Disappointing News Wells Fargo

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
mickroark
Posts: 121
Joined: Wed Jan 13, 2016 10:35 am

Re: Disappointing News Wells Fargo

Post by mickroark »

I just sold my mutual fund at Vanguard that had Wells Fargo stock as its number one holding. :mrgreen:
User avatar
peterinjapan
Posts: 560
Joined: Fri May 15, 2015 8:41 am
Location: Japan!

Re: Disappointing News Wells Fargo

Post by peterinjapan »

I own no WFC but am thinking of buying some at the new lower price. Probably not a good idea.
Whakamole
Posts: 1210
Joined: Wed Jan 13, 2016 9:59 pm

Re: Disappointing News Wells Fargo

Post by Whakamole »

peterinjapan wrote:I own no WFC but am thinking of buying some at the new lower price. Probably not a good idea.
Probably for the best. Things are just getting started:

http://www.breakingviews.com/considered ... tory-gaps/
Engineer250
Posts: 1081
Joined: Wed Jun 22, 2016 1:41 pm

Re: Disappointing News Wells Fargo

Post by Engineer250 »

heartwood wrote:We have our mortgage at WF.

I'm a mega corp retiree. I'm amazed and appalled at the WF CEO's statement that it was the employees fault. Where are the controls, where is the cultural ethos for the company. The BOD should fire the CEO. Perhaps the BOD should consider replacing responsible management. In theory the COO is running the shop, but the BOD and CEO are responsible. To blame the employees without accepting responsibility is unfathomable to me.
If you retired from a mega corp I'm surprised this would be unusual for you! My big company experience in the private industry was all about blaming the little guy on the totem pole. Nevermind that management set the timeline and the requirements. Big companies like that always have a company culture and the leadership plays a strong role in what that culture is. My former mega corp was very pro-customer but also expected people to produce the same product even when the schedule was cut in half or resources were taken away. Other mega corps we worked with had an insider-outsider culture and would straight up lie to people on the outside, including customers. Didn't VW claim it was a bunch of "rogue engineers" who used the test fooling software? C Level might not have known exactly what corners were being cut, but I'm sure they had a pretty good idea and the guys right below them in middle management knew exactly what was going on. I never saw anything unethical at my own company, unless you count how the blame always went downhill and in how employees were often treated.
Where the tides of fortune take us, no man can know.
Levett
Posts: 4177
Joined: Fri Feb 23, 2007 2:10 pm
Location: upper Midwest

Re: Disappointing News Wells Fargo

Post by Levett »

The Senate Banking hearing, currently on Bloomberg, is simply devastating.

Lev
Whakamole
Posts: 1210
Joined: Wed Jan 13, 2016 9:59 pm

Re: Disappointing News Wells Fargo

Post by Whakamole »

Levett wrote:The Senate Banking hearing, currently on Bloomberg, is simply devastating.

Lev
http://www.businessinsider.com/wells-fa ... dal-2016-9
"I'm not a criminal officer, I'm not a lawyer, I don't know the legal term," said Stumpf when pushed by Sen. Patrick Toomey on whether the employees committed fraud by opening the unwanted accounts.
...
Stumpf said that Wells Fargo never disclosed the issues to shareholder through filings because "it was not a material event."
I don't even know what to say.
Fallible
Posts: 7573
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Disappointing News Wells Fargo

Post by Fallible »

Whakamole wrote:
Levett wrote:The Senate Banking hearing, currently on Bloomberg, is simply devastating.

Lev
http://www.businessinsider.com/wells-fa ... dal-2016-9
"I'm not a criminal officer, I'm not a lawyer, I don't know the legal term," said Stumpf when pushed by Sen. Patrick Toomey on whether the employees committed fraud by opening the unwanted accounts.
...
Stumpf said that Wells Fargo never disclosed the issues to shareholder through filings because "it was not a material event."
I don't even know what to say.
I just watched it on NPR and also don't know what to say - or what he meant by "material." IMO, a really weak performance and I'm thinking he may be gone soon.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
barnaclebob
Posts: 4266
Joined: Thu Aug 09, 2012 10:54 am

Re: Disappointing News Wells Fargo

Post by barnaclebob »

There was a very interesting thread on reddit where former retail employees described how retail sales incentives or performance goals are bad in nearly every case. They always find a way to fraudulently make their numbers and management is nearly always complicit in it because they are also judged on how their areas are performing to the metrics.

It sounds like wells fargo had some executive or consultant make some graphs and showed how branches that open more accounts make more profits so that should be the metric that everyone is judged by. The real crime is that those lowest on the chain were fired when they were forced to meet bad metrics.

If my credit union did something like this I would instantly drop them.
User avatar
nedsaid
Posts: 13955
Joined: Fri Nov 23, 2012 12:33 pm

Re: Disappointing News Wells Fargo

Post by nedsaid »

Wells Fargo isn't the only bank with the very high sales goals. It is a big problem all across the financial industry. I have nothing against setting goals for your employees but they are set so unrealistically high that even their best people have trouble meeting them. Big financial companies are pretty much Roman galleys, use you up until you can't row anymore and then throw you overboard. In that environment, you have little hope of getting unbiased and objective advice.
A fool and his money are good for business.
User avatar
abuss368
Posts: 22225
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Disappointing News Wells Fargo

Post by abuss368 »

I would be surprised if this problem and situation is specific to Wells Fargo or more widespread across the banking profession.
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
triceratop
Posts: 5838
Joined: Tue Aug 04, 2015 8:20 pm
Location: la la land

Re: Disappointing News Wells Fargo

Post by triceratop »

Levett wrote:The Senate Banking hearing, currently on Bloomberg, is simply devastating.

Lev
I also listened to the hearing (the full exchange with CEO Stumpf is on C-SPAN's website), and would encourage other shareholders to as well. The hearing was indeed devastating; I was pleasantly pleased though to see the depth of questioning, especially as it related to the impact on consumer credit scores and the long-term financial implications of the fraud on these victims.

As an investor in Wells Fargo (at market weights) it was quite sobering.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."
Caduceus
Posts: 2775
Joined: Mon Sep 17, 2012 1:47 am

Re: Disappointing News Wells Fargo

Post by Caduceus »

Why isn't this fraud? I can't think of a single reason why opening up fake accounts in client's names in order to charge them fees doesn't constitute fraud.

The sticker price of the sham fees from retail bank accounts isn't even the most troubling thing. There were apparently at least more than half a million fake credit accounts that were opened too. What happens if someone was on the cusp of two different credit rating categories and the recent (fake) credit application/enquiry got them bumped down to the lower credit category and they therefore got a higher mortgage interest rate? What about the time spent by clients who might have thought their identity had been stolen when they saw credit cards they didn't apply for in their credit report history? Wouldn't opening and then canceling sham credit account lower the overall age of accounts which is a factor in FICO?
Caduceus
Posts: 2775
Joined: Mon Sep 17, 2012 1:47 am

Re: Disappointing News Wells Fargo

Post by Caduceus »

peterinjapan wrote:I own no WFC but am thinking of buying some at the new lower price. Probably not a good idea.
The real damage to Wells Fargo is reputational. For a bank that prides itself on retail banking, the long term damage is likely to be significant, even if the actual financial damages are slight.

Would you still bank with Wells Fargo?
rattlenap
Posts: 324
Joined: Wed May 25, 2016 6:22 pm

Re: Disappointing News Wells Fargo

Post by rattlenap »

I've been with WF for 2 decades and never once had a problem. This is just a blip on the radar and will soon be yesterdays news. Regardless, I still think they're a much better ran and more conservative place too bank than at one of their competitors, in my opinion at least. I've financed my house and have done all sorts of business with them. So I am staying.
Levett
Posts: 4177
Joined: Fri Feb 23, 2007 2:10 pm
Location: upper Midwest

Re: Disappointing News Wells Fargo

Post by Levett »

Triceratop observed:

"I was pleasantly pleased though to see the depth of questioning"

So was I.

On the other hand, I was astonished by how little the CEO (apparently) knew about his bank's operations.

The hearings remind me of just how timely John Bogle's book, The Battle for the Soul of Capitalism, remains.

I hope someone asks John Bogle about WFC at the Bogleheads meeting and reports back his comments to this site.

Lev
tim1999
Posts: 3747
Joined: Tue Dec 16, 2008 7:16 am

Re: Disappointing News Wells Fargo

Post by tim1999 »

[OT comment removed by admin LadyGeek]

Stories like these are why I only use a local bank that has a small handful of branches and a "customer first" philosophy.
User avatar
in_reality
Posts: 4529
Joined: Fri Jul 12, 2013 6:13 am

Re: Disappointing News Wells Fargo

Post by in_reality »

tim1999 wrote:[OT comment removed by admin LadyGeek]

Stories like these are why I only use a local bank that has a small handful of branches and a "customer first" philosophy.
I'm happy to stay with Wells Fargo. Their new web design is great and I haven't had any problems with them. Did have one unexplained insufficient funds charge about 3 years ago, but cleared that up with a call and insistence it be refunded.

A family member had real trouble at their local branch once where the person in charge of their account had just retired and it was found the amount they owed on their farm was much higher than had been reported to them over the years and it caused considerable grief and mayhem with their financial planning.

I am disappointed in Wells Fargo, expect better, and do truly wish whoever was ultimately in charge of the incentive program be removed from the bank. I see they have already removed product sales goals for all retail bankers.

My biggest complain actually is their too strict security. I don't like not being able to stop the renewal of a CD by telephone because the CD size is "too big". It's just going into my account anyway. Maybe their advanced access code system takes care of that now. I stopped using their CDs a few years ago anyway when their rates stopped being so competitive.
User avatar
heartwood
Posts: 1670
Joined: Sat Nov 23, 2013 1:40 pm

Re: Disappointing News Wells Fargo

Post by heartwood »

Engineer250 wrote:
heartwood wrote:We have our mortgage at WF.

I'm a mega corp retiree. I'm amazed and appalled at the WF CEO's statement that it was the employees fault. Where are the controls, where is the cultural ethos for the company. The BOD should fire the CEO. Perhaps the BOD should consider replacing responsible management. In theory the COO is running the shop, but the BOD and CEO are responsible. To blame the employees without accepting responsibility is unfathomable to me.
If you retired from a mega corp I'm surprised this would be unusual for you! My big company experience in the private industry was all about blaming the little guy on the totem pole. Nevermind that management set the timeline and the requirements. Big companies like that always have a company culture and the leadership plays a strong role in what that culture is. My former mega corp was very pro-customer but also expected people to produce the same product even when the schedule was cut in half or resources were taken away. Other mega corps we worked with had an insider-outsider culture and would straight up lie to people on the outside, including customers. Didn't VW claim it was a bunch of "rogue engineers" who used the test fooling software? C Level might not have known exactly what corners were being cut, but I'm sure they had a pretty good idea and the guys right below them in middle management knew exactly what was going on. I never saw anything unethical at my own company, unless you count how the blame always went downhill and in how employees were often treated.
Perhaps I was more fortunate in my career experiences and the people I worked with than you. I worked my last 20 years for a company and a management that was ethical, supportive of employees and took responsibility. I had the opportunity to interact with the CEO, COO, et al and at times the BOD. Each was clear on how the company acted and behaved. There were also programs and checks to assure management that there was little opportunity for a disconnect between them and employees.

The WF CEO saying it was the employees fault (he's since testified before Congress) when this went on for years and involved thousands of employees implies there were no controls in place to confirm to management they were actually running a company. Thousands of employees over several years, and he wants us to believe he's "running" the company. Perhaps he should watch a season or two of Undercover Boss.
NotWhoYouThink
Posts: 3210
Joined: Fri Dec 26, 2014 4:19 pm

Re: Disappointing News Wells Fargo

Post by NotWhoYouThink »

A family member had real trouble at their local branch once where the person in charge of their account had just retired and it was found the amount they owed on their farm was much higher than had been reported to them over the years and it caused considerable grief and mayhem with their financial planning.
Ummm....this actually sounds quite disturbing.
User avatar
in_reality
Posts: 4529
Joined: Fri Jul 12, 2013 6:13 am

Re: Disappointing News Wells Fargo

Post by in_reality »

NotWhoYouThink wrote:
A family member had real trouble at their local branch once where the person in charge of their account had just retired and it was found the amount they owed on their farm was much higher than had been reported to them over the years and it caused considerable grief and mayhem with their financial planning.
Ummm....this actually sounds quite disturbing.
Yeah, they were selling and planning to buy a business but ended up not being able to swing the financing so their plans had to change.

All in all though, the amount is tiny compared to the sums involved overall at Wells Fargo. It just seems you have to sleep with one eye open no matter where you are....
Steve723
Posts: 196
Joined: Sat Aug 16, 2014 4:44 pm

Re: Disappointing News Wells Fargo

Post by Steve723 »

I'm not sure what to think of all this. Were the top level executives knowingly committing fraud? I doubt it. Did they design a sales incentive system and management practices that created the environment for such fraudulent behavior to take place? Guilty as charged, but I don't think you can send anyone to jail for bad management.

The reality is that Wells Fargo has had a ton of success cross-selling products to existing customers and doing so legitimately in the vast majority of cases. Its what made them the envy of the banking world. Unfortunately, their methodologies and tactics were taken too far and now they are paying the price in a depressed stock price and horrible PR.
Grt2bOutdoors
Posts: 23156
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Disappointing News Wells Fargo

Post by Grt2bOutdoors »

Steve723 wrote:I'm not sure what to think of all this. Were the top level executives knowingly committing fraud? I doubt it. Did they design a sales incentive system and management practices that created the environment for such fraudulent behavior to take place? Guilty as charged, but I don't think you can send anyone to jail for bad management.

The reality is that Wells Fargo has had a ton of success cross-selling products to existing customers and doing so legitimately in the vast majority of cases. Its what made them the envy of the banking world. Unfortunately, their methodologies and tactics were taken too far and now they are paying the price in a depressed stock price and horrible PR.
It's a regulated entity, if you can force them to take a $10 billion dollar bailout they did not need, you can significantly influence certain other outcomes, it just depends how much heat the regulators bring down on them. The board has a fiduciary duty to shareholders, if a few shareholder lawsuits were launched one could see this thing gain significant momentum....
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Whakamole
Posts: 1210
Joined: Wed Jan 13, 2016 9:59 pm

Re: Disappointing News Wells Fargo

Post by Whakamole »

I have been thinking about writing a well-crafted letter to Vanguard noting the damage that the Wells Fargo CEO has done to shareholder equity (or to put it another way, my money) - such as giving a nine-figure bonus to someone who encouraged corporate fraud and him not thinking of this scandal as a "material event" - and that they should work with the Board of Directors to replace him, or replace the BOD if they are unwilling. Of course it's extremely unlikely that the BOD will fire the CEO, so this is basically asking Vanguard to vote out the Board.

I think a concerted effort from other Bogleheads to send the same message would help. Thoughts?
Caduceus
Posts: 2775
Joined: Mon Sep 17, 2012 1:47 am

Re: Disappointing News Wells Fargo

Post by Caduceus »

Steve723 wrote:I'm not sure what to think of all this. Were the top level executives knowingly committing fraud? I doubt it. Did they design a sales incentive system and management practices that created the environment for such fraudulent behavior to take place? Guilty as charged, but I don't think you can send anyone to jail for bad management.
I disagree. Consider the specifics of what happened. When you read the legal briefs that have been filed so far, you get an idea of what Wells Fargo bankers actually needed to do to create these fake accounts. And it completely blows apart the idea that this was casual and non-systematic.

You have a Wells Fargo banker sitting in front of a computer screen, who steals client's information without their knowledge to create an account they did not request. To do so, one of the methods they used was setting a PIN that the customer himself did not input, inventing false information (especially fake email addresses) that was attached to real information (names, addresses), likely to avoid having the customer discover the fraudulent activity via email, and transferred funds from client's accounts without their knowledge.

Let's repeat this for good measure in case anyone missed it. A significant number of Wells Fargo employees knowingly and intentionally created passwords and PINs that clients did not request, generated false information that was at least in part designed to avoid detection of their knowing fraudulent behavior, and actually transferred real money OUT of authentic accounts.

Imagine if you were a small business owner trying to meet an aggressive sales quota. For every 100 customers that walk into your shop, you decide to scam just one of them. You place only one candy bar into their shopping bag, but after they've left, you use their credit card information to charge them for two candy bars. Is there any doubt at all in anyone's mind you've committed fraud?
NotWhoYouThink
Posts: 3210
Joined: Fri Dec 26, 2014 4:19 pm

Re: Disappointing News Wells Fargo

Post by NotWhoYouThink »

Yeah, they were selling and planning to buy a business but ended up not being able to swing the financing so their plans had to change.

All in all though, the amount is tiny compared to the sums involved overall at Wells Fargo. It just seems you have to sleep with one eye open no matter where you are....
Are you saying that the employee that retired just misinformed them about their loan balance, or did the bank employee raid their account? Either is pretty egregious.
BlueCable
Posts: 340
Joined: Fri Jun 17, 2016 9:20 am

Re: Disappointing News Wells Fargo

Post by BlueCable »

Steve723 wrote:I'm not sure what to think of all this. Were the top level executives knowingly committing fraud? I doubt it. Did they design a sales incentive system and management practices that created the environment for such fraudulent behavior to take place? Guilty as charged, but I don't think you can send anyone to jail for bad management.
Actually, there are reports now that many employees reported the activities to either supervisors higher up the chain, the WF whistleblower hotline, or the the CEO himself. In the hearing one senator read an email that was sent to the CEO reporting the fraud, but the CEO said he didn't recall reading it. Many of these employees claim they were fired in retaliation: http://money.cnn.com/2016/09/21/investi ... oplead-dom.

If over 5,000 employees were committing fraud, and the executives and directors have not created a culture which stamps out this fraud, then they are poor stewards of my capital and should be replaced.
Last edited by BlueCable on Wed Sep 21, 2016 10:23 am, edited 1 time in total.
User avatar
in_reality
Posts: 4529
Joined: Fri Jul 12, 2013 6:13 am

Re: Disappointing News Wells Fargo

Post by in_reality »

NotWhoYouThink wrote:
Yeah, they were selling and planning to buy a business but ended up not being able to swing the financing so their plans had to change.

All in all though, the amount is tiny compared to the sums involved overall at Wells Fargo. It just seems you have to sleep with one eye open no matter where you are....
Are you saying that the employee that retired just misinformed them about their loan balance, or did the bank employee raid their account? Either is pretty egregious.
I understood it was just misinformation. The people involved were actually pretty savvy and good record keepers about their (farm) business and I think just deferred to reported statements [there's only so much work you can do in a day you know]. I was in my late teens I think and not really interested in asking details like I would now. Just remember mom gently letting them know she wasn't going to join in to help them make the financing work. I'm sure they would have pursued it to a satisfactory resolution had they felt their money was missing.
Joey_Freshwater
Posts: 105
Joined: Tue Jan 05, 2016 9:38 am

Re: Disappointing News Wells Fargo

Post by Joey_Freshwater »

Caduceus wrote:
Steve723 wrote:I'm not sure what to think of all this. Were the top level executives knowingly committing fraud? I doubt it. Did they design a sales incentive system and management practices that created the environment for such fraudulent behavior to take place? Guilty as charged, but I don't think you can send anyone to jail for bad management.
I disagree. Consider the specifics of what happened. When you read the legal briefs that have been filed so far, you get an idea of what Wells Fargo bankers actually needed to do to create these fake accounts. And it completely blows apart the idea that this was casual and non-systematic.

You have a Wells Fargo banker sitting in front of a computer screen, who steals client's information without their knowledge to create an account they did not request. To do so, one of the methods they used was setting a PIN that the customer himself did not input, inventing false information (especially fake email addresses) that was attached to real information (names, addresses), likely to avoid having the customer discover the fraudulent activity via email, and transferred funds from client's accounts without their knowledge.

Let's repeat this for good measure in case anyone missed it. A significant number of Wells Fargo employees knowingly and intentionally created passwords and PINs that clients did not request, generated false information that was at least in part designed to avoid detection of their knowing fraudulent behavior, and actually transferred real money OUT of authentic accounts.

Imagine if you were a small business owner trying to meet an aggressive sales quota. For every 100 customers that walk into your shop, you decide to scam just one of them. You place only one candy bar into their shopping bag, but after they've left, you use their credit card information to charge them for two candy bars. Is there any doubt at all in anyone's mind you've committed fraud?
That's not a very good analogy. The account that was opened still belonged to the customer so it wasn't theft per se like in your example above.
Caduceus
Posts: 2775
Joined: Mon Sep 17, 2012 1:47 am

Re: Disappointing News Wells Fargo

Post by Caduceus »

Joey_Freshwater wrote: That's not a very good analogy. The account that was opened still belonged to the customer so it wasn't theft per se like in your example above.
So you think an account for which you don't have the username or the PIN, that you essentially do not know exists, and which you coud not access even if you did know it exists, belongs to you?
Last edited by Caduceus on Sat Dec 31, 2016 11:56 am, edited 1 time in total.
chupacaba
Posts: 13
Joined: Thu Dec 06, 2012 3:33 pm

Re: Disappointing News Wells Fargo

Post by chupacaba »

From the Salt Lake Tribune's Pat Bagley a few days ago:
http://www.sltrib.com/opinion/4358518-1 ... enie-wagon


Image
Fallible
Posts: 7573
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Disappointing News Wells Fargo

Post by Fallible »

Whakamole wrote:
furwut wrote:Wells Fargo is receiving a $180 million fine. And it is, apparently, firing 5,300 employees who were involved. But then there is this ...
But Carrie Tolstedt, the head of Wells Fargo’s Community Banking division where those 5,300 people toiled, will be retiring with a $125 million compensation package.
That is what we call accountability :oops:. I hope she can pay the bills and keep the electric on.
Technically WF isn't paying it, the shareholders are (and most of us are, either directly or through a mutual fund that holds Wells Fargo or it's largest shareholder, Berkshire Hathaway.)

To get back to actionable: if you are a shareholder, vote out the BOD (since they seem to be tolerating this behavior.)
Speaking of the board of directors, and as the point was made at the Senate committee hearing yesterday, this goes all the way to the top, with Tolstedt looking like a scapegoat for the higher ups ultimately responsible and making far more money.
Last edited by Fallible on Wed Sep 21, 2016 12:31 pm, edited 1 time in total.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
wolf359
Posts: 2212
Joined: Sun Mar 15, 2015 8:47 am

Re: Disappointing News Wells Fargo

Post by wolf359 »

BlueCable wrote:
ahmadcpa wrote:Many people are now using online banks to service their needs. While this may work for some, you still need a "neighborhood" bank to do the following:

1- Deposit cash
2- Withdraw large amounts of cash
3- Obtain a certified check
4- Safe deposit box

Had it not been for the above, I'd be all over internet banks
5- Medallion Signature Guarentee
The one time I needed a medallion signature guarantee, I couldn't find a bank willing (they said able) to do it. I'm in a major metropolitan area and tried every bank I could. Some stated that they used to do it, but no longer do so. I was even willing to change to a bank that performed this function. No luck.

I ended up having to change my transaction to a type that didn't require the guarantee.
BlueCable
Posts: 340
Joined: Fri Jun 17, 2016 9:20 am

Re: Disappointing News Wells Fargo

Post by BlueCable »

wolf359 wrote: The one time I needed a medallion signature guarantee, I couldn't find a bank willing (they said able) to do it. I'm in a major metropolitan area and tried every bank I could. Some stated that they used to do it, but no longer do so. I was even willing to change to a bank that performed this function. No luck.

I ended up having to change my transaction to a type that didn't require the guarantee.
My local credit union is happy to do this for free. I guess sometimes small-city living has its benefits.
User avatar
Labrat
Posts: 42
Joined: Wed Oct 23, 2013 10:09 am
Location: Colorado

Re: Disappointing News Wells Fargo

Post by Labrat »

I've been a WF customer for over 20 years. I have never paid a 'fee' that many here claim that big banks always charge. They have always taken care of any and all needs I've had quickly and efficiently, and I didn't lose a penny in this ordeal, nor did my credit score suffer......I will remain a customer.
If you are also a WF customer, I'd like to hear someone's account of actually being harmed in any way. (Trying to keep the thread actionable).
"Research is what I'm doing when I don't know what I'm doing." - Wernher von Braun
Steve723
Posts: 196
Joined: Sat Aug 16, 2014 4:44 pm

Re: Disappointing News Wells Fargo

Post by Steve723 »

BlueCable wrote:
Steve723 wrote:I'm not sure what to think of all this. Were the top level executives knowingly committing fraud? I doubt it. Did they design a sales incentive system and management practices that created the environment for such fraudulent behavior to take place? Guilty as charged, but I don't think you can send anyone to jail for bad management.
Actually, there are reports now that many employees reported the activities to either supervisors higher up the chain, the WF whistleblower hotline, or the the CEO himself. In the hearing one senator read an email that was sent to the CEO reporting the fraud, but the CEO said he didn't recall reading it. Many of these employees claim they were fired in retaliation: http://money.cnn.com/2016/09/21/investi ... oplead-dom.

If over 5,000 employees were committing fraud, and the executives and directors have not created a culture which stamps out this fraud, then they are poor stewards of my capital and should be replaced.
Well, supposedly the mass firings was their version of stamping out the fraud. I can't think of a more direct way to stop it than to literally fire people that committed the fraud. What they obviously didn't do was change the underlying incentives and culture that led to this behavior. Yes, additional heads should roll in the executive ranks. Should Stumpf be criminally prosectuted? Don't think so.
barnaclebob
Posts: 4266
Joined: Thu Aug 09, 2012 10:54 am

Re: Disappointing News Wells Fargo

Post by barnaclebob »

abuss368 wrote:I would be surprised if this problem and situation is specific to Wells Fargo or more widespread across the banking profession.
Its a problem for nearly all sales and performance metrics. Did you know that if given a chance to rate service from 1 to 5 if you give anything but a 5 the employee might be punished or lose a bonus? Even if its a mundane service where there is really no way to be outstanding. I have read that Kohls employees that are hired temporarily around Christmas are only kept on permanently based almost entirely on how many credit card accounts they get opened.
Whakamole
Posts: 1210
Joined: Wed Jan 13, 2016 9:59 pm

Re: Disappointing News Wells Fargo

Post by Whakamole »

Steve723 wrote:Well, supposedly the mass firings was their version of stamping out the fraud. I can't think of a more direct way to stop it than to literally fire people that committed the fraud. What they obviously didn't do was change the underlying incentives and culture that led to this behavior. Yes, additional heads should roll in the executive ranks. Should Stumpf be criminally prosectuted? Don't think so.
If this was fraud and hence an illegal act, why weren't the police called to press charges? That would have stopped the behavior very quickly. Certainly more quickly than how they handled it - if you have to fire 5000 people for them to get the message, something is clearly wrong with corporate culture.

It's like the old joke about being in failed relationships; if you are in more than a few, perhaps it's you.
barnaclebob
Posts: 4266
Joined: Thu Aug 09, 2012 10:54 am

Re: Disappointing News Wells Fargo

Post by barnaclebob »

Steve723 wrote: Well, supposedly the mass firings was their version of stamping out the fraud. I can't think of a more direct way to stop it than to literally fire people that committed the fraud. What they obviously didn't do was change the underlying incentives and culture that led to this behavior. Yes, additional heads should roll in the executive ranks. Should Stumpf be criminally prosectuted? Don't think so.
The problem was that no senior management complicit in the fraud did anything to stop it or were fired. You cant honestly believe that 5000 employees that had to make certain sales goals to keep their jobs or bonuses would be opening accounts honestly would you? Then if your job depended on your employees making their numbers would you really care how they were doing it? Setting up a corporate culture which pretty much makes fraud mandatory is just as bad as committing the fraud.
barnaclebob
Posts: 4266
Joined: Thu Aug 09, 2012 10:54 am

Re: Disappointing News Wells Fargo

Post by barnaclebob »

Labrat wrote:I've been a WF customer for over 20 years. I have never paid a 'fee' that many here claim that big banks always charge. They have always taken care of any and all needs I've had quickly and efficiently, and I didn't lose a penny in this ordeal, nor did my credit score suffer......I will remain a customer.
If you are also a WF customer, I'd like to hear someone's account of actually being harmed in any way. (Trying to keep the thread actionable).

Your accounts may not have been harmed but they would trick elderly people or people with poor financial knowledge into opening multiple useless accounts to have save for a car, or kitchen, or to just pay bills from etc. Those accounts would then be more likely to incur min balance or overdraft fees. I've read that they would tell elderly people that they needed a signature on a form for "account security" but it was really a form to open a new account.
BlueCable
Posts: 340
Joined: Fri Jun 17, 2016 9:20 am

Re: Disappointing News Wells Fargo

Post by BlueCable »

Steve723 wrote: Well, supposedly the mass firings was their version of stamping out the fraud. I can't think of a more direct way to stop it than to literally fire people that committed the fraud. What they obviously didn't do was change the underlying incentives and culture that led to this behavior. Yes, additional heads should roll in the executive ranks. Should Stumpf be criminally prosectuted? Don't think so.
In the article I linked to, employees reported violations 3-5 years ago.

I probably agree that I don't think CEO should be prosecuted. As a shareholder, I do not have confidence in his ability to lead Wells Fargo.
Whakamole
Posts: 1210
Joined: Wed Jan 13, 2016 9:59 pm

Re: Disappointing News Wells Fargo

Post by Whakamole »

barnaclebob wrote:
Steve723 wrote: Well, supposedly the mass firings was their version of stamping out the fraud. I can't think of a more direct way to stop it than to literally fire people that committed the fraud. What they obviously didn't do was change the underlying incentives and culture that led to this behavior. Yes, additional heads should roll in the executive ranks. Should Stumpf be criminally prosectuted? Don't think so.
The problem was that no senior management complicit in the fraud did anything to stop it or were fired. You cant honestly believe that 5000 employees that had to make certain sales goals to keep their jobs or bonuses would be opening accounts honestly would you? Then if your job depended on your employees making their numbers would you really care how they were doing it? Setting up a corporate culture which pretty much makes fraud mandatory is just as bad as committing the fraud.
It's starting to sound like RICO will apply. Treble damages, if I am not mistaken.
mouses
Posts: 4217
Joined: Sat Oct 24, 2015 12:24 am

Re: Disappointing News Wells Fargo

Post by mouses »

lostdog wrote:Your local Credit Union will work just fine.
+1 I want a financial institution I can walk into if there is a problem, with the exception of Vanguard, which I trust so far.
Steve723
Posts: 196
Joined: Sat Aug 16, 2014 4:44 pm

Re: Disappointing News Wells Fargo

Post by Steve723 »

barnaclebob wrote:
Steve723 wrote: Well, supposedly the mass firings was their version of stamping out the fraud. I can't think of a more direct way to stop it than to literally fire people that committed the fraud. What they obviously didn't do was change the underlying incentives and culture that led to this behavior. Yes, additional heads should roll in the executive ranks. Should Stumpf be criminally prosectuted? Don't think so.
The problem was that no senior management complicit in the fraud did anything to stop it or were fired. You cant honestly believe that 5000 employees that had to make certain sales goals to keep their jobs or bonuses would be opening accounts honestly would you? Then if your job depended on your employees making their numbers would you really care how they were doing it? Setting up a corporate culture which pretty much makes fraud mandatory is just as bad as committing the fraud.

Wait, they fired 5,000 people didn't they? How is that not doing anything to stop it? Now, they may have grossly mismanaged the situation by not addressing the root causes sooner and being transparent with shareholders. And for that, I wouldn't be opposed to executive level departures and claw backs.

In terms of equating corporate culture with the crime itself, you are heading down a very slippery slope there.
User avatar
triceratop
Posts: 5838
Joined: Tue Aug 04, 2015 8:20 pm
Location: la la land

Re: Disappointing News Wells Fargo

Post by triceratop »

BlueCable wrote:
Steve723 wrote: Well, supposedly the mass firings was their version of stamping out the fraud. I can't think of a more direct way to stop it than to literally fire people that committed the fraud. What they obviously didn't do was change the underlying incentives and culture that led to this behavior. Yes, additional heads should roll in the executive ranks. Should Stumpf be criminally prosectuted? Don't think so.
In the article I linked to, employees reported violations 3-5 years ago.

I probably agree that I don't think CEO should be prosecuted. As a shareholder, I do not have confidence in his ability to lead Wells Fargo.
On the topic of safe havens, whistleblowers, and culture imposed by senior management:

Yesterday my former Senator, Bob Menendez, read a damning e-mail from a bank manager who worked at Wachovia and then Wells Fargo for 22 years. She e-mailed the CEO directly to raise ethical questions about the promotional quotas and how the goals were neither in the best interests of the company nor the customer. She refused to be involved in what she saw, and raised to senior management, as fraudulent behavior.

She was fired for not meeting quotas, subsequently.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."
epoxyresin
Posts: 85
Joined: Sun Apr 17, 2016 3:23 pm

Re: Disappointing News Wells Fargo

Post by epoxyresin »

I think this is getting overblown to some extent. The 5000 employees who have been fired have been fired over the past 10 years, as they were caught. It's not like there's 5000 employees getting fired this Friday. That's where I think a lot of the misunderstanding comes from. It wasn't being disclosed to shareholders because there wasn't some great mass fraud and mass layoffs. It was "we let a couple people go this month because they were caught making customers new accounts without their permission".

Wells Fargo can certainly be blamed for creating a culture where this can happen, but they weren't really making money off of it. Only a tiny amount of the fine is for restitution to customers, most of it is basically punitive (which is good. It's good to punish companies for screwing up). It was essentially employees scamming their bosses in order to meet quotas and get sales bonuses. And the problem wasn't company wide, the majority of the fraudulent activity was coming from the LA area (with much lower levels spread across the country), which makes me suspect that much of the problem really shouldn't be laid on the CEO, at least not more than a general "you should have caught this sooner".
Quark
Posts: 1045
Joined: Sun Nov 01, 2015 5:32 pm

Re: Disappointing News Wells Fargo

Post by Quark »

epoxyresin wrote:I think this is getting overblown to some extent. The 5000 employees who have been fired have been fired over the past 10 years, as they were caught. It's not like there's 5000 employees getting fired this Friday. That's where I think a lot of the misunderstanding comes from. It wasn't being disclosed to shareholders because there wasn't some great mass fraud and mass layoffs. It was "we let a couple people go this month because they were caught making customers new accounts without their permission". ...
Hundreds of employees were fired each year for the past ten years for the same fraudulent activity and no one thought to investigate the issue or wonder why it was continuing? Sounds like a serious problem to me.
metalworking
Posts: 227
Joined: Sun Jan 03, 2016 9:20 pm

Re: Disappointing News Wells Fargo

Post by metalworking »

epoxyresin wrote:I think this is getting overblown to some extent. The 5000 employees who have been fired have been fired over the past 10 years, as they were caught. It's not like there's 5000 employees getting fired this Friday. That's where I think a lot of the misunderstanding comes from. It wasn't being disclosed to shareholders because there wasn't some great mass fraud and mass layoffs. It was "we let a couple people go this month because they were caught making customers new accounts without their permission".

Wells Fargo can certainly be blamed for creating a culture where this can happen, but they weren't really making money off of it. Only a tiny amount of the fine is for restitution to customers, most of it is basically punitive (which is good. It's good to punish companies for screwing up). It was essentially employees scamming their bosses in order to meet quotas and get sales bonuses. And the problem wasn't company wide, the majority of the fraudulent activity was coming from the LA area (with much lower levels spread across the country), which makes me suspect that much of the problem really shouldn't be laid on the CEO, at least not more than a general "you should have caught this sooner".

It never ceases to amaze me how people can take in the same information and come to totally different conclusions. :beer
Caduceus
Posts: 2775
Joined: Mon Sep 17, 2012 1:47 am

Re: Disappointing News Wells Fargo

Post by Caduceus »

metalworking wrote:It never ceases to amaze me how people can take in the same information and come to totally different conclusions. :beer


It does not surprise me. People respond very differently to white-collar crime than they do to other sorts of crimes. If a poor schmuck off the street runs a scam and gets caught, he goes to jail. A Wells Fargo banker who falsifies an account in a successful attempt to bilk a client of fees, does not.
epoxyresin wrote:Wells Fargo can certainly be blamed for creating a culture where this can happen, but they weren't really making money off of it.
Of course they were making money off it. I think you're just identifying the wrong "they." Performance bonuses for middle and high-level management were based in part on the number of accounts that were opened. Don't forget that at senior executive levels, compensation consists more of stock options than base salary, and Wall Street analysts are looking all the time for growth metrics. You have a double failure of duty here - a case where the interests of management are aligned not only against their clients, but also their shareholders, who are the true owners of the bank.
barnaclebob
Posts: 4266
Joined: Thu Aug 09, 2012 10:54 am

Re: Disappointing News Wells Fargo

Post by barnaclebob »

Steve723 wrote:Wait, they fired 5,000 people didn't they? How is that not doing anything to stop it? Now, they may have grossly mismanaged the situation by not addressing the root causes sooner and being transparent with shareholders. And for that, I wouldn't be opposed to executive level departures and claw backs.

In terms of equating corporate culture with the crime itself, you are heading down a very slippery slope there.
Corporations should have a duty to ensure that their policies do not lead to mass fraud at any level in the company, directly or indirectly. An engineer's signature has to be on drawings and if something bad happens because of whats on that drawing the engineer can be held liable under certain situations. Maybe something similar could apply to corporate policies. But then there would be a lot of overhead associated with that...
Alan S.
Posts: 9983
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Disappointing News Wells Fargo

Post by Alan S. »

This entire problem started with hugely unrealistic cross selling goals. As a result employees started gaming the system, and when the first hundred or so bogus accounts came to management attention, a decision was evidently made at some higher level that the risks and downside of this activity was offset by the legitimate accounts that were sold. Therefore, the unrealistic goals were never lifted.

Further, there are obviously periodic internal audits. Sounds like auditors were told to overlook this or audits of this activity were avoided.

This is really staggering management incompetence at the senior level from a firm that watched their competitors get raked over the coals in Congressional hearings over the financial collapse while Wells came out looking like the smartest of the bunch.

Now maybe if some of the more egregious actors had been prosecuted (eg Corzine and Mozilla), Stumpf would have taken a different approach.
Post Reply