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Wells Fargo Hit With 'Unprecedented' Punishment Over Fake Accounts ( 181

An anonymous reader quotes CNN: The Federal Reserve has dropped the hammer on Wells Fargo, [handing] down unprecedented punishment late Friday for what it called the bank's "widespread consumer abuses," including its notorious creation of millions of fake customer accounts. Wells Fargo won't be allowed to get any bigger than it was at the end of last year -- $2 trillion in assets -- until the Fed is satisfied that it has cleaned up its act. Under pressure from the Fed, the bank agreed to remove three people from the board of directors by April and a fourth by the end of the year. It is the first time the Federal Reserve has imposed a cap on the entire assets of a financial institution, according to a Fed official. "We cannot tolerate pervasive and persistent misconduct at any bank," outgoing Fed Chairwoman Janet Yellen said in a statement. Friday was her last day on the job....

Wells Fargo admitted that its workers responded to wildly unrealistic sales goals by creating as many as 3.5 million fake accounts. The bank has also said it forced up to 570,000 customers into unneeded auto insurance... About 20,000 of those customers had their cars wrongfully repossessed in part due to these unwanted insurance charges. In August, Wells Fargo was sued by small business owners who say the bank used deceptive language to dupe mom-and-pop businesses into paying "massive early termination fees." The company was in the headlines again in October for charging about 110,000 mortgage borrowers undue fees.

One U.S. congressman argued that the harsh penalty "demonstrates that we have the tools to rein in Wall Street -- if our regulators have the guts to use them."

Wells Fargo has also spent $3.3 billion on legal bills in just the last three months of 2017.
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Wells Fargo Hit With 'Unprecedented' Punishment Over Fake Accounts

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  • Regulation (Score:2, Insightful)

    This is why everything must be regulated.
    • Banking in the us **IS** regulated -- either by the federal government or one of the states depending on the bank's charter. ... Except for PayPal which is for some reason allowed to operate as an unchartered bank in the US.

      Perhaps what you are in favor of is more effective regulation.

    • by rtb61 ( 674572 )

      Regulated,hmm, how many people went to jail, none, bwa hah hah, no regulation there chump, you have just been scammed. So how come I can not steal money for years, invest it for profit and when I am caught, pay apparently some of it back, pay a tiny fine, keep much of what was stolen and keep all the profits generated by that invested stolen money. That's not regulation against crime, that's regulated free loans for the rich and greedy.

      When they start handing out custodial sentences I call that regulation,

  • by 110010001000 ( 697113 ) on Saturday February 03, 2018 @06:23PM (#56063389) Homepage Journal
    I was actually wondering today who the hell still banks with Wells Fargo in 2018? They are the 3rd largest bank in the US. There must be tons of people and businesses that still work with them. I don't get it.
    • Oh, c'mon! Their money laundering services are second to none! The ads write themselves. 9 out of 10 smugglers agree.

      The 10th is with Bank of America.

    • by AK Marc ( 707885 )
      I was with them through all this. I'm not with them now. They didn't attempt to sign me up to anything. They even sold off some of my Wells Fargo Investments accounts, but not all.

      Why Wells Fargo? They are the only national bank with a solid presence in Alaska. There is no other national choice.
      • Why Wells Fargo? They are the only national bank with a solid presence in Alaska. There is no other national choice.

        Ally is a branchless bank offering deposit accounts across the USA. So if you rarely handle cash, why not go with a credit union or an out-of-state bank such as Ally?

        • by AK Marc ( 707885 )
          I also went with a credit union, but I don't trust the "online only" banks. Sometimes I need a branch. Given the number of issues I've had with banks (BofA before Alaska, and a local bank in Alaska, which is why I ended up going back to the national bank), I like being able to sit in a branch until someone fixes the problem.
    • A lot of it is not by choice, I had a family member that wound up with them after they bought up a smaller bank. I'm guessing more than half their customers were obtained in this way.

      Its hard and tedious to do, but as soon as your bank changes names, find someone else.

      The other part about banks being 'bought out' or 'merging' is that the FDIC intentionally hides that a bank is bankrupt until the change over of customers to the other bank is completed, so that there isn't a run on the bankrupt bank. My favor

  • What? You mean somebody is going to jail?? Customers will be compensated?? The bank is turning over a new leaf?

    Say it ain't so!

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      Agreed - unprecedented would be the whole thing treated as a RICO operation ending with mass convictions and dissolving the bank with the account balances being assured and the remaining money confiscated. The mob doesn't get to keep their assets just because they organized a front company that also sells pizza to customers in the area.

    • This was Janet Yellen's final act before retiring.

      That's what made it possible: the fact that she was free to take the action because she didn't care about future career prospects.

  • Harsh penalties? (Score:2, Insightful)

    by Anonymous Coward

    In what world is this a harsh penalty, considering the scope and graveness of the transgressions? It's barely even a slap on the wrist!

  • Just a cap? (Score:5, Insightful)

    by Anonymous Coward on Saturday February 03, 2018 @06:34PM (#56063421)

    Just a cap, for screwing over thousands of people? That's not even a slap on the wrist. Management should be in jail and the bank should have to pay penalties to the customers they wronged. Large penalties.

  • by 140Mandak262Jamuna ( 970587 ) on Saturday February 03, 2018 @06:36PM (#56063423) Journal
    No company or bank or institution should be allowed to have assets totaling more than 2% of the GDP of our country.

    No bank doing business in America, whether it is domestic or foreign or sovereign, should have assets more than 2% of our GDP.

    No investment bank should have FDIC insured deposits.

    All retail banks with FDIC insure deposits should have equal access to investment banks.

    Courts are ruling corporations are people. All the hard won freedoms and liberties of real citizens is being usurped by these corporations. Once these corporations become more powerful than the government, it is game over for real citizens.

  • Finally (Score:5, Interesting)

    by GrahamJ ( 241784 ) on Saturday February 03, 2018 @06:47PM (#56063457)

    Finally we find out how big a company has to get before the government cares about abuses of power:

    *puts pinky to corner of mouth*


  • by wisnoskij ( 1206448 ) on Saturday February 03, 2018 @06:49PM (#56063465) Homepage

    When the price of real estate goes up 10% are they forced to give away 10% of their real estate? When their customers pay their bills, which include some percentage of profits, where do their profits go?

  • Summary (Score:5, Insightful)

    by DaMattster ( 977781 ) on Saturday February 03, 2018 @06:52PM (#56063479)
    One U.S. congressman argued that the harsh penalty "demonstrates that we have the tools to rein in Wall Street -- if our regulators have the guts to use them." Uh, no it does not. Wells Fargo has been nailed time and again for abuse yet they continue to do it. The only way to stop it is to make the executives subject to criminal punishment with jail time. Instead, they get away scot-free with a generous golden parachute. This makes me really cheer when the market goes down!
  • In retrospect, its very ironic. Wells Fargo didn't actively pump up and create sham mortgages and was considered one of the few good larger banks at the time - in the mean time their Execs goals only mentality had their employees creating fake accounts etc...

    In the past (prior to the financial crisis) the highest WF officers knowingly associated with this behavior would have been marched off to prison. None of that, just like the financial crisis, none of the actual actors get punished, again...
  • NOPE! (Score:5, Insightful)

    by ma1wrbu5tr ( 1066262 ) on Saturday February 03, 2018 @07:12PM (#56063539) Journal
    If someone fraudulently creates an account in someone's name and then incurs charges on that account, that's at least fraud and probably ID theft. If anyone here reading did that, we'd be talking to a judge or sitting in a cell (eventually). Wells Fargo does it to millions and a few people lose their jobs. If corporations want to be considered "people" then they have to be accountable as "people". Equal Justice Under The Law must be applied to these at least a few of these C level executives before I'll believe that we all can expect the same treatment for the same offense.
  • and the company needs to die. There is no other remedy that will purge all of the greed that this institution has used to justify this behavior. It cannot be effectively punished which will otherwise correct or otherwise bring it back into a socially acceptable direction.

    It's far past time to institute a corporate death penalty. With the courts neutered w.r.t. other financial remedies, this is what we are left with.

  • by DevNull127 ( 5050621 ) on Saturday February 03, 2018 @07:31PM (#56063593)
    I don't know why everybody doesn't just use a credit union. They're non-profits, so they simply have no reason to pull the kind of crap that Wells Fargo did to hundreds of thousands of people.

    If you hate banks, remember: you do have another choice.
    • by ceoyoyo ( 59147 )

      But isn't that socialism? Surely credit unions are extremely uncompetitive and will soon all disappear because they don't have a profit motive to drive them to greater efficiency?

      • No, it's pure capitalism. the credit union members are OWNERS and get the profits.

        • by dryeo ( 100693 )

          So socialist capitalism, or is it capitalist socialism. It's like co-ops and worker owned businesses, socialist constructs working in a capitalist world.

          • silly, socialism has nothing to do with it. or you think companies with stocks and stockholders are socialism too? hahaha, my sides

            • by dryeo ( 100693 )

              Basically socialism is the workers owning the means of production, with lots of branches including running the means of production in a democratic way, one worker, one vote. Companies with stocks work by one share, one vote.
              There are also branches of socialism that are about small or no government. Anarchism being the extreme, libertarian-ism also was originally a socialist ideal.
              Unluckily, given human nature, libertarian-ism just leads to a power vacuum which the (usually corrupt) totalitarians move into,

              • socialism is done at government level though and controls ALL companies. Owners of a company are not practicing socialism, an outsider doesn't get a piece of the pie

                • by dryeo ( 100693 )

                  No, you're thinking of State Socialism, which is one type of socialism. To quote the blurb at the beginning of []

                  Libertarian socialism (or socialist libertarianism)[1] is a group of anti-authoritarian[2] political philosophies inside the socialist movement that rejects socialism as centralized state ownership and control of the economy.[3]

                  Libertarian socialism also rejects the state itself,[4] is close to and overlaps with left-libertarianism[5][6] and criticizes wage labour

                  • pffft, someone was just putting invented tripe in the middle of the normal definition. It's not a real thing, while capitalism and socialism are.

                    • by dryeo ( 100693 )

                      You seem to have a very 2 dimensional viewpoint. Libertarian-ism and authoritarian-ism are just as much real things and have little to do with capitalism and socialism. Then there is the free market, which both capitalism and socialism can be against. (Capitalism strives to remove the free market and socialism often doesn't want to compete in a free market)

  • the penalty for defrauding joe-sixpack becomes higher than the profit the fraud yields will this ever change. Especially with the banking communities "We're too big to fail" attitude.

  • They got slapped on both wrists. That's really harsh.

  • by wonkavader ( 605434 ) on Saturday February 03, 2018 @08:58PM (#56063899)

    No jail.
    No dip into the fortunes of the people who directed the fraud.
    No keeping these thieves from working at another financial institution.
    No systematic attempt to fix the sabotaging of the careers of the workers who refused to commit fraud. []

    This little bit of Old Harry's Game is spot on: []

  • This is what a Fascist economic system looks like.
  • I remember this like it was yesterday and its becoming even more common.

    Man Sues BOA for trying to foreclose on their house that they paid cash for []
  • Wells Fargo is ANOTHER example of why there needs to be regulation.

    The economic concept of "self interest" can mutate easily into "greed". When that happens, destructive behaviors are the result.

    To think we can have a marketplace without any oversight or regulation is at best naive; more likely wilfully ignorant.

    • There is plenty of oversight on banks, but in this case, it wasn't an official strategy of fraud, rather a completely irrational sales goal coupled with a wink and nod to lower management and then to individual employees.

  • That's almost half of annual GDP. Sounds too big to fail. Is this a good thing and should we worry about what happens if Wells Fargo assets grow to more than annual GDP?

  • What great idea for a game and movie. A group of sick fucks with nothing better to do but hunt Wells Fargo Executives,
  • as in you have 89 days to divest of enough assets to bring your net worth to 1.5Trillion (oh and you can't close any branches).

    Or as part of the fight on poverty you must begin opening NO Monthly Fee accounts to anybody with assets less than or equal to 90% of the National Poverty Line (also waive the neat Gotcha Fees).

  • OK, but that is not far enough. Those persons removed should be banned from ever sitting on a board ever again, or holding a C-level position at any American company, and should be forced to pay restitution equal to 100% of their pay, less the average Wells Fargo employee salary (~$55k/year) starting when the unreasonable sales goals were set, and 100% of any severance package, to the victims of the scams.

    It is high time to put the fear of God in these lawless dirt bag MBAs with an "anything goes for a dol

  • This is fraud on a massive scale. Why aren't the managers responsible for it going to jail?
  • Um...really?

    Where is the punishment? Oh, we've basically said you can't make any acquisition purchases until you fix you ways. Um, that's NOT punishment.

    "Unprecedented Punishment" would be the government doing its job. That means, board members don't resign, they're tossed into jail. That means fines.

    20,000 cars repossessed by their corrupt system. At let's say $20,000 each that is $400,000,000. What should the punishment be? Plus all the other fraudulent crap. Considering that a minor traffic offense of

A bug in the hand is better than one as yet undetected.