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Given the enormous scale of the fraud, someone should definitely be going to prison. "But my criminal organization is very large and not everything we did was i

Given the enormous scale of the fraud, someone should definitely be going to prison. "But my criminal organization is very large and not everything we did was illegal" is not an excuse.

yummyfajitas 10y ago
Enormous scale? The total fees from this fraud were $2.4 million. https://www.bloomberg.com/view/articles/2016-09-09/wells-fargo-opened-a-couple-million-fake-accounts https://www.bloomberg.com/view/articles/2016-09-09/wells-far... The "excuse" is that a bunch of employees did it against management's express instructions, and that management actually took action (albeit stupid ineffective action) to prevent it back in 2014. https://www.bloomberg.com/view/articles/2016-09-19/tough-targets-and-short-term-projects https://www.bloomberg.com/view/articles/2016-09-19/tough-tar... This is not something that was remotely profitable for WF, this was employees lying to WF to hide the fact that they didn't meet their goals.
- anigbrowl 10y ago
  I should have known you'd show up with some bullshit misdirection. The scale of the fraud is enormous because it involved millions of accounts. That means millions of individual decisions to misuse customers' accounts for personal profit. The fact that it generated very little income for WF just means that it wasn't a very successful fraud. You don't get to evade criminal liability by saying that your criminal enterprise worked poorly and failed to run an impressive profit. management actually took action (albeit stupid ineffective action) Having instituted the policy to begin with, and with the knowledge of how such policies incentivize people, the management bears responsibility for not only the original problem but the ineffectiveness of the subsequent response. The CEO and his peers aren't some clueless kids that got into the C-suite and pushed random buttons on some big control panel, they're experienced managers with a deep knowledge of economics and institutional dynamics...in fact I'm probably selling them short, I'm sure their resumes tell a much more impressive story about their capabilities. So since they were good enough to hire into senior positions, they are surely good enough to take on the responsibility for the highly predictable outcome of their decisions.
  - yummyfajitas 10y ago
    ...wasn't a very successful fraud. The fraud was successful; it caused WF to continue paying underperforming salespeople. The fraud didn't make money for WF because WF was one of the victims - in fact, as far as money lost goes, probably the primary victim. But the thing is, there is no evidence of any criminal organization or conspiracy. The criminals in this case - the 5,300 sales people - don't appear to have coordinated at all. Are you sure we are commenting on the same story?
- gizmo 10y ago
  The employees' goal posts got moved repeatedly, to the point where employees started cheating out of desperation. The CEO is culpable because of his "eight is great" mantra. The average citizen does not need multiple checking accounts and multiple credit cards. The entirely goal of the "eight is great" program was to use high pressure sale tactics to push services onto customers that they didn't need. > At the end of last year, the average Wells Fargo retail customer had 6.3 products, according to the company. [1] For retail customers this number is absurd. The CEO was fully aware of this. There were whistle-blowers, of course. They got fired. This was a failure of corporate governance, a failure of internal checks and balances, and a complete moral failure of the chief executive. So yes the CEO should be held accountable, and that should include jail time. [1] http://www.wsj.com/articles/how-wells-fargos-high-pressure-sales-culture-spiraled-out-of-control-1474053044 http://www.wsj.com/articles/how-wells-fargos-high-pressure-s...
- dangerlibrary 10y ago
  From your own article: 5,300 employees were apparently engaged in fraudulent activities under his watch. Profitable or not, I stand by my statement.
- raesene6 10y ago
  To me the line of argument that this was employee fraud, with an unaware management doesn't fly. All banks have large internal audit departments precisely for the purpose of catching internal fraud. This is a long standing thing in banking and well established. The idea that Wells Fargo's internal audit department missed several thousand employees carrying out the same kind of fraud over a period of years is entirely unbelievable. So either the Internal audit team were in on it (extremely unlikely), internal audit were directed by management not to investigate this, or management ignored the reports for internal audit. To me, its extremely likely that the later options there are more likely to be what happened.
  - JoeAltmaier 10y ago
    The fact that it was discovered by an external source, not an internal audit, says it all. How can an external auditor have more information than management? Inconceivable.
    - tunap 10y ago
      And the internal audits of the other major banks have yet to uncover wrongdoing. And yet, up to a year ago I couldn't walk into any bank without getting the desperate, hard sell for services. Where's the BofA and Chase inquiries? I do miss the pretty lady tellers asking if there was anything else they could do to satisfy me. Not so much the guys.

Given the enormous scale of the fraud, someone should definitely be going to prison. "But my criminal organization is very large and not everything we did was illegal" is not an excuse.

yummyfajitas 10y ago

Enormous scale? The total fees from this fraud were $2.4 million. https://www.bloomberg.com/view/articles/2016-09-09/wells-fargo-opened-a-couple-million-fake-accounts https://www.bloomberg.com/view/articles/2016-09-09/wells-far... The "excuse" is that a bunch of employees did it against management's express instructions, and that management actually took action (albeit stupid ineffective action) to prevent it back in 2014. https://www.bloomberg.com/view/articles/2016-09-19/tough-targets-and-short-term-projects https://www.bloomberg.com/view/articles/2016-09-19/tough-tar... This is not something that was remotely profitable for WF, this was employees lying to WF to hide the fact that they didn't meet their goals.

anigbrowl 10y ago
I should have known you'd show up with some bullshit misdirection. The scale of the fraud is enormous because it involved millions of accounts. That means millions of individual decisions to misuse customers' accounts for personal profit. The fact that it generated very little income for WF just means that it wasn't a very successful fraud. You don't get to evade criminal liability by saying that your criminal enterprise worked poorly and failed to run an impressive profit. management actually took action (albeit stupid ineffective action) Having instituted the policy to begin with, and with the knowledge of how such policies incentivize people, the management bears responsibility for not only the original problem but the ineffectiveness of the subsequent response. The CEO and his peers aren't some clueless kids that got into the C-suite and pushed random buttons on some big control panel, they're experienced managers with a deep knowledge of economics and institutional dynamics...in fact I'm probably selling them short, I'm sure their resumes tell a much more impressive story about their capabilities. So since they were good enough to hire into senior positions, they are surely good enough to take on the responsibility for the highly predictable outcome of their decisions.
- yummyfajitas 10y ago
  ...wasn't a very successful fraud. The fraud was successful; it caused WF to continue paying underperforming salespeople. The fraud didn't make money for WF because WF was one of the victims - in fact, as far as money lost goes, probably the primary victim. But the thing is, there is no evidence of any criminal organization or conspiracy. The criminals in this case - the 5,300 sales people - don't appear to have coordinated at all. Are you sure we are commenting on the same story?
gizmo 10y ago
The employees' goal posts got moved repeatedly, to the point where employees started cheating out of desperation. The CEO is culpable because of his "eight is great" mantra. The average citizen does not need multiple checking accounts and multiple credit cards. The entirely goal of the "eight is great" program was to use high pressure sale tactics to push services onto customers that they didn't need. > At the end of last year, the average Wells Fargo retail customer had 6.3 products, according to the company. [1] For retail customers this number is absurd. The CEO was fully aware of this. There were whistle-blowers, of course. They got fired. This was a failure of corporate governance, a failure of internal checks and balances, and a complete moral failure of the chief executive. So yes the CEO should be held accountable, and that should include jail time. [1] http://www.wsj.com/articles/how-wells-fargos-high-pressure-sales-culture-spiraled-out-of-control-1474053044 http://www.wsj.com/articles/how-wells-fargos-high-pressure-s...
dangerlibrary 10y ago
From your own article: 5,300 employees were apparently engaged in fraudulent activities under his watch. Profitable or not, I stand by my statement.
raesene6 10y ago
To me the line of argument that this was employee fraud, with an unaware management doesn't fly. All banks have large internal audit departments precisely for the purpose of catching internal fraud. This is a long standing thing in banking and well established. The idea that Wells Fargo's internal audit department missed several thousand employees carrying out the same kind of fraud over a period of years is entirely unbelievable. So either the Internal audit team were in on it (extremely unlikely), internal audit were directed by management not to investigate this, or management ignored the reports for internal audit. To me, its extremely likely that the later options there are more likely to be what happened.
- JoeAltmaier 10y ago
  The fact that it was discovered by an external source, not an internal audit, says it all. How can an external auditor have more information than management? Inconceivable.
  - tunap 10y ago
    And the internal audits of the other major banks have yet to uncover wrongdoing. And yet, up to a year ago I couldn't walk into any bank without getting the desperate, hard sell for services. Where's the BofA and Chase inquiries? I do miss the pretty lady tellers asking if there was anything else they could do to satisfy me. Not so much the guys.