Tag Archives: Wells Fargo Bank

Wells Fargo paid more in criminal penalties than it paid in interest to its depositors, by Simon Black

Wells Fargo is catching up to HSBC and Deutsche Bank as a dirty bank. From Simon Black at sovereignman.com:

Last week Wells Fargo paid the largest fine yet for one of it’s many scandals– $3 billion.

This time, the fine was for opening bank accounts under customers’ names without the customers’ knowledge or consent.

Workers at Wells Fargo did this to boost their own sales goals. They forged customers’ signatures, falsified records, and engaged in outright fraud.

This internal identity theft ended up costing customers millions of dollars in unnecessary fees and overdraft charges. And it went on for fourteen years.

This was no accident, one-off, or a case of a few bad apples. In fact, this wasn’t even close to the only scandal Wells Fargo has been fined for over the past few years.

Wells Fargo also sold customers car insurance they didn’t need, and charged erroneous fees which caused 20,000 cars to be wrongly repossessed.

A computer glitch once caused over 500 Wells Fargo customers to have their houses foreclosed on.

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And . . . yet another Wells Fargo banking scandal, by Simon Black

Is Wells Fargo still Warren Buffett’s favorite bank? Maybe not, after all the scandals. From Simon Black at theburningplatform.com:

Is it Friday again? Must be time for another banking scandal!

Seriously– these banking scandals are happening with such regularity and predictability it would be almost comical. . . were it not for the millions of people who have had their lives turned upside down.

The latest transgression involves, once again, our old friends at Wells Fargo.

Bear in mind that the ink isn’t even dry yet on the $1 billion check that Wells Fargo wrote last week as a penalty to settle its previous scandal, where they defrauded 570,000 clients in a car insurance scam.

By the bank’s own estimates, as many as 20,000 of those clients may have had their vehicles repossessed as a result of their inability to pay for the car insurance that Wells Fargo illegally stuck them with.

And speaking of vehicle repossession, in November of last year Wells Fargo came under fire for illegally repossessing vehicles that were owned by members of the military.

In October, Wells Fargo took heat from federal regulators after it was found that the bank had deliberately recommended investment products that were “highly likely to lose value. . .”

Early that month, the bank admitted that it had ‘erroneously’ charged late fees to more than 100,000 borrowers, even though the delays were the bank’s fault.

In 2016, a number of employees at various Wells Fargo branches in California were found to have sold sensitive customer information, including Social Security Numbers, to a ring of identity thieves.

And of course, in late 2016 and all throughout 2017, Wells Fargo’s notorious ‘fake account’ scandal was found to have affected millions of customers.

There’s a word for all of this: fraud.

And if you or I had committed any of these acts by even the slightest, we’d be wearing DayGlo Orange jumpsuits in a federal penitentiary.

But a grand total of ZERO executives from Wells Fargo have been sent to prison or faced any charges whatsoever.

In fact, the executive who was found to be the most culpable in the fake account scandal scored a whopping $67 million severance package when she left the company in late 2016.

To continue reading: And . . . yet another Wells Fargo banking scandal

It Just Doesn’t Let Up with Wells Fargo, by Wolf Richter

Wells Fargo once again finds itself in major trouble. From Wolf Richter at wolfstreet.com:

New scandal: another 570,000 (800,000?) customers become victims.

Wells Fargo — “a community-based financial services company,” as it says — revealed late Thursday, after it learned that The New Timeswould blow its cover, that it  had wrongfully charged 570,000 of its auto-loan customers for comprehensive and physical damage insurance (CPI) since 2012 though they already had their own insurance.

“In response to customer concerns,” Wells Fargo became aware of this issue in July 2016. It initiated a review of the “CPI program” — as it calls this profit center — “and related third-party vendor practices,” namely those of the insurance supplier National General. In September 2016, “based on the initial findings,” it scuttled its “CPI program.” It then hired a consulting firm to figure out what was going on.

The consequences were profound. The added insurance premium raised the car payment. If the increase was $50 per month on a particular vehicle, the total amount of additional money extracted from that customer over the duration of a six-year loan would be $3,600. Since many of these auto loans were set up on automatic payment on the customers’ accounts at Wells Fargo, these additional monthly amounts eventually drained the bank accounts and caused them to be overdrawn.

Victims who checked their accounts and found the larger payments and raised a ruckus were refunded the money. But many people didn’t check.

These wrongful CPI premiums “contributed to a default that led to their vehicle’s repossession,” the bank said. Their credit was ruined and “approximately 20,000 customers” might have lost their vehicle.

To drive the nail into the flesh more deeply, the bank then extracted insufficient funds fees, late fees, and other fees from its victims’ accounts which pushed them into default even faster. With this strategy, Wells Fargo caused all kinds of other mayhem in their lives as these folks lost their transportation to get to work, pick up their kids, or go to the grocery store.

To continue reading: It Just Doesn’t Let Up with Wells Fargo

In Dramatic Twist, Wells Fargo Said To Retaliate, Fire Whistleblowers Who Exposed Bank’s Illegal Practices, by Tyler Durden

Thing go from bad to worse for Wells Fargo Bank. From Tyler Durden at zerohedge.com:

While the recent congressional hearing targeting John Stumpf, in which Elizabeth Warren suggested he should resign and be criminally charged, was nothing more than a “kangaroo court” meant to refocus public anger on banks, with good reason, the reason why we concluded that nothing would actually change is that ultimately there was no evidence the bank’s executive management was aware of the bank’s illegal, fraudulent tactics involving the creation of some 2 million fake customer accounts to “sandbag” retail banking fees. That assumption, however, may need revision now that CNN reports that it has heard from former Wells Fargo workers – some of whom were named – around the country, who tried to put a stop to the bank’s illegal tactics only to be met with harsh, prompt and severe retaliation by the bank.

“Almost half a dozen workers who spoke with us say they paid dearly for trying to do the right thing: they were fired”, CNN says, which if confirmed would promptly make this a criminal case, which implicate virtually every senior management member, as such retaliatory practices would suggest not only awareness of what was happening at the bank, but also an even more dramatic response by management seeking to keep these practices under wraps.

Some of the named witnesses made it very clear that the narrative spun by Stumpf in Senate was a lie:

“I endured harsh bullying … defamation of character, and eventually being pinned for something I didn’t do,” said Heather Brock, who was fired earlier this month as a senior business banker at a Wells Fargo branch in Round Rock, Texas.

“They ruined my life,” Bill Bado, a former Wells Fargo banker in Pennsylvania, told CNNMoney.

Bado not only refused orders to open phony bank and credit accounts. The New Jersey man called an ethics hotline and sent an email to human resources in September 2013, flagging unethical sales activities he was being instructed to do. Eight days after that email, a copy of which CNNMoney obtained, Bado was terminated. The stated reason? Tardiness.

To be sure, this is not the narrative Stumpf presented before Congress. Retaliation against whistleblowers is a major breach of trust. Ethics hotlines are exactly the kind of safeguards put in place to prevent illegal activity from taking place and provide refuge to employees from dangerous work environments. Indeed, Wells Fargo CEO John Stumpf made precisely that point on Tuesday when he testified before angry Senators. “Each team member, no matter where you are in the organization, is encouraged to raise their hands,” Stumpf told lawmakers. He mentioned the anonymous ethics line, adding, “We want to hear from them.”

Only, that’s not what allegedly happened at Wells. It gets worse: according to a former HR staffer, Wells had an explicit protocol for retaliating against “tipsters” – fire them for a minor offense, like being late.

One former Wells Fargo human resources official, cited by CNN, said the bank had a method in place to retaliate against tipsters. He said that Wells Fargo would find ways to fire employees “in retaliation for shining light” on sales issues. It could be as simple as monitoring the employee to find a fault, like showing up a few minutes late on several occasions.

“If this person was supposed to be at the branch at 8:30 a.m. and they showed up at 8:32 a.m, they would fire them,” the former human resources official told CNNMoney, on the condition he remain anonymous out of fear for his career.

To continue reading: In Dramatic Twist, Wells Fargo Said To Retaliate, Fire Whistleblowers Who Exposed Bank’s Illegal Practices

 

Supervisor Of “Massive Fraud” At Wells Fargo Leaves Bank With $125 Million Bonus, by Tyler Durden

Some executives get fired for the sins of their underlings, but banking is different. From Tyler Durden at zerohedge.com:

There was a burst of righteous populist anger anger last week, when it emerged that Wells Fargo had engaged in pervasive, “massive” fraud since at least 2011, including opening credit cards secretly without a customer’s consent, creating fake email accounts to sign up customers for online banking services, and forcing customers to accumulate late fees on accounts they never even knew they had. For this criminal conduct, Wells was fined $185 million (including a $100 million penalty from the CFPB, the largest penalty the agency has ever issued). In all, Wells opened 1.5 million bank accounts and “applied” for 565,000 credit cards that were not authorized by their customers.

As “punishment” Wells Fargo told CNN that it had fired 5,300 employees related to the shady behavior over the last few years. The firings represent about 1% of its workforce and took place over several years. The fired workers went to far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services, the CFPB said. What was hushed away is that not a single employee will go to prison, and that ultimately it will be Wells Fargo’s shareholders – such as Warren Buffett – who will end up footing the bill.

What Wells did not disclose publicly to anyone is that the head of the group responsible for Wells’ biggest consumer fraud scandal in years, is quietly leaving the bank with a $125 million bonus, a bonus which as Fortune’s Stephen Gandel writes today will not see even one cent clawed back as part of the dramatic revelations.

According to Gandel, Carrie Tolstedt, the Wells Fargo executive who was in charge of the unit where employees opened more than 2 million largely unauthorized customer accounts—a seemingly routine practice that employees internally referred to as “sandbagging”— is leaving the giant bank with an enormous pay day, some $124.6 million.

Carrie Tolstedt

Carrie Tolstedt

Tolstedt is walking away from Wells Fargo with a very full bank account, and praise: in the July announcement of her exit, which made no mention of the soon-to-be-settled case, Wells Fargo’s CEO John Stumpf said Tolstedt had been one of the bank’s most important leaders and “a standard-bearer of our culture” and “a champion for our customers.” In light of the record fine levied by the CFPB for the unit which Tolstedt headed, we wonder if Stumpf would like to retract his statement.

What is just as troubling is that despite beefed-up “clawback” provisions instituted by the bank shortly after the financial crisis, “it does not appear that Wells Fargo is requiring Tolstedt, the Wells Fargo executive who was in charge of the unit where employees opened more than 2 million largely unauthorized customer accounts—a seemingly routine practice that employees internally referred to as “sandbagging”—to give back any of her nine-figure pay.”

As a reminder, on Thursday, Richard Cordray, the head of the CFPB, said, “It is quite clear that [the actions of Tolstedt’s unit] are unfair and abusive practices under federal law. They are a violation of trust and an abuse of trust.”

However, cited by Gandel, a spokesperson for Wells Fargo said that the timing of Tolstedt’s exit was the result of a “personal decision to retire after 27 years” with the bank. The spokesperson declined to comment on whether the bank was considering clawing back Tolstedt’s back pay.

To continue reading: Supervisor Of “Massive Fraud” At Wells Fargo Leaves Bank With $125 Million Bonus