -- (incredibly generous) ... over the course of 5 years this accounts for 1 billion in revenue or 200 million dollars per year. Annualized it is much less than 1% and would not inflate the stock price. These guys definitely made a mistake. It wasn't calculated fraud. It was bad incentive setting. Politicians like Warren don't intuitively understand how hard it is to actually control a group of thousands of middle-class workers and get them to do things.It is not easy to govern ... sadly politicians are the least knowledgable in what it takes and they hurt good people like Stumpf (I trust his leadership and qualities because he was appointed by Buffett). WF stock dropped a bit prior to the hearing and I bought as much as I could. Luckily most of Wall Street is smarter than such politicians and it paid off. Thanks Senator Warren. What I would like to see is politicians be held to the same accountability as these guys. That would be hilarious. I wonder how well Obamacare would do if we could actually measure results based on metrics. Our society needs people that can blend business acumen with the spirit and heart of people like Elizabeth Warren. Only Buffet or Gates come to mind.
- pinewurst 10y ago
  If you can call "meet the goals or get fired" incentive setting. Forcing employees to carry out some cack-headed upper management initiative on pain of losing their jobs isn't that.
- wu-ikkyu 10y ago
  If the CEO shouldn't be held liable for the fraud then why shouldn't the ones who signed off on all the fake accounts? Didn't they directly benefit from inflating the numbers?
- tswartz 10y ago
  You make a good point about how hard it is to properly incentivize a large group of people. Stumpf and leadership made a best estimate for what goals and incentives were necessary to reach performance. However, the key is that when employees began voicing concerns over what was being done they were ignored and in some cases intimidated and blacklisted from working in banking. That is why they should be held accountable. It's because of their lack of positive action when the negative outcomes from their incentive program began appearing. http://fortune.com/2016/10/09/wells-fargo-work-culture/ http://fortune.com/2016/10/09/wells-fargo-work-culture/
tswartz 10y ago
I appreciate that Warren didn't let Stumpf talk his way out of taking any responsibility for the actions of his employees and made a clear argument as to why he should be held accountable. Unfortunately, it seems the primary reason he resigned was because the public outrage was loud enough. It seems that until CEOs are personally held accountable via fines or prison (as Warren suggests) we won't see a very big change in their actions. He benefited personally from the policy he implemented, but ignored the negative consequences. The bank is fined, but he is not and keeps his bonuses.
- CalChris 10y ago
  Carrie Tolstedt is also retiring at the end of the year with $125M.
  - bas 10y ago
    Oh man, she must be so bummed about that. The struggle is real.
- wheelerwj 10y ago
  Bullshit he resinged! at 63, he's the oldest ceo of all the top 5 banks. Stumpf did't resign, he retired!
  - tswartz 10y ago
    haha, fair point. He is probably going to go into consulting and make some extra money for those green fees.
  - tedunangst 10y ago
    Resinged is a nice way to put it. Once before the senate, then again before the house.
    - LargeCompanies 10y ago
      Sorry and not to be the grammar police but it's resigned...
themark 10y ago
Im too lazy to look, but I'm pretty sure this same thing was reported many times before.
rememberlenny 10y ago
In the same vein, Sheila Bair is an amazing human being. She was chair of the FDIC during the TARP funding and bank bailouts. She wrote a captivating book on the battle against the corruption of banks and the difficulties in policing issues with government funding. Book link: https://www.amazon.com/Bull-Horns-Fighting-Street-Itself/dp/1451672497 https://www.amazon.com/Bull-Horns-Fighting-Street-Itself/dp/...
pcunite 10y ago
It would be good if Elizabeth Warren would look into the Clinton Foundation. Make sure things are up to snuff, so to speak.
quantumfoam 10y ago
Big whoop. No jail time served. Stumpf stepped down and the criminal enterprise (that remains till this day) was charged with millions that when compared to their profits (in the billions) range, what really was accomplished? The worst thing that happened here was he lost his job but kept a nice severance package and took a vacation. Talk about justice.
ShellCasing 10y ago
What we need is a federal licensing agency for bankers that is similar to the state-by-state licensing agencies for lawyers. That way, when a banker gets caught violating ethical obligations (e.g., defrauding people) he can be disbarred from ever working in finance ever again. Proving an ethical violation is much easier than proving a criminal act.
adekok 10y ago
What do the libertarians say about this theft? While I understand the idea of the free market, I don't see how that would have protected the consumer in this case. The CEO has millions of times the power of the average consumer, and can harness thousands of people to his agenda. The consumer is left to either (a) pay the "idiot" tax of being stupid enough to sign up for a thieving bank, or (b) rely on the government to protect his best interests. While I have severe misgivings about the efficiency and corruption of large government, I find it hard to argue that a perfect "free market" would be better for the consumer.
- muninn_ 10y ago
  If you live in the West you live in a free market right now. Asking the "libertarians" what they would do about this incident in the "free market" is a deceptive thing to say. Not only does it ignore the fact that we live in a free market, it unjustly pins the failings of the system we live in on a philosophy which has a wide array of different nuances and subgroups. Libertarians range from anarcho-capitalists, to socialist libertarians, to anarcho-communists. Additionally, a "perfect free market" does not exist and never could. Nor could a "perfect government". If you want to be angry, look at how the government is failing you now. If you want to say that the "non-free market" you're living in is better, well, what happened here? The CEO just gets to retire and they have to pay a measly fine. Oh and before anybody says "we don't live in a true free market", until we live under absolutely no system of government, nobody civilization has really ever lived under what is technically a free market. If you pay taxes or tribute or respect some sort of authority you live in a government and it is acting upon the market. I find that to be a useless definition.
  - hobs 10y ago
    >If you live in the West you live in a free market right now. > nobody (in) civilization has really ever lived under what is technically a free market. So, we do or we don't?
    - muninn_ 10y ago
      You do live in a free market. You don't live in a free market by a definition including no interference from government. But that's a dumb and useless definition so it's tossed out here.
nxbtch 10y ago
great capitalism, great democracy
guelo 10y ago
I doubt the Consumer Financial Protection Bureau will survive the upcoming Trump/Republican attack on federal regulatory agencies.
- user837387 10y ago
  Isn't it awesome? And in a couple of more years when we have another meltdown we can again say that nobody saw it happen and blame everybody but ourselves. F*ck us.
  - orsenthil 10y ago
    It has around 600 Million dollar budget and employs 1000s of people. The upcoming crazy administration putting their foot on anything of that scale could be suicidal.
zodiac 10y ago
I watched Stumpf testify in front of the Senate Banking Committee, and while I agree that (from what I saw) he should be held accountable, what I don't understand is why the right venue for it is the Senate instead of the Judiciary. Warren clearly thinks that Stumpf wasn't just doing a bad job, but that what he did and didn't do was criminal in some way (eg the talk of jail time, comparisons to Enron in the article). The CFPB settlement also indicates that there was wrongdoing, at least on the part of Wells Fargo the corporation. Isn't the right thing to do to prosecute Stumpf in court? The testimony seemed to me to have no purpose other than to put Stumpf "on trial", and it led to damaged PR and his resignation, but it looked like a "trial" without due process protections like knowing what exact charges he was facing. Another missing protection I was particularly disturbed by was how often she would cut him off and not allow him to defend himself (yes, his answers were clearly evasive, but it still isn't fair to do that).
- anigbrowl 10y ago
  It's fair in that the Senate can't impose any penalty on him other than a public shaming. I agree that it would be better if the judiciary took on this case. Unfortunately Congress holds the power of the purse and that effectively means it can keep the DoJ on a much shorter leash than most people appreciate. Also, sadly, the complexity of litigation means that if it goes to court Wells Fargo could just keep the proceedings spinning out for years before it ever gets to trial, by which point almost everyone will have forgotten what the original issue was. Indeed, this is more or less what happens now.
  - hollerith 10y ago
    >It's fair in that the Senate can't impose any penalty on him other than a public shaming. They can compel him to answer questions, and those answer can then be used by prosecutors.
- refurb 10y ago
  The testimony seemed to me to have no purpose other than to put Stumpf "on trial" Think about it. Who would benefit from putting a banker on public trial? I'll give you a guess, their initials are EW.
orsenthil 10y ago
Can she and other senators question and bring down Trump if he does something illegal?
- zodiac 10y ago
  Yes, Congress can impeach and try the President (https://en.wikipedia.org/wiki/Impeachment_in_the_United_States#Federal_impeachment https://en.wikipedia.org/wiki/Impeachment_in_the_United_Stat..., https://en.wikipedia.org/wiki/Article_One_of_the_United_States_Constitution#Clause_6:_Trial_of_Impeachment https://en.wikipedia.org/wiki/Article_One_of_the_United_Stat...)
  - filoeleven 10y ago
    But the chances of that happening are slim, given that the Republicans will control both the House and the Senate, and in the end a successful impeachment requires a 2/3 majority. It could happen if he makes enough Republicans angry and/or does something illegal _that they agree should be illegal_. This would likely exclude running afoul of some business law that the current Congress enacts to specifically target his divided interests (like trying to force him to put his business in a blind trust, something that every other president has done by convention). Then again, the establishment Republicans would probably be much more comfortable with Pence in the driver's seat, so who knows?
MarkMc 10y ago
In pushing for jail time for this particular CEO, Elizabeth Warren is barking up the wrong tree. Stumpf made mistakes in setting incentives and monitoring staff culture, but there is no evidence he committed fraud. The bank overcharged customers $2 million dollars and paid a $185 million settlement. That seems reasonable to me. More worryingly, the bank also seems to have harassed and blacklisted whistleblower employees. No doubt it will have to pay a hefty settlement and class-action lawsuits, but again the CEO is guilty only failing to monitor bank culture. There was nothing malicious or criminal in his actions. The number of fake accounts created by the bank - 1.5 million! - is irrelevant. I run a business and can create a billion customer accounts in seconds without harm to anyone else. What matters is how much damage the bank did to others - in this case the bank has already paid a fine proportional to that damage. Instead of going after a hapless CEO and a company that has already paid a huge settlement for a relatively small error, Elizabeth Warren should focus her attention on banks which overinflated the value of their mortgages before selling them on to other banks or Freddie Mac and Fannie Mae. In such cases we're talking a fraud involving billions of dollars, that led to worldwide financial recession, and where perhaps the CEO had direct knowledge of the fraud. [Disclosure: I own shares in Wells Fargo]
- mylesm 10y ago
  Part (most?) of the damage isn't contained in the numbers you cited. Wells Fargo used customer identities to apply for and open credit cards, which could have affected their credit scores and thus potentially the interest rates they paid on loans (that could be a lot for something like a mortgage). It's hard to know what the dollar figure of this is, but it probably raises the damages a little bit.
  - MarkMc 10y ago
    Yes you're right - the bank's actions had an effect on the credit scores of many thousands of people. Still, the size of the settlement with regulators seems to reflect that.
deleted 10y ago
[deleted]
known 10y ago
VW CEO didn't resign;
- CodeWriter23 10y ago
  http://www.npr.org/sections/thetwo-way/2015/09/23/442818919/volkswagen-ceo-resigns-saying-he-s-shocked-at-emissions-scandal http://www.npr.org/sections/thetwo-way/2015/09/23/442818919/...
Timshel 10y ago
The takedown in question: https://www.youtube.com/watch?v=xJhkX74D10M https://www.youtube.com/watch?v=xJhkX74D10M
throwayawnotime 10y ago
Take Down? WTF he still has all of his many millions and is not in jail.
Evolved 10y ago
Let's not overlook the fact that not only did the whistleblowers' concerns not get addressed[0], they were also subsequently fired for <bullshit reasons> trumped up charges, AND their U-5[1][2][3][4] was also marked as well, which makes it much harder to get another job in banking as banking organizations have access to this universal employee report card as it is colloquially referred to. [0]http://fortune.com/2016/10/18/wells-fargos-former-ceo-may-have-been-warned-of-phony-account-fraud-as-early-as-2007/ http://fortune.com/2016/10/18/wells-fargos-former-ceo-may-ha... [1]http://www.wealthmanagement.com/practice-management/u5-hazard http://www.wealthmanagement.com/practice-management/u5-hazar... [2]http://www.finra.org/industry/terminate-individuals-registration http://www.finra.org/industry/terminate-individuals-registra... [3]http://www.npr.org/2016/10/14/497991242/fired-wells-fargo-employees-allege-attempts-to-blow-the-whistle http://www.npr.org/2016/10/14/497991242/fired-wells-fargo-em... [4]http://www.forbes.com/sites/billsinger/2011/12/15/wells-fargo-hit-with-punitive-damages-in-finra-u5-defamation-case/#12e8ab87af13 http://www.forbes.com/sites/billsinger/2011/12/15/wells-farg...

253 points by xenophon 10y ago

Look I love Elizabeth Warren but this whole article is really over the top. > leaders of financial institutions are painfully aware that there are consequences They were fined lousy 280m and the CEO was allowed to resign a full 3 years after it was first reported. Really, REEAAALLLY painful stuff there.

AstroJetson 10y ago
Its becoming cases of the wheels of justice turn, they turn slowly but they turn. The rate they are turning has become much faster (never --> 3 years is a big speed improvement) and the people that are getting caught in those wheels is a much higher level. 5 years ago clerks, now a CEO.
- wheelerwj 10y ago
  Then maybe we should ditch the wheels and use Hammers of Justice instead? The ceo PERSONALLY made more money during the scam than entire bank was fined. really epic stuff here, I mean, Really, way to dish out the pain!
  - dmix 10y ago
    The difference is he didn't personally direct people in a criminal way for personal profit. The fact heads didn't role is what is the real issue here. There should have been a strong internal house cleaning after this became known to the top. But they apparently didn't react in a satisfactory way. This is where the CEO was at fault. He didn't send the right signal that this type of behavior will result in a skewering. And he (and others at the top) deserved to lose their job as a result. But to claim he was knowingly profiting from some sort of criminal conspiracy is unhelpful hyperbole. Whether or not the people who created this internal culture and ignored the malicious behavior of thousands should be criminally liable is another issue. But he was certainly separated enough from it where anything beyond a shameful career ending is a bit much.
  - tedunangst 10y ago
    The bank was also fined many times more than it made from the scam.
    - wheelerwj 10y ago
      i mean, i guess if you dont factor in 100% stock price increase they didn't make that much money.
cortesoft 10y ago
And keep his stock valued at $109million..... I am sure he is quite distraught.
samstave 10y ago
The pain is only in the risk to their pocketbook. Not any other actual risk...
- wheelerwj 10y ago
  most of us are entrepreneurs,so we should all appreciate the value of the corporate vail. But this is criminal identity theft. all of us would expect real consequences for that kind of activity.

prions 10y ago

Can we remove: -"Why x matters" -"What we know" -"Slammed" and -"Number x will shock you!" from all news headlines?

anigbrowl 10y ago
I wish. Newspapers seem to have decided that the best way to attract readers is to imitate the magazines that live near the supermarket checkout.
- willtachau 10y ago
  Can you blame them? It's ultimately driven by users. If we didn't click on these article titles, the publishers wouldn't use these ridiculous formats.

vonklaus 10y ago

This is good. Articles like this however always seem to recall the subprime mortgage crisis, when "too big to fail" sheltered CEOs and banks from much fallout. I would like to express to Sen Warren, and others, that a more fragmented & transparent financial system is important-- but much less than the broadband & tech sector. Google has 1.6B[0] users of a total of 3.8[1] internet users. too big to fail is 42% of the world using "core" services from one institution. The data is hard to find and I am on mobile but the consolidation of global broadband & wireless provideres attempted or closed between 2015-2016 was nearly 1 Trillion. A rollup of unprecedented levels. [0]http://m.wolframalpha.com/input/?i=+total+active+users+google&x=0&y=0 http://m.wolframalpha.com/input/?i=+total+active+users+googl... * While this is Alexa's visits total, subsets of Google's 10-k (which doesnt break this out because they are facing heavy competition) adjust to uniques. If someone finds better data, I will adjust, but this seems to be the accepted active user base of google. [1]http://m.wolframalpha.com/input/?i=total+internet+users&x=0&y=0 http://m.wolframalpha.com/input/?i=total+internet+users&x=0&...

DINKDINK 10y ago
The difference in your comparison though is the internet still works if Google goes under. If a TBTF bank goes under [1] the financial system can halt/implode. Which is the main argument to break up the banks to a level where there isn't total-system fragility. [1] due to their own reckless behavior / Capitalism on the upside, Socialism on the downside.
- samstave 10y ago
  Well, I am going to call BS as if we had regulation regarding consolidation of banks, then we would have a larger eco-system in the financial areas: [0] Here is my problem with banking, if naive, please inform me: Banking should be treated like any other base infrastructure. Financial infrastructure is critical. It is not ok for the foundation of modern commerce and civilization to be controlled by so few. We need to revamp our financial situation. period. http://www.motherjones.com/files/images/big-bank-theory-chart-large.jpg http://www.motherjones.com/files/images/big-bank-theory-char...
- 10y ago

stanfordkid 10y ago

I absolutely love Senator Warren. That being said, the notion that the stock price of Wells Fargo could be significantly impacted by this scheme (which is central to Ms. Warren's argument) is not well founded. Wells Fargo makes 86 billion in revenue per year. Even if 10 million accounts were made and each made a thousand dollars -- (incredibly generous) ... over the course of 5 years this accounts for 1 billion in revenue or 200 million dollars per year. Annualized it is much less than 1% and would not inflate the stock price. These guys definitely made a mistake. It wasn't calculated fraud. It was bad incentive setting. Politicians like Warren don't intuitively understand how hard it is to actually control a group of thousands of middle-class workers and get them to do things.It is not easy to govern ... sadly politicians are the least knowledgable in what it takes and they hurt good people like Stumpf (I trust his leadership and qualities because he was appointed by Buffett). WF stock dropped a bit prior to the hearing and I bought as much as I could. Luckily most of Wall Street is smarter than such politicians and it paid off. Thanks Senator Warren. What I would like to see is politicians be held to the same accountability as these guys. That would be hilarious. I wonder how well Obamacare would do if we could actually measure results based on metrics. Our society needs people that can blend business acumen with the spirit and heart of people like Elizabeth Warren. Only Buffet or Gates come to mind.

pinewurst 10y ago
If you can call "meet the goals or get fired" incentive setting. Forcing employees to carry out some cack-headed upper management initiative on pain of losing their jobs isn't that.
wu-ikkyu 10y ago
If the CEO shouldn't be held liable for the fraud then why shouldn't the ones who signed off on all the fake accounts? Didn't they directly benefit from inflating the numbers?
tswartz 10y ago
You make a good point about how hard it is to properly incentivize a large group of people. Stumpf and leadership made a best estimate for what goals and incentives were necessary to reach performance. However, the key is that when employees began voicing concerns over what was being done they were ignored and in some cases intimidated and blacklisted from working in banking. That is why they should be held accountable. It's because of their lack of positive action when the negative outcomes from their incentive program began appearing. http://fortune.com/2016/10/09/wells-fargo-work-culture/ http://fortune.com/2016/10/09/wells-fargo-work-culture/

tswartz 10y ago

I appreciate that Warren didn't let Stumpf talk his way out of taking any responsibility for the actions of his employees and made a clear argument as to why he should be held accountable. Unfortunately, it seems the primary reason he resigned was because the public outrage was loud enough. It seems that until CEOs are personally held accountable via fines or prison (as Warren suggests) we won't see a very big change in their actions. He benefited personally from the policy he implemented, but ignored the negative consequences. The bank is fined, but he is not and keeps his bonuses.

CalChris 10y ago
Carrie Tolstedt is also retiring at the end of the year with $125M.
- bas 10y ago
  Oh man, she must be so bummed about that. The struggle is real.
wheelerwj 10y ago
Bullshit he resinged! at 63, he's the oldest ceo of all the top 5 banks. Stumpf did't resign, he retired!
- tswartz 10y ago
  haha, fair point. He is probably going to go into consulting and make some extra money for those green fees.
- tedunangst 10y ago
  Resinged is a nice way to put it. Once before the senate, then again before the house.
  - LargeCompanies 10y ago
    Sorry and not to be the grammar police but it's resigned...

themark 10y ago

Im too lazy to look, but I'm pretty sure this same thing was reported many times before.

rememberlenny 10y ago

In the same vein, Sheila Bair is an amazing human being. She was chair of the FDIC during the TARP funding and bank bailouts. She wrote a captivating book on the battle against the corruption of banks and the difficulties in policing issues with government funding. Book link: https://www.amazon.com/Bull-Horns-Fighting-Street-Itself/dp/1451672497 https://www.amazon.com/Bull-Horns-Fighting-Street-Itself/dp/...

pcunite 10y ago

It would be good if Elizabeth Warren would look into the Clinton Foundation. Make sure things are up to snuff, so to speak.

quantumfoam 10y ago

Big whoop. No jail time served. Stumpf stepped down and the criminal enterprise (that remains till this day) was charged with millions that when compared to their profits (in the billions) range, what really was accomplished? The worst thing that happened here was he lost his job but kept a nice severance package and took a vacation. Talk about justice.

ShellCasing 10y ago

What we need is a federal licensing agency for bankers that is similar to the state-by-state licensing agencies for lawyers. That way, when a banker gets caught violating ethical obligations (e.g., defrauding people) he can be disbarred from ever working in finance ever again. Proving an ethical violation is much easier than proving a criminal act.

adekok 10y ago

What do the libertarians say about this theft? While I understand the idea of the free market, I don't see how that would have protected the consumer in this case. The CEO has millions of times the power of the average consumer, and can harness thousands of people to his agenda. The consumer is left to either (a) pay the "idiot" tax of being stupid enough to sign up for a thieving bank, or (b) rely on the government to protect his best interests. While I have severe misgivings about the efficiency and corruption of large government, I find it hard to argue that a perfect "free market" would be better for the consumer.

muninn_ 10y ago
If you live in the West you live in a free market right now. Asking the "libertarians" what they would do about this incident in the "free market" is a deceptive thing to say. Not only does it ignore the fact that we live in a free market, it unjustly pins the failings of the system we live in on a philosophy which has a wide array of different nuances and subgroups. Libertarians range from anarcho-capitalists, to socialist libertarians, to anarcho-communists. Additionally, a "perfect free market" does not exist and never could. Nor could a "perfect government". If you want to be angry, look at how the government is failing you now. If you want to say that the "non-free market" you're living in is better, well, what happened here? The CEO just gets to retire and they have to pay a measly fine. Oh and before anybody says "we don't live in a true free market", until we live under absolutely no system of government, nobody civilization has really ever lived under what is technically a free market. If you pay taxes or tribute or respect some sort of authority you live in a government and it is acting upon the market. I find that to be a useless definition.
- hobs 10y ago
  >If you live in the West you live in a free market right now. > nobody (in) civilization has really ever lived under what is technically a free market. So, we do or we don't?
  - muninn_ 10y ago
    You do live in a free market. You don't live in a free market by a definition including no interference from government. But that's a dumb and useless definition so it's tossed out here.

nxbtch 10y ago

great capitalism, great democracy

guelo 10y ago

I doubt the Consumer Financial Protection Bureau will survive the upcoming Trump/Republican attack on federal regulatory agencies.

user837387 10y ago
Isn't it awesome? And in a couple of more years when we have another meltdown we can again say that nobody saw it happen and blame everybody but ourselves. F*ck us.
- orsenthil 10y ago
  It has around 600 Million dollar budget and employs 1000s of people. The upcoming crazy administration putting their foot on anything of that scale could be suicidal.

zodiac 10y ago

I watched Stumpf testify in front of the Senate Banking Committee, and while I agree that (from what I saw) he should be held accountable, what I don't understand is why the right venue for it is the Senate instead of the Judiciary. Warren clearly thinks that Stumpf wasn't just doing a bad job, but that what he did and didn't do was criminal in some way (eg the talk of jail time, comparisons to Enron in the article). The CFPB settlement also indicates that there was wrongdoing, at least on the part of Wells Fargo the corporation. Isn't the right thing to do to prosecute Stumpf in court? The testimony seemed to me to have no purpose other than to put Stumpf "on trial", and it led to damaged PR and his resignation, but it looked like a "trial" without due process protections like knowing what exact charges he was facing. Another missing protection I was particularly disturbed by was how often she would cut him off and not allow him to defend himself (yes, his answers were clearly evasive, but it still isn't fair to do that).

anigbrowl 10y ago
It's fair in that the Senate can't impose any penalty on him other than a public shaming. I agree that it would be better if the judiciary took on this case. Unfortunately Congress holds the power of the purse and that effectively means it can keep the DoJ on a much shorter leash than most people appreciate. Also, sadly, the complexity of litigation means that if it goes to court Wells Fargo could just keep the proceedings spinning out for years before it ever gets to trial, by which point almost everyone will have forgotten what the original issue was. Indeed, this is more or less what happens now.
- hollerith 10y ago
  >It's fair in that the Senate can't impose any penalty on him other than a public shaming. They can compel him to answer questions, and those answer can then be used by prosecutors.
refurb 10y ago
The testimony seemed to me to have no purpose other than to put Stumpf "on trial" Think about it. Who would benefit from putting a banker on public trial? I'll give you a guess, their initials are EW.

orsenthil 10y ago

Can she and other senators question and bring down Trump if he does something illegal?

zodiac 10y ago
Yes, Congress can impeach and try the President (https://en.wikipedia.org/wiki/Impeachment_in_the_United_States#Federal_impeachment https://en.wikipedia.org/wiki/Impeachment_in_the_United_Stat..., https://en.wikipedia.org/wiki/Article_One_of_the_United_States_Constitution#Clause_6:_Trial_of_Impeachment https://en.wikipedia.org/wiki/Article_One_of_the_United_Stat...)
- filoeleven 10y ago
  But the chances of that happening are slim, given that the Republicans will control both the House and the Senate, and in the end a successful impeachment requires a 2/3 majority. It could happen if he makes enough Republicans angry and/or does something illegal _that they agree should be illegal_. This would likely exclude running afoul of some business law that the current Congress enacts to specifically target his divided interests (like trying to force him to put his business in a blind trust, something that every other president has done by convention). Then again, the establishment Republicans would probably be much more comfortable with Pence in the driver's seat, so who knows?

MarkMc 10y ago

In pushing for jail time for this particular CEO, Elizabeth Warren is barking up the wrong tree. Stumpf made mistakes in setting incentives and monitoring staff culture, but there is no evidence he committed fraud. The bank overcharged customers $2 million dollars and paid a $185 million settlement. That seems reasonable to me. More worryingly, the bank also seems to have harassed and blacklisted whistleblower employees. No doubt it will have to pay a hefty settlement and class-action lawsuits, but again the CEO is guilty only failing to monitor bank culture. There was nothing malicious or criminal in his actions. The number of fake accounts created by the bank - 1.5 million! - is irrelevant. I run a business and can create a billion customer accounts in seconds without harm to anyone else. What matters is how much damage the bank did to others - in this case the bank has already paid a fine proportional to that damage. Instead of going after a hapless CEO and a company that has already paid a huge settlement for a relatively small error, Elizabeth Warren should focus her attention on banks which overinflated the value of their mortgages before selling them on to other banks or Freddie Mac and Fannie Mae. In such cases we're talking a fraud involving billions of dollars, that led to worldwide financial recession, and where perhaps the CEO had direct knowledge of the fraud. [Disclosure: I own shares in Wells Fargo]

mylesm 10y ago
Part (most?) of the damage isn't contained in the numbers you cited. Wells Fargo used customer identities to apply for and open credit cards, which could have affected their credit scores and thus potentially the interest rates they paid on loans (that could be a lot for something like a mortgage). It's hard to know what the dollar figure of this is, but it probably raises the damages a little bit.
- MarkMc 10y ago
  Yes you're right - the bank's actions had an effect on the credit scores of many thousands of people. Still, the size of the settlement with regulators seems to reflect that.

deleted 10y ago

[deleted]

known 10y ago

VW CEO didn't resign;

CodeWriter23 10y ago
http://www.npr.org/sections/thetwo-way/2015/09/23/442818919/volkswagen-ceo-resigns-saying-he-s-shocked-at-emissions-scandal http://www.npr.org/sections/thetwo-way/2015/09/23/442818919/...

Timshel 10y ago

The takedown in question: https://www.youtube.com/watch?v=xJhkX74D10M https://www.youtube.com/watch?v=xJhkX74D10M

throwayawnotime 10y ago

Take Down? WTF he still has all of his many millions and is not in jail.

Evolved 10y ago

Let's not overlook the fact that not only did the whistleblowers' concerns not get addressed[0], they were also subsequently fired for <bullshit reasons> trumped up charges, AND their U-5[1][2][3][4] was also marked as well, which makes it much harder to get another job in banking as banking organizations have access to this universal employee report card as it is colloquially referred to. [0]http://fortune.com/2016/10/18/wells-fargos-former-ceo-may-have-been-warned-of-phony-account-fraud-as-early-as-2007/ http://fortune.com/2016/10/18/wells-fargos-former-ceo-may-ha... [1]http://www.wealthmanagement.com/practice-management/u5-hazard http://www.wealthmanagement.com/practice-management/u5-hazar... [2]http://www.finra.org/industry/terminate-individuals-registration http://www.finra.org/industry/terminate-individuals-registra... [3]http://www.npr.org/2016/10/14/497991242/fired-wells-fargo-employees-allege-attempts-to-blow-the-whistle http://www.npr.org/2016/10/14/497991242/fired-wells-fargo-em... [4]http://www.forbes.com/sites/billsinger/2011/12/15/wells-fargo-hit-with-punitive-damages-in-finra-u5-defamation-case/#12e8ab87af13 http://www.forbes.com/sites/billsinger/2011/12/15/wells-farg...