20 ms·

Wells Fargo Hit with $1B in Fines

603 points by smaili 9y ago

vinhboy 9y ago
It's hard for me think of wellsfargo as an "evil" company, because every time I had to go into the branch, they have some of the nicest tellers and it's always a pleasant experience.
- camhenlin 9y ago
  Maybe it's possible to be a good, friendly person, good employee, etc., and still work for an awful company. People need jobs
  - moate 9y ago
    Nice people work for Walmart and Amazon who are both frequently cited as terrible employers. Terrible people also work at generally "good" companies as well. Say it with me folks: Business aren't people. They're collections of people who run a a whole range of types. (Obvious exceptions for 1-man shops/Freelancers)
- dharmab 9y ago
  I felt sorry for the branch manager at by local branch when I closed my account. She's a great person who really cares about her customers, unlike her employer.
  - vinhboy 9y ago
    I think this raises a fair point. How can we punish the employers and not the employees? Maybe we should have jailed the executives or responsible party, so no one dares to pull that kind of shit again.
  - criddell 9y ago
    Part of my frustration with WF is that after I establish a relationship with the manager, they inevitably move him or her to a different store.
- marshray 9y ago
  I have been a WF customer for many years and, to be fair, they have always done right by me. It used to be that my main complaint was they would ask me to sign up for a credit card every time I walked into a branch, but they've cut way back on that. I am, of course, disgusted by their fraudulent actions, and have several times considered closing my accounts in protest. But now I'm thinking that I probably couldn't find a bank anywhere under closer and more intense scrutiny. For now at least, it seems they're on their best behavior.
  - vinhboy 9y ago
    > But now I'm thinking that I probably couldn't find a bank anywhere under closer and more intense scrutiny. I thought that like 2 scandals ago... But they keep appearing on the news with more... Maybe they are not done airing out their dirty laundry.
- rm_-rf_slash 9y ago
  My mother opened my first bank account at HSBC a long time ago. Then the recession happened and their regional branches got bought out by First Niagara, the shittiest and most customer-service-time-deaf corporation I ever had the displeasure of dealing with. (And then we learned through the news that HSBC actively assisted drug money laundering in South America, woohoo) Fortunately they were then bought out by KeyBank, although now I just use a local credit union. Throughout all of that, my local tellers and bank staff remained. They are probably the friendliest and most helpful bank staff I ever encountered. It’s a shame they had to go through all of that. Probably more irate customers than I had to deal with them.
  - FireBeyond 9y ago
    > ... the shittiest and most customer-service-time-deaf corporation ... Fortunately they were then bought out by KeyBank, although now I just use a local credit union. The same KeyBank who hit my account with $380+ in overdraft fees _in a single day_ when they decided after four years of seeing the same paycheck being deposited twice a month that it was "subject to hold"?
- wmeredith 9y ago
  I don't know how to say this without sounding condescending, but you basically just need to think harder or perhaps more critically. This is like saying you can't wrap your head around global warming because it's cold un your backyard or that you can't believe the earth is round because the ground in front of you seems so flat. We must open our minds to larger concepts. This sort of small-mindedness is responsible for the worst part of the human condition.
  - aeorgnoieang 9y ago
    They didn't write that they couldn't form the thought; just that it was hard. You could try reading harder, or perhaps more carefully (and critically).
aphextron 9y ago
Something has happened to big banks along the way, where they no longer actually provide banking services to their customers. When I walk into a Wells Fargo branch now and sit down with a "banker" to take care of my accounts, it consists of sitting next to them while they call 1-800-WELLSFARGO for me and talk to a call center. There simply is no service anymore. I walked into my local branch to open up an IRA last week before the tax deadline, and they literally couldn't even do it for me in time because the person on the phone said "we'll do our best effort, no guarantee." I walked up to the teller, asked for a cashier check for the full amount in my accounts, and opened up an account next door at a small local bank (First Republic). They were able to sit down with me and immediately pull up all the paperwork to create and fund an IRA account with no hassle at all right there, no phone call involved. It was like night and day. These huge banks have simply become way too big, and it serves no one's interest but their own. They have zero incentive to provide actual customer service anymore. There needs to be a massive restructuring of our system to allow smaller banks to thrive and provide actual competition.
- wpietri 9y ago
  Agreed. I changed over to a local credit union from Bank of America a few years back. Their online banking is a bit more awkward, but I can always talk with an informed person, which more than makes up for it. My theory is that banks started out personal, but as they have consolidated have become ever more industrial in their scale and processes. Unfortunately, industrial-style human interaction is pretty awful. I think the massive restructuring will come as banks split tasks into a) fully automating the boring things, and b) creating really good tools that empower their front-line workers (instead of treating them as dumb peripherals). If our current major banks all went the way of Blockbuster during that process, I'll shed no tears. Few will, I imagine.
- epc 9y ago
  Chase seems to have moved their "hands on" banking to their "Private Bankers" (who you qualify for if you have some minimum amount of money or debt across your accounts).
  - 9y ago
djschnei 9y ago
Where does the fine go? Does it get divvied up amongst the people affected by WF's wrongdoing?
- rb808 9y ago
  > Does it get divvied up amongst the people affected by WF's wrongdoing? Are you crazy? The fines usually get distributed around different politicians to spend on their favorite things. Like this https://www.usatoday.com/story/opinion/editorials/2014/07/14/lohudreacts-spend-pnb-paribas-fine/12634055/ https://www.usatoday.com/story/opinion/editorials/2014/07/14... Which is why these fines will continue. Everyone hates the banks so the regulators can just keep fining them for everything indefinitely, when they run out of ideas they find some new problems with the 2008 mortgages again.
  - djschnei 9y ago
    Was mostly a sarcastic question ;) This pattern can be seen everywhere... 1) politicians regulate an industry with the best intentions 2) industry becomes a safe haven for "the big fish" that can pay to play 3) Rinse and repeat for a while, creating bigger and bigger barriers to entry into the marketplace. Politicians are happy, mega banks are happy. 4) Megabank inevitably does something reprehensible 5) politicians slap them with some fines. Fake remorse ensues... 6) go back to step 1
    - samstave 9y ago
      Stop paying taxes.
      - djschnei 9y ago
        Well, taxes go towards some stuff I appreciate... plus I would probably be thrown in jail. So not sure that is a solution :p
        samstave 9y ago
bigmattystyles 9y ago
Was the fine expected to be much worse? They're trading up at the moment
- nappy-doo 9y ago
  It's not as much as the fine was expected to be worse, just that the situation is now resolved. WFC can put this behind them, and move on. AFAICR, this is the last of the scandals that have rocked the bank. As soon as the cap on their assets is lifted (likely before the end of the quarter), there's nothing left in the queue holding the price back. As such, the company will be able to take advantage of the higher interest rate environment we're moving into, and the stock (already undervalued compared to its peers) will benefit as a result. Or, markets are irrational. Take your pick.
- pas 9y ago
  Or probably the end of uncertainty about the investigation is itself a signal. (People who dropped it from their portfolios because they were risky now put it back.)
- jonknee 9y ago
  It's now a known quantity and if there is one thing Wall Street dislikes is surprises.
kaizendad 9y ago
OK, but Wells Fargo made $5 billion last year, and the activity they were fined for took place over many years, which leaves me to ask: after the fines, was this activity profitable or not? If it was profitable, do the fines actually dissuade future dishonesty? Also, apparently Wells Fargo thinks that 27,000 people lost their cars over this. I bet none of those people will be made whole. Cars are really essential things: lose your car and you may be unable to take a child to school, unable to shop for food, or even unable to get to work. It's a pity that can't be undone.
- johnwheeler 9y ago
  No, they made 22 billion. You're probably reading their quarterly figures. source: https://www.nasdaq.com/symbol/wfc/financials?query=income-statement https://www.nasdaq.com/symbol/wfc/financials?query=income-st... The scams in themselves were not profitable. For the cross-selling, they made an extra 100 million or so over the course of many years, I don't recall the figures I read.
  - perseusprime11 9y ago
    This billion dollar fine is like a small change for them. Warren Buffet has a lot of exposure to this company and he has been influencing to let them go for a long time. Go figure!
    - johnwheeler 8y ago
      Well, the shareholders have suffered outsize to the amount of damage to the victims in dollar terms by orders of magnitude. Probably 100-150 billion, conservatively, wasn’t realized. Wells didn’t get in trouble during the financial crisis because they stuck to conventional banking instead of investment banking, like their peers. Their reputation was unmatched. Since the crisis WFC has floated low double digits percentage wise around their market cap, while all its peers have doubled and tripled in market cap. Wells holders have missed the boat they waited ten years for, and probably will live in purgatory for another 4 or 5 years because of this mess.
monster_group 9y ago
So the government gets to keep $1B collected from WF. What about the people who overpaid all those fees? Are they being refunded?
- commanderjroc 9y ago
  I got an email today about them settling a class action lawsuit that covers this. https://wfsettlement.com https://wfsettlement.com
- rgbrenner 9y ago
  The CFPD is required to use all money from fines for victim compensation, and where that's not practical, they keep it to compensate future victims or they can spend it on consumer education and financial literacy programs. They are not permitted to spend the money on anything else.
meesterdude 9y ago
What a great start! Keep it up!
jonathankoren 9y ago
Marketplace reported this morning that while WF was fined $1B, they apparently saved more than three times that amount due to the new tax law. http://www.latimes.com/business/hiltzik/la-fi-hiltzik-wells-fargo-20180420-story.html http://www.latimes.com/business/hiltzik/la-fi-hiltzik-wells-... http://www.latimes.com/business/la-fi-wells-fargo-earnings-20180112-story.html http://www.latimes.com/business/la-fi-wells-fargo-earnings-2...
marricks 9y ago
I heard this discussed in NPR as a reasonable fine because “it hit their profits but they still made money that quarter” and “the CEO steppe down”. How is that enough when so many people had their life totally screwed? It should decimate their profits and high ups should serve federal time. Id executives don’t fear the government over something so egregious were opening the door to more of the same.
tinbad 9y ago
I had high hopes for Bank Simple some time ago when they came out. Then they got acquired by a bigger bank. This industry is nearly impossible to disrupt. Just like the Oil companies back in the day, these banks are so big and powerful that it's impossible to innovate in the current market conditions.
- scotch_drinker 9y ago
  Big Oil was broken up by anti trust legislation. It's possible this comes back around. Currently reading a biography on Brandeis who was one of the titans of anti-trust in the 30s and 40s. I'm hoping that kind of regulation comes back around.
  - uxp 9y ago
    How? The CFPB wasn't perfect, but like the ACA, many think that if legislation is not perfect, it should not be enacted. That's the entire basis of the Hastert rule, if the majority party isn't able to "secure" a majority of votes, then bills shouldn't be voted on. Isn't that the point of voting?!? Why are our representatives pre-voting on bills to determine if they should even be argued, debated, amended and tried? I'm reminded of something one of my senators said last year about the Russia investigation (specifically the election interference, not "collusion"), in context of them not wanting to investigate because the facts were not known. THATS THE FKING POINT OF AN INVESTIGATION YOU DIPSH*T, TO FIND FACTS. Everyone needs to vote this november. I don't care if you vote Republican, Democrat or any of the 3rd parties. Just vote. Get the old guys out. Disrupt their legacy. We (software developers) hate the Waterfall method. We like being Agile, whatever that means. Make our government operate the same way. Iterate in small, meaningful chunks.
- gukov 9y ago
  Banks, Oil, social networks
makecheck 9y ago
Not sure how they calculate fines like these but it sure should work something like the following: $100M + [(entire bank profit gained from illegal activity) * 7.0] + [(number of people screwed) * (average fees charged per person) * 2.0] In addition, there should be a stipulation that the bank cannot (in present or future) pay the fee through employee layoffs or other cop-outs. Ideally, the government is able to require fine payments to come directly from executive compensation or by selling assets, etc. My guess is it would come out to, let’s say, a hell of a lot more than this.
- aerotwelve 9y ago
  > Ideally, the government is able to require fine payments to come directly from executive compensation or by selling assets, etc. Interestingly enough, DF allows the government to do this if the bank is considered "too big to fail", which is a classification they define precisely in the bill. But not before that.
JumpCrisscross 9y ago
Critically, Well Fargo "submitted to an unprecedented order Friday that would give the Office of the Comptroller of the Currency the right to remove some of the lender’s executives or board members" [1]. TL; DR Senior management and even Board members can be fired by the OCC. [1] https://www.bloomberg.com/news/articles/2018-04-20/wells-fargo-said-to-be-fined-1-billion-over-consumer-missteps https://www.bloomberg.com/news/articles/2018-04-20/wells-far...
rectang 9y ago
The executives responsible (principally Carrie Tolstedt and John Stumpf) not only did not go to jail, they ended up money ahead to the tune of 8-9 figures, even after clawbacks. So if you're an executive, you know what to do... And if you're a shareholder, is a billion dollar fine compared against 88.4 billion in 2017 revenue sufficient to sustain your motivation in an endless fight against the backscratching director and executive culture?
- ansible 9y ago
  You think that even in this day and age, anytime you're getting hit with a billion dollars in fines, you'd sit up and pay attention. I'm not saying WF (or more importantly, their shareholders) actually cares. But you'd think that they would at that level.
  - rectang 9y ago
    A billion ain't enough. I don't have faith in Wells Fargo ownership or leadership to ensure ethical or even legal behavior in the absence of sufficient incentives. The market as currently set up encourages large scale misbehavior and destructive abuse by Wells Fargo of its customers. The stockholders are insulated by distance from the misery their company causes, and the executives outright make out like bandits, even when they get caught. This is ultimately a problem which can only be solved by voters and their representatives inflicting meaningful punishment.
    - uxp 9y ago
      My parents opened an account for me with a bank when I was ~6 years old in 1988 that was swallowed up by Wells Fargo in the early naughts, which I maintained until about 6 years ago. At around the time I withdrew all my money and moved it to a local CU, I was going through financial hardships, and frequently would have less than a hundred dollars to my name. I never had any problems with them until then, when they would seem to hold up smaller debits as pending, even if a deposit was made which was also held as pending, until a larger debit was made and they were able to shift the order of transactions to maximize overdraft fees. For example, $50 balance, $25 debit, $20 debit, $100 deposit, $80 debit resulting in a logical balance of $25 would be shifted to clear as a $50 balance, $80 debit (+$30 fee), $25 debit (+$30 fee), $20 debit (+$30 fee), $100 deposit leaving a balance of -$65 and a daily fee until I could find more cash to deposit and not use my debit card. These transactions could happen over multiple business days, which made zero sense. Even now that I have a more stable job and a comfortable pillow of cash to fall back on, my CU seems to want to dictate where that money should go, instead of me shifting it around. Just this week, I went into a branch to withdraw some cash where the teller asked if I wanted to shift some savings into a money market account, which I agreed to, but said I didn't have much time that day to discuss it. Before I could go next door and get lunch, he had moved the money and zeroed out the account, which (despite being a saving account, is where my debit purchases get withdrawn from), managed to get me two overdraft fees when I bought lunch. I'm seriously considering purchasing another mattress to store my money. In this day and age, there is no such thing as a bank. They are all financial institutions.
pasbesoin 9y ago
Remember: This isn't the Trump administration. This results from the regulation that was put in place and the enforcement that was started before, and that his administration is busy trying to deconstruct. Setting the political aspect aside, there seems to be a broader consensus that this "bankster" behavior is bad and needs to be reined in. And investment depends upon a certain degree of stability as well as reliable financial and legal systems. How this behavior is handled -- or not -- has more of an impact, down to start-up ventures and their environments, than people sometimes stop to think about.
- superioritycplx 9y ago
  The criminal bailouts of 2008 also wasn't the Trump administration.
sol_remmy 9y ago
Where are the proceeds of the fine going? This "fine" should be returned to the American people and not used to fund obscure government programs
- aerotwelve 9y ago
  It is being returned to the victims as the law requires the CFPB to do.
Bye_Felicia 9y ago
disgusting. conclusion: Bankers are above the law. They should be in jail, along with the CEO. This isn't just white collar crime. This was blatant, premeditated, financial fraud. Directed from the very top to every single Wells Fargo office. How is the public so stupid and uneducated, as to not be outraged? All this does, is help to motivate the next generation of sociopaths. Zero consequences.
- FireBeyond 9y ago
  > This was blatant, premeditated, financial fraud. Directed from the very top to every single Wells Fargo office. Oh no! No it wasn't! They never directed their employees to do anything illegal or unethical in hitting those unrealistic account targets, and the fact that hundreds (or more) tellers to do so the very same way is entirely coincidence and not the executives' fault! /s
- fma 9y ago
  But....but..we got Martin Shkreli in jail! /s
scotch_drinker 9y ago
WFC had net income of $5.9 billion in Q1 2018. A $1B fine is a joke that is being played on the rest of us.
- unethical_ban 9y ago
  It won't put them out put business, but I guarantee this is not a good look for them or their board, even internally. I have no sympathy for them, fyi.
- gukov 9y ago
  What would a bank need to do to get fined their annual net income?
trumped 9y ago
Will they take out a 0% loan to pay that?
bedhead 9y ago
The government should've instead created a "fine" where they receive something like half of Wells Fargo's profits for the next ten years or so. Then cap executive compensation for the duration. Then force every board member to resign and have a regulator on the board. All for the next decade. These one-and-done fines that are paid by shareholders instead of management, even large ones, do nothing...do something with lasting consequences if you want to punish, modify behavior, and put the fear of god into others considering cheating.
- traviscj 8y ago
  Your plan is to loop the government/regulators into the scam? What exactly is that incentivizing and how does that improve things for the average bank customer?
LyalinDotCom 9y ago
Maybe its a stupid question... but what do these agencies do with so much fine money?
degenerate 9y ago
Gone are the days of Enron when the people responsible actually go to jail, it seems :(
matchagaucho 9y ago
There doesn't appear to be any reparations for the actual consumers. Where exactly do the fines go? A class action lawsuit would have served more justice.
- dredmorbius 9y ago
  This depends, but generally in Federal regulatory action, to the US Treasury. Victim restituion is a separate issue. https://www.alternet.org/economy/bank-fines-and-crime https://www.alternet.org/economy/bank-fines-and-crime
volandovengo 9y ago
I've interacted a lot with the larger banks and been flabbergasted at how they view the world. Banks, big and small, regard the consumer operations of the bank as a cost center, which they should do as little as possible to maintain. In fact - I believe the only reason that they even have public facing consumer branches is largely to get access to capital as cheaply as possible. Every proposed improvement to the consumer experience is viewed in the light of "how is this going to make the bank more money." If a direct line from improving the customer experience to make more money can't be drawn, the bank won't do it. Long gone are the days where banks provided a core function to the vast majority of society. They just exist to enrich themselves.
- PHPMyAdmin 9y ago
  > In fact - I believe the only reason that they even have public facing consumer branches is largely to get access to capital as cheaply as possible I would agree with this. Banks nowadays– maybe not local independent banks or credit unions– leverage your money to purchase investment vehicles on better credit for their higher-profile clientele, and also as liquid capital to dispense as needed. > If a direct line from improving the customer experience to make more money can't be drawn, the bank won't do it. Yep. I have an account at a sizable bank, and their mobile app has been broken the half dozen times I've used it, across as many months. It's the 21st century and a bank cannot figure out how to finance a proper mobile management application.
  - saagarjha 9y ago
    To be honest, the same could be said about some Silicon Valley tech companies as well…
- bo1024 9y ago
  Wasn't this the part of the point of Glass-Steagall? (I don't know much about it, so asking sincerely.)
deleted 9y ago
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ejlangev 9y ago
Until people start going to jail for their illegal activity rather than just paying out nominal fines I wouldn't expect their behavior to change. This is at least the 3rd major fine Wells Fargo has paid in the last few years. If only people remembered that the second half of the expression about "a few bad apples" is that they "spoil the bunch."
nodesocket 9y ago
This only hurt old Wells shareholders (stock is up nearly 2% today on this news). Meanwhile the Wells executives who clearly broke the law get off scot free. Martin Shkreli instead get's the book thrown at him, assets seized, and sent to federal prison for much less.
- dimal 9y ago
  He defrauded rich people. That can't be allowed.
  - DoreenMichele 9y ago
    He also gloated. Someone pointed out to me once that the parable of the boy who cried wolf is a story where not only did he lie, he also laughed in their faces and mocked them for believing him. He gets eaten in the end.
otakucode 9y ago
When a large fine is levied, there is only one question which actually matters: Did the company profit more than the fine from the illegal actions? If they did, then the fine will be written off as a 'cost of doing business' and nothing will change. It wouldn't make sense to do otherwise. When dealing with entities as large as Wells Fargo, they can often get away with anything as long as it is profitable enough. Since their personhood doesn't extend to the government actually being able to curtail their free movement or actions, and fines are the only way they can be censured, the fact that the public itself will balk at fines which are simply seen as "too large" can enable them to get away with anything.
cup-of-tea 9y ago
What's really funny is this is a bank and the bank essentially printed that $1bn itself anyway because banks control the money supply.
tzm 9y ago
Relative to a salary of $90k / year, $1 billion fine is roughly equivalent to a $1k fine.. or roughly a parking ticket in downtown SF.
twhb 9y ago
Does anybody have recommendations for good banks?
- dredmorbius 9y ago
  As a general best bet: local credit union.
deleted 9y ago
[deleted]
GrumpyNl 9y ago
I dare you o steal a marsbar in the supermarket, three times please.
Bricejm 9y ago
A fine isn't going to hurt Wells, especially when it's about two weeks worth of profit. If you want to teach a bank a lesson, you have to hit their business model. If after a fraud is uncovered regulators instituted restrictions to account openings instead of fines, you would see change. For example, if Wells wasn't allowed to open a new account - of any kind - for six months they would start to lose customers - and bankers - to institutions without restrictions. That would change the industry.
CivilEngineer 8y ago
The woman who was sucked out of the window of that Southwest flight was a Wells Fargo VP.
gr1zzlybe4r 8y ago
I'm commenting late on this and for the first time on HN ever, but the things that big banks can do and get away with are ridiculous. It simply doesn't matter what they do to their customers because they will always be bailed out and get their way. They don't have to care because it doesn't matter.
godgod 8y ago
Not enough.

603 points by smaili 9y ago

It's hard for me think of wellsfargo as an "evil" company, because every time I had to go into the branch, they have some of the nicest tellers and it's always a pleasant experience.

camhenlin 9y ago
Maybe it's possible to be a good, friendly person, good employee, etc., and still work for an awful company. People need jobs
- moate 9y ago
  Nice people work for Walmart and Amazon who are both frequently cited as terrible employers. Terrible people also work at generally "good" companies as well. Say it with me folks: Business aren't people. They're collections of people who run a a whole range of types. (Obvious exceptions for 1-man shops/Freelancers)
dharmab 9y ago
I felt sorry for the branch manager at by local branch when I closed my account. She's a great person who really cares about her customers, unlike her employer.
- vinhboy 9y ago
  I think this raises a fair point. How can we punish the employers and not the employees? Maybe we should have jailed the executives or responsible party, so no one dares to pull that kind of shit again.
- criddell 9y ago
  Part of my frustration with WF is that after I establish a relationship with the manager, they inevitably move him or her to a different store.
marshray 9y ago
I have been a WF customer for many years and, to be fair, they have always done right by me. It used to be that my main complaint was they would ask me to sign up for a credit card every time I walked into a branch, but they've cut way back on that. I am, of course, disgusted by their fraudulent actions, and have several times considered closing my accounts in protest. But now I'm thinking that I probably couldn't find a bank anywhere under closer and more intense scrutiny. For now at least, it seems they're on their best behavior.
- vinhboy 9y ago
  > But now I'm thinking that I probably couldn't find a bank anywhere under closer and more intense scrutiny. I thought that like 2 scandals ago... But they keep appearing on the news with more... Maybe they are not done airing out their dirty laundry.
rm_-rf_slash 9y ago
My mother opened my first bank account at HSBC a long time ago. Then the recession happened and their regional branches got bought out by First Niagara, the shittiest and most customer-service-time-deaf corporation I ever had the displeasure of dealing with. (And then we learned through the news that HSBC actively assisted drug money laundering in South America, woohoo) Fortunately they were then bought out by KeyBank, although now I just use a local credit union. Throughout all of that, my local tellers and bank staff remained. They are probably the friendliest and most helpful bank staff I ever encountered. It’s a shame they had to go through all of that. Probably more irate customers than I had to deal with them.
- FireBeyond 9y ago
  > ... the shittiest and most customer-service-time-deaf corporation ... Fortunately they were then bought out by KeyBank, although now I just use a local credit union. The same KeyBank who hit my account with $380+ in overdraft fees _in a single day_ when they decided after four years of seeing the same paycheck being deposited twice a month that it was "subject to hold"?
wmeredith 9y ago
I don't know how to say this without sounding condescending, but you basically just need to think harder or perhaps more critically. This is like saying you can't wrap your head around global warming because it's cold un your backyard or that you can't believe the earth is round because the ground in front of you seems so flat. We must open our minds to larger concepts. This sort of small-mindedness is responsible for the worst part of the human condition.
- aeorgnoieang 9y ago
  They didn't write that they couldn't form the thought; just that it was hard. You could try reading harder, or perhaps more carefully (and critically).

aphextron 9y ago

Something has happened to big banks along the way, where they no longer actually provide banking services to their customers. When I walk into a Wells Fargo branch now and sit down with a "banker" to take care of my accounts, it consists of sitting next to them while they call 1-800-WELLSFARGO for me and talk to a call center. There simply is no service anymore. I walked into my local branch to open up an IRA last week before the tax deadline, and they literally couldn't even do it for me in time because the person on the phone said "we'll do our best effort, no guarantee." I walked up to the teller, asked for a cashier check for the full amount in my accounts, and opened up an account next door at a small local bank (First Republic). They were able to sit down with me and immediately pull up all the paperwork to create and fund an IRA account with no hassle at all right there, no phone call involved. It was like night and day. These huge banks have simply become way too big, and it serves no one's interest but their own. They have zero incentive to provide actual customer service anymore. There needs to be a massive restructuring of our system to allow smaller banks to thrive and provide actual competition.

wpietri 9y ago
Agreed. I changed over to a local credit union from Bank of America a few years back. Their online banking is a bit more awkward, but I can always talk with an informed person, which more than makes up for it. My theory is that banks started out personal, but as they have consolidated have become ever more industrial in their scale and processes. Unfortunately, industrial-style human interaction is pretty awful. I think the massive restructuring will come as banks split tasks into a) fully automating the boring things, and b) creating really good tools that empower their front-line workers (instead of treating them as dumb peripherals). If our current major banks all went the way of Blockbuster during that process, I'll shed no tears. Few will, I imagine.
epc 9y ago
Chase seems to have moved their "hands on" banking to their "Private Bankers" (who you qualify for if you have some minimum amount of money or debt across your accounts).
- 9y ago

djschnei 9y ago

Where does the fine go? Does it get divvied up amongst the people affected by WF's wrongdoing?

rb808 9y ago
> Does it get divvied up amongst the people affected by WF's wrongdoing? Are you crazy? The fines usually get distributed around different politicians to spend on their favorite things. Like this https://www.usatoday.com/story/opinion/editorials/2014/07/14/lohudreacts-spend-pnb-paribas-fine/12634055/ https://www.usatoday.com/story/opinion/editorials/2014/07/14... Which is why these fines will continue. Everyone hates the banks so the regulators can just keep fining them for everything indefinitely, when they run out of ideas they find some new problems with the 2008 mortgages again.
- djschnei 9y ago
  Was mostly a sarcastic question ;) This pattern can be seen everywhere... 1) politicians regulate an industry with the best intentions 2) industry becomes a safe haven for "the big fish" that can pay to play 3) Rinse and repeat for a while, creating bigger and bigger barriers to entry into the marketplace. Politicians are happy, mega banks are happy. 4) Megabank inevitably does something reprehensible 5) politicians slap them with some fines. Fake remorse ensues... 6) go back to step 1
  - samstave 9y ago
    Stop paying taxes.
    - djschnei 9y ago
      Well, taxes go towards some stuff I appreciate... plus I would probably be thrown in jail. So not sure that is a solution :p
      - samstave 9y ago

bigmattystyles 9y ago

Was the fine expected to be much worse? They're trading up at the moment

nappy-doo 9y ago
It's not as much as the fine was expected to be worse, just that the situation is now resolved. WFC can put this behind them, and move on. AFAICR, this is the last of the scandals that have rocked the bank. As soon as the cap on their assets is lifted (likely before the end of the quarter), there's nothing left in the queue holding the price back. As such, the company will be able to take advantage of the higher interest rate environment we're moving into, and the stock (already undervalued compared to its peers) will benefit as a result. Or, markets are irrational. Take your pick.
pas 9y ago
Or probably the end of uncertainty about the investigation is itself a signal. (People who dropped it from their portfolios because they were risky now put it back.)
jonknee 9y ago
It's now a known quantity and if there is one thing Wall Street dislikes is surprises.

kaizendad 9y ago

OK, but Wells Fargo made $5 billion last year, and the activity they were fined for took place over many years, which leaves me to ask: after the fines, was this activity profitable or not? If it was profitable, do the fines actually dissuade future dishonesty? Also, apparently Wells Fargo thinks that 27,000 people lost their cars over this. I bet none of those people will be made whole. Cars are really essential things: lose your car and you may be unable to take a child to school, unable to shop for food, or even unable to get to work. It's a pity that can't be undone.

johnwheeler 9y ago
No, they made 22 billion. You're probably reading their quarterly figures. source: https://www.nasdaq.com/symbol/wfc/financials?query=income-statement https://www.nasdaq.com/symbol/wfc/financials?query=income-st... The scams in themselves were not profitable. For the cross-selling, they made an extra 100 million or so over the course of many years, I don't recall the figures I read.
- perseusprime11 9y ago
  This billion dollar fine is like a small change for them. Warren Buffet has a lot of exposure to this company and he has been influencing to let them go for a long time. Go figure!
  - johnwheeler 8y ago
    Well, the shareholders have suffered outsize to the amount of damage to the victims in dollar terms by orders of magnitude. Probably 100-150 billion, conservatively, wasn’t realized. Wells didn’t get in trouble during the financial crisis because they stuck to conventional banking instead of investment banking, like their peers. Their reputation was unmatched. Since the crisis WFC has floated low double digits percentage wise around their market cap, while all its peers have doubled and tripled in market cap. Wells holders have missed the boat they waited ten years for, and probably will live in purgatory for another 4 or 5 years because of this mess.

monster_group 9y ago

So the government gets to keep $1B collected from WF. What about the people who overpaid all those fees? Are they being refunded?

commanderjroc 9y ago
I got an email today about them settling a class action lawsuit that covers this. https://wfsettlement.com https://wfsettlement.com
rgbrenner 9y ago
The CFPD is required to use all money from fines for victim compensation, and where that's not practical, they keep it to compensate future victims or they can spend it on consumer education and financial literacy programs. They are not permitted to spend the money on anything else.

meesterdude 9y ago

What a great start! Keep it up!

jonathankoren 9y ago

Marketplace reported this morning that while WF was fined $1B, they apparently saved more than three times that amount due to the new tax law. http://www.latimes.com/business/hiltzik/la-fi-hiltzik-wells-fargo-20180420-story.html http://www.latimes.com/business/hiltzik/la-fi-hiltzik-wells-... http://www.latimes.com/business/la-fi-wells-fargo-earnings-20180112-story.html http://www.latimes.com/business/la-fi-wells-fargo-earnings-2...

marricks 9y ago

I heard this discussed in NPR as a reasonable fine because “it hit their profits but they still made money that quarter” and “the CEO steppe down”. How is that enough when so many people had their life totally screwed? It should decimate their profits and high ups should serve federal time. Id executives don’t fear the government over something so egregious were opening the door to more of the same.

tinbad 9y ago

I had high hopes for Bank Simple some time ago when they came out. Then they got acquired by a bigger bank. This industry is nearly impossible to disrupt. Just like the Oil companies back in the day, these banks are so big and powerful that it's impossible to innovate in the current market conditions.

scotch_drinker 9y ago
Big Oil was broken up by anti trust legislation. It's possible this comes back around. Currently reading a biography on Brandeis who was one of the titans of anti-trust in the 30s and 40s. I'm hoping that kind of regulation comes back around.
- uxp 9y ago
  How? The CFPB wasn't perfect, but like the ACA, many think that if legislation is not perfect, it should not be enacted. That's the entire basis of the Hastert rule, if the majority party isn't able to "secure" a majority of votes, then bills shouldn't be voted on. Isn't that the point of voting?!? Why are our representatives pre-voting on bills to determine if they should even be argued, debated, amended and tried? I'm reminded of something one of my senators said last year about the Russia investigation (specifically the election interference, not "collusion"), in context of them not wanting to investigate because the facts were not known. THATS THE FKING POINT OF AN INVESTIGATION YOU DIPSH*T, TO FIND FACTS. Everyone needs to vote this november. I don't care if you vote Republican, Democrat or any of the 3rd parties. Just vote. Get the old guys out. Disrupt their legacy. We (software developers) hate the Waterfall method. We like being Agile, whatever that means. Make our government operate the same way. Iterate in small, meaningful chunks.
gukov 9y ago
Banks, Oil, social networks

makecheck 9y ago

Not sure how they calculate fines like these but it sure should work something like the following: $100M + [(entire bank profit gained from illegal activity) * 7.0] + [(number of people screwed) * (average fees charged per person) * 2.0] In addition, there should be a stipulation that the bank cannot (in present or future) pay the fee through employee layoffs or other cop-outs. Ideally, the government is able to require fine payments to come directly from executive compensation or by selling assets, etc. My guess is it would come out to, let’s say, a hell of a lot more than this.

aerotwelve 9y ago
> Ideally, the government is able to require fine payments to come directly from executive compensation or by selling assets, etc. Interestingly enough, DF allows the government to do this if the bank is considered "too big to fail", which is a classification they define precisely in the bill. But not before that.

JumpCrisscross 9y ago

Critically, Well Fargo "submitted to an unprecedented order Friday that would give the Office of the Comptroller of the Currency the right to remove some of the lender’s executives or board members" [1]. TL; DR Senior management and even Board members can be fired by the OCC. [1] https://www.bloomberg.com/news/articles/2018-04-20/wells-fargo-said-to-be-fined-1-billion-over-consumer-missteps https://www.bloomberg.com/news/articles/2018-04-20/wells-far...

rectang 9y ago

The executives responsible (principally Carrie Tolstedt and John Stumpf) not only did not go to jail, they ended up money ahead to the tune of 8-9 figures, even after clawbacks. So if you're an executive, you know what to do... And if you're a shareholder, is a billion dollar fine compared against 88.4 billion in 2017 revenue sufficient to sustain your motivation in an endless fight against the backscratching director and executive culture?

ansible 9y ago
You think that even in this day and age, anytime you're getting hit with a billion dollars in fines, you'd sit up and pay attention. I'm not saying WF (or more importantly, their shareholders) actually cares. But you'd think that they would at that level.
- rectang 9y ago
  A billion ain't enough. I don't have faith in Wells Fargo ownership or leadership to ensure ethical or even legal behavior in the absence of sufficient incentives. The market as currently set up encourages large scale misbehavior and destructive abuse by Wells Fargo of its customers. The stockholders are insulated by distance from the misery their company causes, and the executives outright make out like bandits, even when they get caught. This is ultimately a problem which can only be solved by voters and their representatives inflicting meaningful punishment.
  - uxp 9y ago
    My parents opened an account for me with a bank when I was ~6 years old in 1988 that was swallowed up by Wells Fargo in the early naughts, which I maintained until about 6 years ago. At around the time I withdrew all my money and moved it to a local CU, I was going through financial hardships, and frequently would have less than a hundred dollars to my name. I never had any problems with them until then, when they would seem to hold up smaller debits as pending, even if a deposit was made which was also held as pending, until a larger debit was made and they were able to shift the order of transactions to maximize overdraft fees. For example, $50 balance, $25 debit, $20 debit, $100 deposit, $80 debit resulting in a logical balance of $25 would be shifted to clear as a $50 balance, $80 debit (+$30 fee), $25 debit (+$30 fee), $20 debit (+$30 fee), $100 deposit leaving a balance of -$65 and a daily fee until I could find more cash to deposit and not use my debit card. These transactions could happen over multiple business days, which made zero sense. Even now that I have a more stable job and a comfortable pillow of cash to fall back on, my CU seems to want to dictate where that money should go, instead of me shifting it around. Just this week, I went into a branch to withdraw some cash where the teller asked if I wanted to shift some savings into a money market account, which I agreed to, but said I didn't have much time that day to discuss it. Before I could go next door and get lunch, he had moved the money and zeroed out the account, which (despite being a saving account, is where my debit purchases get withdrawn from), managed to get me two overdraft fees when I bought lunch. I'm seriously considering purchasing another mattress to store my money. In this day and age, there is no such thing as a bank. They are all financial institutions.

pasbesoin 9y ago

Remember: This isn't the Trump administration. This results from the regulation that was put in place and the enforcement that was started before, and that his administration is busy trying to deconstruct. Setting the political aspect aside, there seems to be a broader consensus that this "bankster" behavior is bad and needs to be reined in. And investment depends upon a certain degree of stability as well as reliable financial and legal systems. How this behavior is handled -- or not -- has more of an impact, down to start-up ventures and their environments, than people sometimes stop to think about.

superioritycplx 9y ago
The criminal bailouts of 2008 also wasn't the Trump administration.

sol_remmy 9y ago

Where are the proceeds of the fine going? This "fine" should be returned to the American people and not used to fund obscure government programs

aerotwelve 9y ago
It is being returned to the victims as the law requires the CFPB to do.

Bye_Felicia 9y ago

disgusting. conclusion: Bankers are above the law. They should be in jail, along with the CEO. This isn't just white collar crime. This was blatant, premeditated, financial fraud. Directed from the very top to every single Wells Fargo office. How is the public so stupid and uneducated, as to not be outraged? All this does, is help to motivate the next generation of sociopaths. Zero consequences.

FireBeyond 9y ago
> This was blatant, premeditated, financial fraud. Directed from the very top to every single Wells Fargo office. Oh no! No it wasn't! They never directed their employees to do anything illegal or unethical in hitting those unrealistic account targets, and the fact that hundreds (or more) tellers to do so the very same way is entirely coincidence and not the executives' fault! /s
fma 9y ago
But....but..we got Martin Shkreli in jail! /s

scotch_drinker 9y ago

WFC had net income of $5.9 billion in Q1 2018. A $1B fine is a joke that is being played on the rest of us.

unethical_ban 9y ago
It won't put them out put business, but I guarantee this is not a good look for them or their board, even internally. I have no sympathy for them, fyi.
gukov 9y ago
What would a bank need to do to get fined their annual net income?

trumped 9y ago

Will they take out a 0% loan to pay that?

bedhead 9y ago

The government should've instead created a "fine" where they receive something like half of Wells Fargo's profits for the next ten years or so. Then cap executive compensation for the duration. Then force every board member to resign and have a regulator on the board. All for the next decade. These one-and-done fines that are paid by shareholders instead of management, even large ones, do nothing...do something with lasting consequences if you want to punish, modify behavior, and put the fear of god into others considering cheating.

traviscj 8y ago
Your plan is to loop the government/regulators into the scam? What exactly is that incentivizing and how does that improve things for the average bank customer?

LyalinDotCom 9y ago

Maybe its a stupid question... but what do these agencies do with so much fine money?

degenerate 9y ago

Gone are the days of Enron when the people responsible actually go to jail, it seems :(

matchagaucho 9y ago

There doesn't appear to be any reparations for the actual consumers. Where exactly do the fines go? A class action lawsuit would have served more justice.

dredmorbius 9y ago
This depends, but generally in Federal regulatory action, to the US Treasury. Victim restituion is a separate issue. https://www.alternet.org/economy/bank-fines-and-crime https://www.alternet.org/economy/bank-fines-and-crime

volandovengo 9y ago

I've interacted a lot with the larger banks and been flabbergasted at how they view the world. Banks, big and small, regard the consumer operations of the bank as a cost center, which they should do as little as possible to maintain. In fact - I believe the only reason that they even have public facing consumer branches is largely to get access to capital as cheaply as possible. Every proposed improvement to the consumer experience is viewed in the light of "how is this going to make the bank more money." If a direct line from improving the customer experience to make more money can't be drawn, the bank won't do it. Long gone are the days where banks provided a core function to the vast majority of society. They just exist to enrich themselves.

PHPMyAdmin 9y ago
> In fact - I believe the only reason that they even have public facing consumer branches is largely to get access to capital as cheaply as possible I would agree with this. Banks nowadays– maybe not local independent banks or credit unions– leverage your money to purchase investment vehicles on better credit for their higher-profile clientele, and also as liquid capital to dispense as needed. > If a direct line from improving the customer experience to make more money can't be drawn, the bank won't do it. Yep. I have an account at a sizable bank, and their mobile app has been broken the half dozen times I've used it, across as many months. It's the 21st century and a bank cannot figure out how to finance a proper mobile management application.
- saagarjha 9y ago
  To be honest, the same could be said about some Silicon Valley tech companies as well…
bo1024 9y ago
Wasn't this the part of the point of Glass-Steagall? (I don't know much about it, so asking sincerely.)

deleted 9y ago

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ejlangev 9y ago

Until people start going to jail for their illegal activity rather than just paying out nominal fines I wouldn't expect their behavior to change. This is at least the 3rd major fine Wells Fargo has paid in the last few years. If only people remembered that the second half of the expression about "a few bad apples" is that they "spoil the bunch."

nodesocket 9y ago

This only hurt old Wells shareholders (stock is up nearly 2% today on this news). Meanwhile the Wells executives who clearly broke the law get off scot free. Martin Shkreli instead get's the book thrown at him, assets seized, and sent to federal prison for much less.

dimal 9y ago
He defrauded rich people. That can't be allowed.
- DoreenMichele 9y ago
  He also gloated. Someone pointed out to me once that the parable of the boy who cried wolf is a story where not only did he lie, he also laughed in their faces and mocked them for believing him. He gets eaten in the end.

otakucode 9y ago

When a large fine is levied, there is only one question which actually matters: Did the company profit more than the fine from the illegal actions? If they did, then the fine will be written off as a 'cost of doing business' and nothing will change. It wouldn't make sense to do otherwise. When dealing with entities as large as Wells Fargo, they can often get away with anything as long as it is profitable enough. Since their personhood doesn't extend to the government actually being able to curtail their free movement or actions, and fines are the only way they can be censured, the fact that the public itself will balk at fines which are simply seen as "too large" can enable them to get away with anything.

cup-of-tea 9y ago

What's really funny is this is a bank and the bank essentially printed that $1bn itself anyway because banks control the money supply.

tzm 9y ago

Relative to a salary of $90k / year, $1 billion fine is roughly equivalent to a $1k fine.. or roughly a parking ticket in downtown SF.

twhb 9y ago

Does anybody have recommendations for good banks?

dredmorbius 9y ago
As a general best bet: local credit union.

deleted 9y ago

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GrumpyNl 9y ago

I dare you o steal a marsbar in the supermarket, three times please.

Bricejm 9y ago

A fine isn't going to hurt Wells, especially when it's about two weeks worth of profit. If you want to teach a bank a lesson, you have to hit their business model. If after a fraud is uncovered regulators instituted restrictions to account openings instead of fines, you would see change. For example, if Wells wasn't allowed to open a new account - of any kind - for six months they would start to lose customers - and bankers - to institutions without restrictions. That would change the industry.

CivilEngineer 8y ago

The woman who was sucked out of the window of that Southwest flight was a Wells Fargo VP.

gr1zzlybe4r 8y ago

I'm commenting late on this and for the first time on HN ever, but the things that big banks can do and get away with are ridiculous. It simply doesn't matter what they do to their customers because they will always be bailed out and get their way. They don't have to care because it doesn't matter.

godgod 8y ago

Not enough.