Wells Fargo Hit With 'Unprecedented' Punishment Over Fake Accounts (cnn.com) 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.
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.
Regulation (Score:2, Insightful)
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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.
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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,
Re:Regulation (Score:5, Insightful)
Re:Regulation (Score:5, Informative)
Now it's acceptable to sign people up for services they were never requesting and take money for them as long as they don't 'catch you'. What a wonderful new world we're headed for.
It's never been acceptable to commit fraud and that's precisely what that is. You go to federal pound me in the you know where prison and always have gone there if you commit such an act. That's where Bernie Madoff is right now and will be there until he dies.
Re:Regulation (Score:5, Informative)
Now it's acceptable to sign people up for services they were never requesting and take money for them as long as they don't 'catch you'. What a wonderful new world we're headed for.
It's never been acceptable to commit fraud and that's precisely what that is. You go to federal pound me in the you know where prison and always have gone there if you commit such an act. That's where Bernie Madoff is right now and will be there until he dies.
And yet... that is exactly what happened in this case, and no bankers are going to jail.
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Your comment makes me think you didn't notice that this has been going on for seven years now...
IOW, no, what Wells Fargo is being nailed for has nothing to do with Trump being President....
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It's not true that it has nothing to do with Trump being president. It *is* unfortunately true that the Democrats wouldn't have been any better. And judging by some of the nominee's comments right before the election, the Greens wouldn't have been any better either. If you want to think the "Libertarians" would have been better, be my guest...but don't expect me to believe it.
On *this* issue there were four, apparently identical, choices. Up until slightly before the election I had thought that the Gree
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Back in the day, they started charging me a "check image" fee of 30 cents per check, for the luxury of having them use printer toner on my monthly statement. Of course, I had not requested that they start including check images on my statement, but that's another issue.
When I called to complain, the nice CSR told me should would waive this month's fee. However, she said it would take 3-4 months for the request to discontinue check images to make it through their system, so I could expect to continue to see
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Yeah... the bastards at WFB did the same crap to me back then. I was stuck with the BS for three years as I was out of the country and couldn't open a new account. Then I opened a credit union account and was quite happy for nearly 15 years.
Now more of my banking is with Chase, as I get private client services due to my business. What a world of a difference!
Re: Regulation (Score:2)
Unfortunately, WFB kept buying other smaller banks and sticking it to all of their customers. That was the growth strategy, apparently; be a parasite on existing customers to increase capital sufficiently to buy competition, and parasitically infest their customers too.
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> The real money was in the risk-free inflation of their balance sheet.
Indeed. Except of course it was fraudulent. Thinking they could get away with opening Millions of credit accounts without anybody ever noticing is a surprising amount of hubris. Or is that normal in the banking sector?
Re:The financial sector is already highly regulate (Score:5, Interesting)
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It's not highly regulated if the regulated get to choose who regulates them and how the laws are enforced. There needs to be a firewall between the regulators and those that are regulated, and *one* of the components of that wall needs to be that the regulators are from time of appointment forwards until death and beyond forbidden to accept any form of remuneration from the regulated. I'm also dubious about giving them *any* input into who would be an appropriate regulator, but since this needs to be a pu
Re:The financial sector is already highly regulate (Score:5, Interesting)
Regulations mean jack shit if overstepping them isn't fined in a way that makes those that overstep them rethink that option. If I make 1000 bucks breaking a law and the possible fine is 100 bucks, don't expect me to follow the law. If the fine is lower than the revenue, it's not a fine, it's part of the calculation.
Re: The financial sector is already highly regulat (Score:2)
You have it backwards: it is the LACK of regulation which allows companies to merge, thus depriving consumers of choice and competitive prices, and henceforth becoming too big too fail.
Re:The financial sector is already highly regulate (Score:5, Insightful)
The regulations don't deal with the core destructive and problem-causing issues which are also massively profitable. All regulations which have any teeth are walked back by politicians. See "How Wall Street defanged Dodd Frank" [thenation.com]. Now, Dodd-Frank was a joke for a lot of reasons, but the big reason was its intentional complexity and incompleteness and its unwillingness to deal with core issues. But even the pieces of Dodd-Frank that had small teeth were defanged. [rollingstone.com]
Back in 2008, the big issue was lenders not having 'skin in the game' - they could make loans and shed all repayment risk when they sold off the loan to investors or the government. It's a license to print money and a perverse incentive to create bad debt. If you google "QRM safe harbor and risk retention [google.com]", you'll get some history (QRM = qualified residential mortgage). There was an attempt to make lenders retain some small portion of repayment risk, instead of the government taking all of it, but that was walked back, as the above search will tell you.
The current Wall Street economic model is "privatize the profits and socialize the losses." Not a thing was done to address that. "Too big to fail" was never addressed - the biggest banks are even bigger today than in 2008 ("In the US, since the crisis, the six largest US banks now control nearly 70 per cent of all the assets in the US financial system, having increased around 40 per cent (against overall asset growth of only 8 per cent). JP Morgan, the largest US bank, has over $2.4 trillion in assets, larger than most countries." -- The Independent [independent.co.uk])
So. Instead the regulations are along these lines: Instead of just outlawing robbing people, they outlaw robbing people at 12 Noon. The rest of the day is fine. But then they add, 'well you can't rob people at 3 PM either'. And so on. They refuse to deal with the core issues (i.e. "you can't rob people"), instead nibbling ineffectually around the edges.
"Complexity breeds loopholes." That's the point of complex regulations - to breed loopholes. It's fantastic because it keeps competitors out of the business, because you need vast legal and accounting departments to stay abreast of the regulations. And it does little to stop the destructive behavior.
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Simple, effective regulations like Glass-Steagall [google.com], instituted during the Great Depression, worked for generations. But they were slowly weakened, then eliminated.
Simple, clear regulations, which don't require massive regulatory departments in companies in order to comply, are the most effective. Wall Street companies today, the ones whose heads have lunch with Federal Reserve heads, and to whom central bankers [google.com] and Treasury officials [google.com] go to work after their term expires, don't want simple, clear regulations.
I wonder (Score:3)
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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.
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Why Wells Fargo? They are the only national bank with a solid presence in Alaska. There is no other national choice.
What does presence do? Try Ally (Score:2)
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?
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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
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Sorry, I haven't trusted Wells Fargo since around 1968 when they froze some customers accounts because a politico asked them to do so. It was illegal, but doing anything about it would have been both expensive and problematic, because the political power was instigating the action. And expensive is difficult to handle when your bank account is frozen.
'Unprecedented'?! (Score:2)
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!
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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.
Janet Yellen's retirement. (Score:3)
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.
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In other words, it gets turned over in the appeal.
Harsh penalties? (Score:2, Insightful)
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)
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.
We should be proactive, not reactive like this. (Score:5, Insightful)
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.
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Number of entities that can influence 50% of the economic output of the country is the key number. We want it to be large. But if we cap it as too low, some of the players might not gain the clout necessary to survive in the global market place.
But, your claim that I am
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Schwarzschild's formula (Score:2)
No company or bank or institution should be allowed to have assets totaling more than 2% of the GDP of our country.
Assets and GDP have nothing to do with each other.
That's like saying mass and weight have nothing to do with each other. The thing relating them is a constant of proportionality, in this case the gravitational constant and the planet's radius. Likewise, by Schwarzschild's formula, the maximum mass of a spherical body before it becomes a black hole is proportional to the body's radius, with a constant of proportionality related to the gravitational constant and the speed of light.
140Mandak262Jamuna is trying to establish the financial analog of Schwarzschil
Finally (Score:5, Interesting)
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*
TWO TRILLION DOLLARS
How Does one Prevent Assets From Increasing? (Score:3)
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)
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Actually it doesn't mean that, it means that the investors won't. The executives are, in theory, subject to criminal punishment with jail time. Isn't it strange how rarely that happens.
It's as if those enforcing the laws don't want them to hurt wealthy individuals (except an extremely occasional designated fall-guy).
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The 'liability' part of limited liability does not refer to criminal liability.
If a shareholder or company officer commit a criminal act then they can be prosecuted whether the company is a limited liability organisation or not.
Limited liability refers to the fact that the owners of the company (the shareholders) are not liable for the debts of the company - if you own a limited company then the bank and other creditors cannot take your house and car if the company goes bust and can't pay its debts.
In my op
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Yes, but since the shareholders don't have any effective control over the actions of the corporation, they basically can't be held responsible for the criminal actions of the corporation. Only for their own. This is, I believe, set aside if you own more that some amount (10%?) of the stock of the corporation, at which point you are considered to exercise some degree of control.
End Financial Crisis WF considered the good bank (Score:2)
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)
In this situation the corruption is pervasive (Score:2)
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.
This is why I use a credit union (Score:5, Insightful)
If you hate banks, remember: you do have another choice.
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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?
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No, it's pure capitalism. the credit union members are OWNERS and get the profits.
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So socialist capitalism, or is it capitalist socialism. It's like co-ops and worker owned businesses, socialist constructs working in a capitalist world.
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silly, socialism has nothing to do with it. or you think companies with stocks and stockholders are socialism too? hahaha, my sides
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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,
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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
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No, you're thinking of State Socialism, which is one type of socialism. To quote the blurb at the beginning of https://en.wikipedia.org/wiki/... [wikipedia.org]
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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.
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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)
Not until (Score:2)
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.
Wow! (Score:2)
They got slapped on both wrists. That's really harsh.
Yep, we knew it would be be like this (Score:3)
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.
https://www.nytimes.com/2016/1... [nytimes.com]
This little bit of Old Harry's Game is spot on: https://www.youtube.com/watch?... [youtube.com]
Nobody said the magic word (Score:2)
Remember Bank of America being Foreclosed on (Score:2)
Man Sues BOA for trying to foreclose on their house that they paid cash for [youtube.com]
Self Interest (Score:2)
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.
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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.
$2 trillion in assets (Score:2)
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?
Refund Our Money (Score:2)
A Real Punishment would be a Lower Cap (Score:2)
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).
4 People forced out of the board (Score:2)
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
why not jail? (Score:2)
Unprecedented Punishment (Score:2)
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
Re:Death penalty (Score:5, Informative)
Pretty sure the OP meant corporate death penalty. They lose their status as a corporation, and all protections against liability that it includes.
Ideally it would basically make all shareholders members of a basic partnership, they would share in all expenses and liability that the corporation previously incurred - the partners wouldn't be able to get out fast enough plus no one would be willing to buy their share of the partnership. This would be better than imprisonment IMO.
Since this is a bank however, things get tricky as you can't have citizens losing their savings. In this case you'd have to treat it like the FDIC does a bankrupt bank - due the shear size of the bank it would become a circus trying to divide the customers up to other banks.
Re:Death penalty (Score:4, Insightful)
"Ideally?"
All those who purchased shares in a publicly traded corporation, even prior to any criminal act, suddenly have their limited liability investment converted into a unlimited liability investment without having committed any wrongful act themselves.
No violation of the fifth, sixth, and eighth amendments there at all.
But we can all be happy that investing for retirement will suddenly place everything that you own, as well as your future wage income, at intolerable risk now that you're a potential general partner in hundreds or thousands of businesses.
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They're not considered a higher priority. The stockholders take the losses of the fines associated with the corporation. The stockholders may lose their entire investment if, for example, the corporation goes bankrupt.
The stockholders' indirect liability, however, is limited to their investment
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Fundamentally, mostly. Any money I've invested in a corporation can go away if it goes bankrupt. (I've had that happen to me. Possibly I should have gone for a more shotgun strategy with risky investments.) That's enough incentive for most people.
In order to accept greater responsibility, I'd have to have some actual real control on the board, which I don't
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Execution? Really? If you wanna see the collapse of the economy (and the start of the next civil war/end of the U.S.), then by all means...
Bring it on. I'll be sitting on my homestead and it would be unwise for anyone to come onto my property to start trouble. That's why you need the ability to protect and take care of your own self. Society is full of assholes and the system is broke.
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Without a larger economy, your homestead is unlikely to do better than support you in a very basic and quite shaky standard of living. However, cutting yourself off from the outside world like that would get you off Slashdot.
Re:Death penalty (Score:5, Interesting)
When banks merge, they're sometimes forced to transfer some of their customers to other banks. Take all of Wells Fargo's customer accounts and do that, parcel them off to other banks. Sell off the assets and loans to other banks. Take the proceeds, and any remaining liabilities and put them in a government owned "bad bank" to close out Wells Fargo's business.
Take the bank records and hand them to the justice department and state AGs, have them start combing through for fraudulently opened accounts, find the bankers who opened the accounts and charge them with fraud and identity theft. Sure, the executives and managers are responsible (and should be charged and imprisoned) for creating a criminal environment and doing nothing to stop it, even encouraging it - but the individual bankers are still responsible for fraud and should be held accountable with prison time.
Finally - nothing for the investors, they invested in a criminal organization, they voted for a criminal board, and so they get nothing. All Wells Fargo stock is cancelled. All assets and proceeds from sales go to the aforementioned "bad bank".
It's all doable, it's all possible. For my money, Wells Fargo will try to somehow weasel out of this penalty. First they'll try to get a Fed chairman appointed who will drop the penalty. Then, when that doesn't work, they'll try to hide assets and continued criminality in shell companies and subsidiaries. In about a year when that comes to light, maybe we'll finally see a big bank go down.
In the meantime, if you're trusting your money to Wells Fargo, Bank of America, Chase, HSBC, Citibank, or any of the other big banks, stop. Go find a bank that won't charge you a monthly fee, won't charge $35 for an overdraft, and isn't trying to defraud you. They're out there, they're not difficult to find.
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Unfortunately, the investors were not complicit in the crime. Losing everything is wrong, although they should get a big haircut for sure.
What should be done is that they are broken into independent banks on a state-by-state basis (ideally 3-4 different banks in major markets), with the national entity wound down over a few years. All senior executives involved should be banned for life from FDIC insured banks or publicly traded companies.
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Every investment is a gamble. Investing in a company that has stock that tanks or otherwise has to declare bankruptcy and being overextended means the investors get nothing is a risk that one must always accept. Whether they're outright complicit or not, investors (aka owners) are the last on the list for repayment and there's no reason they should expect a dime, especi
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Um, who is this "they" that you speak of? Are you referring to a very large number of unconnected people, each with only a limited stake in the company and other things to do with their time and money?
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If I invest in someone to get rid of someone else, I get charged with murder, too.
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Yes they were.
The company is granted limited liability by the people (in the form of the state) in return for an obligation to obey the law. (In any sensible jurisdiction, there would be a few other obligations too - like not paying the shareholders if the employees are not paid adequately to survive).
If the company does not fulfil its side of the bargain, then "poof". As others have pointed out - shareholders need to know that if they invest
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If the company survives, it will be required to pay its employees. If it goes bankrupt, there is a specified order in which people are to be repaid, and shareholders are dead last and will not receive a dime (businesses don't go bankrupt if they don't have liabilities exceeding assets, and therefore all assets are exhausted before all the credit
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I'm sure there are plenty of good CUs out there, but I think people do put too much
Re: Death penalty (Score:2)
How absurd. Banking literally requires zero skill and zero talent. It just requires money.
The minute you threaten the death penalty, all the criminals leave the market, along with a ton of risk. The remaining honest banks will clean up with less competition and no lawbreaking.
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I believe that the current front runner in the new national anthem contest is Donald Trump, Mike Pence,Mitch McConnell, and Paul Ryan singing "The Road Goes On Forever And The Party Never Ends" https://www.youtube.com/watch?... [youtube.com]
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It may not be the solution, but it's and appropriate intermediate step.
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It may not be the solution, but it's and appropriate intermediate step.
Well if you apply the death penalty here you should also apply it to people who don't pay their taxes or default on their loans then too. Are you sure you want to apply the same standard across the system?
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Look up "Corporate Death Penalty". I think you're misunderstanding the whole discussion.
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Look up "Corporate Death Penalty". I think you're misunderstanding the whole discussion.
I don't misunderstand. If we were talking about that, someone should have clearly communicated that. The problem with this discussion in that context would be incompetent communication skills.
Re:Bad (Score:5, Insightful)
Yes they do. Shareholders elect board members. If they know they will lose money should the company misbehave, they'll start taking their board member elections a lot more seriously.
Re:Bad (Score:5, Interesting)
And if they sell the shares, with incumbent overall loss of asset value, then those with more shares in the bank are punished further. But maybe not far enough.
Wells Fargo is still fighting suits from the 2008 meltdown to this day, and Wells Fargo was part of the problem: fraudulent lending. None of this is new, it's just gone further berserk. Only rarely is there a bad reputation in banking, and Wells Fargo has one. But they don't care, and I doubt they ever will.
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The thieves are spending the illgotten gains from the clients. The clients will never be able to recover the unauthorized charges or overcharges or services that were not ordered.
So, WF, as you have done in the past, and continue to do clandistinely, steal from others to pay this obligation
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In public companies, the power the average shareholder has over a board election is about zero.
But collectively they have a lot of power. They can force out board members, and they can initiate a shareholder lawsuit. The Fed is forcing out some board members, but I doubt if that will be the end of it. The shareholders' lawyers will be squeezing those directors for everything they can get.
Shareholders can also chose to not buy shares in companies with ethically questionable policies, or even from companies that shield their board from shareholder influence. Corporations with transparent and accoun
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Let's get specific. I own some 3M stock, and have corresponding votes in company elections. Suppose I decide that a board member, call him Joe, needs to go. My votes are insignificant by themselves. Shares held by mutual funds are almost certain to vote as the board recommends, which likely means voting for Joe. Most individual shareholders aren't going to know why Joe should go.
To accomplish anything, I'd have to run a major and probably multinational ad campaign to unseat Joe. I don't have the ti
Those who control many shares have power (Score:2)
Those who control many shares, and thus stand to lose a lot of money if the company does wrong, have a lot of power in electing the board.
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How about it's they design of the system where the regulatory bodies are controlled by those they are supposed to regulate.
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