Wells Fargo CEO Stumpf Tries to Brazen Out Fraud as Congressmen Call Wells a “Criminal Enterprise,” Demand Breakup

John Stumpf is the gift that keeps giving to bank reformers.

The embattled CEO of Wells Fargo put in another poor showing in the House Financial Services Committee today, as Stumpf largely reprised his performance from the Senate last week:

Asserting that he would “make it right” to all harmed customers, when the bank’s plans obviously fall well short

Attempting to doctor the record, as our retail banking expert Clive describes in an accompanying post today, by having employees trying to obtain ex post facto consent for credit cards opened in their name without their approval

Pinning the blame on low-level employees while depicting Wells as a stellar corporate citizen

Refusing to acknowledge harm to employees who were fired whistleblowing or for failing to meet sales targets that were unattainable by honest means

Having a conveniently thin knowledge of many practices in his bank

Committee chairman Jeb Hensarling gave a blistering opening statement, that “Millions were ripped off…Fraud is fraud, theft is theft, there’s no other ways to describe it,” and followed by listing laws that he believed Wells has broken. He also pointed out that employees had filed wrongful termination lawsuits as far back as 2009, describing dodgy sales methods, adding that it was “beyond credibility that somebody up the food chain didn’t order, condone or turn a blind eye to it.” He promised a full investigation, including more hearings, and other committee members urged him to call wronged customers and former employees. Ranking member Maxine Waters provided evidence of questionable sales activities in 2007 and 2008, as well as Fed sanctions in 2011. Later in the hearing, she called for the bank to be broken up.

Carolyn Maloney called out Stumpf for making his largest stock sale just as he got word of the scandal. From the Financial Times:

…she brandished documents showing a big sale of Wells stock by Mr Stumpf in October 2013 — right after the bank “was turned into a school for scoundrels” — and challenged the CEO to explain it…

Mr Stumpf denied that the sale of shares worth $13m — his biggest on the open market since becoming CEO — was related to the fake-account matter, and said that it was done with “proper approvals”

This looks bad. Stumpf later claimed he first learned of the fake accounts abuses in “summer-fall” of 2013.

The disconnect between Stumpf’s bland rendering of Wells’ corporate bromides and the Congressmens’ ire was more pronounced than at the Senate hearings. Stumpf not only kept claiming that he was “fully accountable,” but upped the ante saying he “led the bank with courage”.

One of my favorite moments was when Ed Perlmutter got a dim idea of what the bog standard retail banking model was about and realized he didn’t like it. He was really bothered by the words he heard Stumpf using: “stores,” “sales organization,” products”: “We treat banks differently than grocery stores” as in among other things, bail them out. He asked Stumpf why the bank had had sales targets at all. The response? Stumpf said he didn’t want branch employees to be passive. He wanted them to “have a conversation with our customers about where the are in their financial journey.”

Even though the Representatives were on average less adept at interrogation than their Senate counterparts, they hammered on new issues. Brad Sherman asked if consumers who had forced arbitration clauses who wanted their day in court would get one. Stupf tried to pass off the idea that having Wells pay for mediation was just as good but finally admitted, “no”. Nydia Velázquez asked if Wells would rehire employees who were fired for not meeting sales goals. Ed Royce called the sales goals a “mandate” and another representative (I believe Keith Ellison) went through the escalating warnings for employees who did not meet their sales targets. As with so many questions, Stumpf professed to be unfamiliar with them, leading Scott Garrett to say that his patter sounded like that of Enron and Arthur Andersen executives.

One set of overarching messages was the evidence of at best grossly inadequate or at worse corrupt and complicit management. Again and again, the Congressmen and women demanded how Stumpf could claim he hadn’t known about the fraud earlier and intervened more effectively. They depicted Stumpf as responsible for a diseased, predatory culture. Stumpf kept sunnily claiming that “We are a quality company that made some mistakes” and acted as if more staff training was a real remedy, as opposed to a liability shield for senior executives.

Intriguingly, another theme was how Wells had undermined trust in the system. If anything, the Republican members were more angry about this issue than the Democrats, with several Tea Party members upbraiding Stumpf for making the case for “the other side,” meaning fans of regulation. In keeping, Jim Himes, a Democrat, gave an impassioned statement about how what was at stake was not a narrow legal definition of harm, but “belief in the banking system, belief in the market..The system comes apart if people don’t have faith.” This is consistent with our early observation that the intense reaction to the Wells Fargo abuses was in part an instinctive reaction among the elites to the fact they are facing legitimacy crisis. At a minimum, they need to look capable of policing their own ranks.

It seems impossible for Wells Fargo’s board to keep Stumpf much longer. The scandal keeps growing. Wednesday, California Treasurer John Chiang announced yesterday that the state was suspending all business with the bank for a year. Yesterday, the Department of Justice and the Office of the Controller of the Currency settled with the bank over violations of the e Servicemembers Civil Relief Act for repossessing cars of active duty servicemen. Although Wells would normally shrug off the penalties, $4 million in restitution and $20 million in fines, abusing members of the military is deadly from a PR perspective. As Adam Levitin pointed out by e-mail, the board’s best move would be to turf out Stumpf and bring in Sheila Bair.

But as much as one part of me would like to be proven right with my estimate that Stumpf would be ousted shortly after the House hearings, another part would now like to see him stay on. The longer his Orwellian babblespeak is on display, the more it exposes the rotten core of corporate governance in America. Stumpf is at most different in degree, but not in kind, from what goes on in public companies at the top. The more that Stumpf demonstrates that the elites play by a different set of rules and how that fosters predatory conduct, the easier it becomes to do something about it.

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73 comments

  1. Expat

    It’s all bluff and showmanship. Stumpf will sacrifice a few million, a few more states will cut Wells off, and restitution will be made to a few ex-employees. After a year, Wells will go back to doing what it does best: stealing from the poor and giving to Congress. Stumpf will be made whole on his lost bonus and shares in a round-about scheme where he becomes a consultant for $25 million a year.

    You wanna break up the banks to stop this bullshit? Break them up with neutron bombs. No other method will work.

    1. Yves Smith Post author

      Oh, no, Stumpf will be made to suffer. That may be just turfing him out but no way will Wells have him back once that happens. He’s become a hazard to the bank’s stock price.

      Dinging him is important to restore a minimal appearance of accountability among the elite. Not sayin’ it will necessarily go much further than that, but it’s way too late to merely throw Carrie Tolstedt (the head of the community banking unit) under the bus and offer the token gestures you mentioned. The longer this scandal goes unresolved, the more Wells will have to do to appease officials. Remember, the DoJ is investigating, and quite a few Congresscritters rattled off a long rap sheet of statutes the bank has violated. And if the regulators learn that Wells made misrepresentations or withheld information during their reviews, they could reopen the settlements, which would allow them to fine Stumpf and Tolstedt.

      1. Faye Carr

        I’m a little afraid of disagreeing with Yves, but Expat expresses my thoughts and past recollections in similar circumstances.

        Not since Enron (and maybe Madoff) has any brand name corporate CEO been actually punished. Beyond wrist slapping, a tax exempt, preportionally small fine, with a golden parachute and maybe a job in government when the hooha dies down some. If I missed it, I don’t mind being wrong.

        Sure would be nice to see it though, at least once before the election.

        1. Clive

          At the risk of getting my cultural references askew, the congressional moves against Stumpf — certainly the volume and tone of the badmouthing in the House committee (and the Senate before that) — suggest to me that the U.S. equivalent of “the establishment” (and despite Wikipedia claiming to have no knowledge of the U.S. having an “establishment”, everything tells me that you do, indeed, have one and we’ve seen a facet of it making its presence felt in Washington with Wells Fargo) is on guillotine-watch and is closing ranks against what is even by elite standards too much mess to try to sweep under the carpet.

          And while the U.S. hasn’t got much in the way of recent examples of business elites being kicked into the ditch (granted, the ditch they get kicked into is paved with gold, but for those who move in that rarefied echelon, the kind of semi-public shunning is a bitter blow to what are very fragile egos) here in the U.K. when the Governor of the Bank of England — and in Westminster, the Chancellor would have had his back so this was a regulatory/political one-two punch — had finally had enough of Bob Diamond’s shameless marauding antics at Barclays and had ignored the increasingly obvious signals that the Establishment wanted him brought to heel the end came swiftly and suddenly.

          Of course, there were no orange jump suits (we don’t have those here anyway, you get a blanket over your head as you are popped in and out of the police van) and Diamond skulked away to lead another equally grubby enterprise — but what he ended up doing in no way has the same sort of prestige, kudos and entitlement to deference as being CEO of an outfit like Barclays. I’ll bet Diamond has to call in a few favours to get invited to Davos. And Jack Lew probably is slow to return his calls.

          Okay, if this is “punishment” then I’ll have some of that kind of action, but to the likes of Diamond, it is a very palpable fall from grace.

          1. diptherio

            Of course, there were no orange jump suits…and Diamond skulked away to lead another equally grubby enterprise…

            Okay, if this is “punishment” then I’ll have some of that kind of action, but to the likes of Diamond, it is a very palpable fall from grace.

            That a little fall from grace, bruising a precious ego, is the worst these cretins have to deal with shows how unjust our legal system is. It’s the definition of privilege: “private law.”

            I, for one, will not be satisfied with anything less than what your average mugger would get…for a couple thousand muggings. I have a feeling that the willingness to settle for a little embarrassment as adequate punishment for the elites is far past its pull-by date. Nobody’s buying the old, “well, it’s better than nothing” line anymore.

            1. Clive

              Oh, I am not at all saying it is proportionate and appropriate justice. But I’ll take victories when and where I can find them, even if they’re not everything I’d wish for.

              It is a fairly significant shift (I wouldn’t call it seismic or anything like that, but it is a fairly noticeable tremor) that our elites are taking notice that a) we’re watching b) we don’t like what we’ve seen c) we’re getting organized in our resistance and d) while our pitchforks aren’t the sharpest and can easily be repelled at the gates, they are getting sharper and more numerous the longer things go on unaddressed.

              1. diptherio

                Yeah…it’s just sad that this is the best we can hope for. Equality under the law — what a concept!

        2. Yves Smith Post author

          This time is different. No bank has ever used clawback provisions, ever. Here the first time they use it, both execs are hit with eight figure clawbacks. Those are not token amounts.

          Gillian Tett wrote how this is an important precedent in Why Wells Fargo is a watershed moment for clawbacks (Google the headline if you can’t access it via the link):

          http://www.ft.com/cms/s/0/33a8e0ae-856d-11e6-8897-2359a58ac7a5.html#axzz4LhauqX87

          And the booting of the top execs at Barclays was basically due to the bank crossing the Bank of England during the Libor investigation. It wasn’t over stealing from consumers on a large-scale basis. There was no public ire or media outrage in the case of Barclays, and nothing like MPs almost with one voice calling the bank a “criminal enterprise” or demanding that the CEO be indicted.

          Stumpf is going to be put through a wringer and the odds are not trivial that at least Carrie Tolstedt will be indicted.

          1. Lune

            I share your cautious optimism Yves. I have to confess, despite how much I liked Sen. Warren’s speech, I figured it was just so much grandstanding and nothing would come of it.

            But the clawback is real. And it seems to be just the beginning. If this becomes a rare bipartisan issue, there’s no limit to where it can go in an election year.

            So my cynical side has to ask this: how much of this is due to Wells Fargo being a west coast bank and not part of the Wall St club? I bet JP Morgan has nearly the same predatory culture in its retail side, but no one seems to be looking there….

    2. BecauseTradition

      No other method will work. Expat

      Banks have powerful explicit and implicit privileges from government that might be abolished.

      Except TINA? Because tradition?

    3. Richard Davet

      Your call for break up may obfuscate the reason for prosecution.

      We need to go after the criminal conduct by Stumpf et al. We don’t want to give those tasked with prosecution an excuse by blaming “management style” or “culture” with “criminal conduct”.These people are not stupid and design their business models accordingly to try to deflect criminal prosecution by telling you what you are looking at (crime) is not what you are looking at.

      There is no distinction between Mr. Stumpf and the criminal cited by one of the Congressmen. Lets prosecute them in the same way. The last thing we want to happen is to be dealing with his successor who will mimick his behavior all over again.

      1. Yves Smith Post author

        I didn’t call for Wells to be broken up. Maxine Waters did.

        Wells is a pretty classic retail bank. It ought to be possible to manage it properly. The big control failure was having the audit unit report to the line managers. That should be verboten in any bank and regulators should come down hard on banks that do that (the same thing was at the root of the London Whale scandal).

        However, Wells looks to be a persistent bad actor in terms of pushing employees to abuse customers. A servicemember who lost her home to Wells keeps writing to me and other people to try to get her home back (sadly, no way will that happen). She pointed to a lawsuit where the plaintiff provided internal Wells documents showing how reps were instructed to lie about losing the documents of people trying to get mortgage modifications. Banks under law are require to consider mod requests.

        I have not doubt other banks do the same thing but the hot lights are on Wells. A breakup might be salutary if nothing else to freak out other bank execs. CEO pay is a function of the size and complexity of the organization. Smaller banks mean much less lucre for bank execs.

        1. Richard Davet

          I meant to reply to “Expat”, sorry.

          It is never too late to right a wrong. The “GSE Business Model” at fault to begin with is the same Model that is in place today—- called “fatally flawed” by every creditable scholar on the subject. You simply cannot sell something that does not work as intended and sold. Virtually nothing has been done about by our representatives in Congress.It (the Model) has been placed in limbo instead of hell.

          The Stumpf criminal infractions in “cross selling” dwarf those of his infractions as a member player/partner in the GSE Business Model. It’s possible banker’s welcome Stump’s crisis to get the public’s eye off their mortgage antics.

          The problem at Wells Fargo et al is the fact that because there is no downside to the criminal conduct—–why not? How many criminal lawyers have they hired to tell them they are not stealing? Hence their business models evolve and are crafted accordingly in order to more easily do the numbers.

          Why are they talking to Stumpf at all? He should be in handcuffs with bail in the millions (comparable to his crimes). Instead, they grilled him for four hours because he is a big shot and gets special treatment compared to the felon brought up by one of the Congressmen. He is probably playing golf right now.

          1. Yves Smith Post author

            *Sigh*. You’ve written about GSEs before and you really don’t understand how the GSEs work, much the less have the goods on them. You don’t even understand why they became insolvent.

            The GSE are very much culpable in allowing large scale servicing abuses to occur that they could have stomped on, as well as not pushing for principal modifications. But that is not the case you have been arguing.

  2. Richard Davet

    Wiktionary

    “Does Macys tell Gimbels” (Proverb)

    A rhetorical question with the implied answer being that competitors do not share business secrets with one another.

    Mr. Stumpf’s lack of credibility came through loud and clear by his repeated denial about his ignorance about what other banks were doing with “cross selling”. Everybody in the retail business (his reference to his stores) constantly monitor competition as an integral part of their business model.

    As for his commitment to making customers “whole” need I remind you of Fannie Mae’s stance on the subject in presiding as the head of the snake in the largest and most devastating sham in history called the “GSE Business Model” that brought the Nation to it’s knees and which is unresolved to this date.

    https://assets.documentcloud.org/documents/289482/lavalle-report-small-printed.pdf

    Fannie Mae in response to my FOIA requesting the number of borrowers “made whole” as a result of servicer fraud as referenced in their Report to the Fannie Mae Board (in hyper-link above)———- they denied my request saying such information is “proprietary”.

    This all brings us back to Mr. Stumpf and Congress.We have “been there, done that” before with the GSE Business Model player/ partners about making people “whole”. It is obvious that the paradigm model post Enron implemented by Congress to protect the consumer has failed miserably. It is their turn to step up to the plate and pout their money where their mouths are.

        1. Yves Smith Post author

          I can’t find the footnote you are referencing, so I can’t assess the merits of your FOIA (and I’ve done quite a few). In general, if you were seeking regulatory exam type data, you were never going to get it.

  3. Jim A.

    At this point, the reason to keep Stumpf is so that HE is the one being grilled in hearings rather than his successor.

    1. Yves Smith Post author

      Yes, I’ve said that, which is why I expected him to be kept on through the House hearings. However, if the board wants to put this scandal behind them, Stumpf has to go.

      Plus I doubt he would be called to testify before Congress again. If he still has a job at Wells, he’d just say the same drivel. Any additional hearings will focus on ex employees and customers, and possibly Carrie Tolstedt. Some reps also want to go after the CFPB for not having caught this, but someone has to recognize that this will backfire. The CFPB no doubt will have a defense in having only limited authority and staffing, as if in the Congresscritters want them to be a real watchdog, they need it to be more muscular.

      1. Richard Davet

        Or hire a watchdog with teeth.

        Lets face it—–wishing for regulatory reform is like Santa Claus will come twice this year. In fact we have very good laws already in place. We don’t have any body to enforce those laws. The Banksters have told us by their conduct and action that what we are looking at (crime) is not what we are looking at.

        Unless and until we have prosecutors willing to prosecute we will have expotential criminal activity as demonstrated by the Banksters. It is a business model gown awry because their are no consequences to their crimes and they consider it a cost of doing business.

        The Baord and Stumpf wanted to throw Tolstedt under the bus. That did not work so knowing that usually someone had to lose their head they came up with the clawback. I know Stumpf was the darling of cross selling, but the Board must have ulterior reasons for wanting to keep him. Could it be that someone as slick as he is is hard to come by or is this the same indifferent Board that liked him because he is good at what he does (crime)?

        1. Richard Davet

          The next “hearing” the Board of Directors should be brought in along with major and minor shareholders to determine why they developed such a case of “willful blindness”, Could it be that they were so enthralled with Mr. Stumpf’s operational skills that delivered the numbers they were looking for?

          The way that it is structured is that willful blindness to criminal conduct and theft leads to a loss of all ill gotten gains via making people whole who are damaged. The idea that the Board and Stumpf decide what the number insults the public intelligence.

          If Mr. Stumpf is truly sorry and contrite for his conduct he must know that absolution for that is contingent on making people whole.

          1. John

            Wells Fargo Board of Directors

            Elaine L. Chao,
            wife of Senate Majority Leader Mitch McConnell

            Director since 2011
            Former U.S. Secretary of Labor

            Ms. Chao was the nation’s 24th Secretary of Labor, serving from 2001 to 2009, and the first Asian Pacific American woman to be appointed to a President’s cabinet in American history. From 1996 to 2001, 2009 to 2014, and since May 2015, Ms. Chao was and is a Distinguished Fellow at The Heritage Foundation. She served as President and CEO of United Way of America from 1992 to 1996. Her previous government experience also includes serving as Director of the Peace Corps; Deputy Secretary of the U.S. Department of Transportation; and Chairman, Federal Maritime Commission. She was also Vice President of Syndications at BankAmerica Capital Markets Group and a banker with Citicorp. She has served on a number of public boards prior to government service. Currently, she serves as director of Ingersoll Rand, News Corp and Vulcan Materials Company and is a board member of several nonprofit organizations including Harvard Kennedy School of Government, Institute of Politics; Harvard Business School Board of Dean’s Advisors and Harvard Business School Board of Global Advisors. Ms. Chao received her undergraduate degree in economics from Mount Holyoke College and her Master of Business Administration from the Harvard Business School.

            Wells Fargo Board Committees: Credit Committee and Finance Committee

        2. Yves Smith Post author

          You really are not up to speed on this at all. You need to stop spreading disinformation.

          Stumf has not thrown Toldstedt under the bus. He has never once attempted to shift blame to her. In fact, in the Senate hearings, he praised her performance.

          He has repeatedly assigned blame to the 5,300 employees that were fired and has consistently tried to maintain that the rest of the organization is squeaky clean.

          She was hit with the clawback when Stumpf was dinged too. Stumpf is still CEO, meaning in good standing otherwise as far as the presentation to the public is concerned.

          As I said earlier, Stumpf’s peculiar posture suggests that when she resigned (as in was probably forced to resign, although she might have had the presence of mind to get out while the getting looked good), the odds favor that she and Wells agreed on an official story re what they’d say re her tenure at the bank. The odds that there is a formal separation agreement are pretty close to 100% if she was forced out and it is bog standard for an attorney for someone at her level to insist on what amounts a favorable official story, particularly since, in her case, she almost certainly had glowing reviews in her personnel file.

      2. jash

        The wailing from some of the reps was comical as to the reg burden imposed on the free market!
        Some of them even said that they came to the house to deregulate and now this horrible free market has made that dream much harder to achieve.
        classic.

        Also, there was a point when Stumpf was asked about the line of reporting to Tolstadt and he said it changed in 2013(?). It seemed to me that the very next question should have been WHY.

        Granted he would have mumbled the standard , but you have to ask.

        1. jash

          And why would the regulatory burden NEED to be the same for giant money center ops and the small town corner guy?

          I think the reps mentioned the horrible reg burden coming at their small town operations at least 50 times.

          1. Yves Smith Post author

            Community banks have a lot of regulatory breaks. But the big banks have been very smart about using them to advance the argument that there need to be fewer regs (as in the big bank dominated think tanks and lobbyists carry on all the time about the suffering community banks).

        2. Yves Smith Post author

          Yes, I did love the Tea Parties who were all upset that Wells Fargo had just thrown a big stink bomb into their tidy story about the wonders and virtue of “free markets”

  4. Robert NYC

    So Stumpf will go but will be replaced by some other member of the oligarchy. Fines will be paid to give the public the appearance of a functioning legal/regulatory system, and business will continue as usual. The chances of Shelia Bair getting the job? .00001% but I would love to be wrong.

  5. jake

    For a corporate titan, the man also comes off as remarkably stupid — what an object study in undeserved success. Besides famously rhyming “eight” [accounts] with “great”, what rare and unique talents and insights does he possess? What could he have possibly done, beside promoting theft, to earn hundreds of millions?

    Based at least on this performance, Donald Trump is a genius compared to this guy.

    And we wonder why American business prefers rents to innovation?

    1. Yves Smith Post author

      Yes, I was stunned by that. Should have said that and thanks for pointing that out. I wondered if this might be a big act and he’s really not that dumb. Playing stupid is great cover when you need it, but it would be hard to keep it up as long as he did.

    2. Mike G

      After the last couple of decades observing American business and government, and in my personal experience, I am no longer surprised when people at the upper reaches of organizations turn out to be remarkably stupid.
      It almost seems to be a requirement for their selection that they be malleable and not overly observant.

  6. Chauncey Gardiner

    It’s like a speed chess match. After reading his background on Wikipedia, it is hard not to conclude that Stumpf is merely a knight, albeit one who is very well-paid. IMO he is not an elite insider, and is in the process of being coughed up as a one-off sacrificial lamb in the larger game after serving as an example to maintain discipline among other consiglieres.

    For reasons Yves cited in in her concluding paragraph, I too hope he doesn’t go quickly or quietly. But I also expect that outcome won’t be allowed to happen.

  7. diptherio

    They think that if they go after Stump hard enough, we’ll forget about Diamonds and Blankfiend. Ain’t gonna happen.

    1. crittermom

      Yep. We won’t.
      Especially those of us whose lives remain a living hell due to their illegal activities regarding mortgages.

  8. crittermom

    While I’m happy to see Stumpf and WF getting hammered, I remain disgusted that it has taken the govt almost a decade after many, many millions of us began losing our homes for them to realize the banks have become CRIMINAL ENTERPRISES. Duh?

    The govt slapped ’em with fines (equal to no more than 10% of their ill-gotten profits) for previous illegal activity, with most if not all of it going to the govt rather than the victims.

    And we victims had no say in the matter.

    The govt has turned a blind eye for far too long to the ‘new banking systems’ and now I suppose they think WF is the only one doing the latest nasty deeds in the name of greed?
    Very, very doubtful. (The CFPB has received 30,000 complaints regarding cross-selling and opening and closing of accts) Hello?

    WF is once again, the mere tip of a very large iceberg, while we citizens are locked in the cabins of a Titanic.
    They’re just the first to be blatantly exposed. There will be more to come, guaranteed.
    But will the actual victims be made whole? Hell, no. (Hits on their credit will last for years)

    It used to be that if you had a check written to you, you could take it to the bank it was written on to cash it, thereby knowing immediately if it was ‘good’.

    Not anymore, unless you’re willing to pay a ‘fee’ to the bank to cash it, that could amount to 75% of the amount of the check if it’s a small one.

    Want change for a $20?
    If you don’t have an acct at the bank and just walk in off the street, good luck. Many won’t even break it for you–unless you have an acct there.
    It hasn’t been until recent years that banks began charging for or refusing such banking practices. Their entire demeanor has changed.

    I called govt agencies to inquire if this was all legal.
    Apparently so. We are no longer ‘customers’.
    We are prey, instead.

    We need William Black in a position of power in the govt (oops? I almost called it ‘our’ govt) to expose the very ugly truth and really come down on ’em HARD.

    I want to see these banksters lose ALL their money, as well as their homes (paid for by their ill-gotten gains, no doubt)–and thrown in a common prison (no ‘country club’) to rot, spending the rest of their lives paying restitution. (Ha, ha, ha! I crack myself up)

    Too bad we don’t have a candidate on the ballot that has the best interest of the PEOPLE over that of their own pocket…

    1. Jess

      Speaking of “getting hammered”, FWIW, a FB friend says she met Stumpf once at a Habitat for Humanity PR event and he was “drunk as a skunk”.

  9. tegnost

    I have a wells account and was, completely without my knowledge, assigned (given would imply I had some input on the process) a secured credit card when I did a split deposit and the person (not actually sure when it happened, but I remember one strange bank visit where I talked to a rep) took 300 bucks and opened the secured card account. A long time later (6 or 8 months, just guessing as I have no real idea of when it happened) the renter at my mailing address, rather than throwing away all my mail as usually happens, opened a letter from wells, and there was a $300 check. My friend, the landlord of the house where I periodically reside, called to tell me about it and I thought they were offering me $300 to open an account and thought it was one of those things where if I cash the check then I agree to the card, but no. Eventually I get to seattle and get the check which I take to wells and ask the rep what the deal is? Oh I’ve been issued a secured credit card, but since I never activated it (duh, I never even knew I had it) they sent the $300 back. I ask why, if they just took the money out of my account without my knowledge they couldn’t just put it back in, and what would have happened had I not gotten the check? Oh, they would have sent another…nothing to worry about…am I sure I don’t want to get another card? so right into another cross sell …so now I know what actually happened

    1. polecat

      I have to agree with Expat ….. This all pre-election grandstanding and bloviating …. ‘Oh. are WE gonna nail those bad banksters !!’ Ha!, senators, pull the other one will ya …..

      Another year or two of this BS and the pitchforks really will be out en mass ! I don’t think the public will stand for more toothless crap emanating from the grifing CONgress …….!

      1. crittermom

        Sadly, waiting “another year or two” (for the govt to enforce the laws), has only resulted in the two most disliked candidates in history ‘chosen’ for us.
        I’ve already sharpened my pitchfork…

    2. perpetualWAR

      Can I ask the un-ask-able?
      After all the evidence regarding the big 5 banks, why would you bank with them?

      1. BecauseTradition

        Because they’re all crooked and we have no other option but to use one member of the usury cartel or another – by design or accident.

        1. Ames Gilbert

          Not (necessarily) accurate.
          I’ve used a credit union for 30 years. It’s true they can’t exchange ‘furrin’ money, and a few other esoteric services the regular banks charge an arm and a leg for, but for everyday banking, they have been fine. My CC is part of the “Cirrus network”, so I’ve been able to take out cash at ATMs all over the world. No minimums to open or maintain an account, a credit card if you need it. Lousy savings account rate, true, but they are mandated to not take risks with the customers’ money.

          1. BecauseTradition

            Ah, but you miss the fundamental looting of government-privileged depository institutions – that the poor, typically the least so-called credit-worthy, are forced* to lend (a deposit is legally a loan) to banks, credit unions, etc. to lower the borrowing costs of the rich, the most so-called credit worthy.

            With an ethical system, the rich would still be the most credit worthy but the poor would not be forced to lend to them.

            *Or else be limited to unsafe, increasingly inconvenient physical fiat.

      2. Vatch

        In some locations there might not be any alternative to using one of the biggest banks. Many local banks have been assimilated into the giant banks over the past couple of decades.

      3. tegnost

        Good question, in the anacortes, sji area there are very few banks so I have a couple of accounts to deal with that, the closest credit union is in oak harbor which is pretty out of the way but I’ll probably get rid of the wells account for alaska or becu now that I know it was not the innocent mistake they claimed it was.

        1. readerOfTeaLeaves

          O.M.G! Anacortes is one of my fave spots.

          I was a WF customer back from the time it was First Interstate, back in the day when the tellers knew their customers pretty well, and there was still a sense of community banking.

          These banks because too big to manage, too big to coordinate, and too big to be competent.

          My experience with BECU, now in Year 5, has been stellar: smart, community-oriented people. I am a huge fan of BECU. They keep things simple, and very easy to track.

          If you have any kids in the family, they have an absolutely fabulous ‘Early Saver’ program that is absolutely terrific.

          1. knowbuddhau

            I’ll second that! As luck would have it, I work at the Rock Fish. Which, as you might know, also runs the Anacortes Brewery. About to enjoy a free growler of Fresh Hops Pale Ale. (They like my work as a janitor so much, my money’s no good there #humblebrag.) The pumpkin ale will be out soon.

            Good to hear about BECU. Been thinking of opening an account there.

            We should have a meet up someday. I know just the place….

            1. tegnost

              working in anacortes all next week, whats a good time to stop by rockfish? or you can find me at a likely location for coffee in the early am tues-thurs…

  10. KPL

    “It seems impossible for Wells Fargo’s board to keep Stumpf much longer.”

    They can’t lest they be pulled under the bus. I am really liking this movie. The longer it plays out, the more putrid it gets and displays how the elites are making it out of the hide of the people and the all pervading rottenness of the system. I hope it continues till elections.

  11. JSM

    I think this discussion would crystallize immediately if we were reminded of what is legally expected of Mr. Stumpf as CEO & Chariman of the Board under e.g. Sarbanes-Oxley and whatever statutes/laws are most relevant.

    It would seem that he must have (at the very least) signed off on compliance papers the contents of which, whether he read them critically or not, he is legally answerable for comprehending.

    That’s to say nothing of the conspiracy to commit identity theft, etc. that high level people were obviously responsible for coordinating.

  12. afisher

    Republican hypocrisy. GOP are attempting to hide that they have been in charge for years in the HOUSE and they let this slide away until ONE WOMAN raised a stink, along with the Agency that she devised. Republicans got caught again with their hands elsewhere and now they try and look tough on bankers who ripped off the American public. PLEEZZZZZZZZZZZZZZZ

    1. Yves Smith Post author

      Spare me your accusations of Republicans. It was Obama who let the banks off the hook in 2009, and rescued them again for chain of title abuses in 2012, which was a stealth bailout that took more directly out of American citizens through preventable foreclosures (which lost investors money too, the only winners were the banks) than the TARP plus years of transfers to the banks via super low interest rates. We chronicled both of his failures at great length.

      See here for just one of hundreds of posts I could provide on this topic:

      http://www.nakedcapitalism.com/2010/03/the-empire-continues-to-strike-back-team-obama-propaganda-campaign-reaches-fever-pitch.html

      And as for who was responsible for “the stink,” it was the Los Angeles Times that found the fraud and started publicizing it, which then led to the the Los Angeles City Attorney filing a case. The OCC also started digging around in 2013 as a result of the LA Times reporting. The CFPB was a latecomer.

      And it was the media uproar that led to the hearings. I know a senior Bloomberg reporter and they went into “all hands on deck” mode when the story broke, and Bloomberg hasn’t been the most aggressive in reporting on this (the WSJ has been the most consistent). Congressmen have been inundated with complaints from constituents and former Wells employees.

      It’s also been clear that many of the media stories almost wrote themselves, due to the volume of former Wells employees contacting reporters (one of the most important, CNN on the fact that Wells was firing whistleblowers, was explicitly due to sources contacting CNN). Although Warren was undeniably extremely effective and one of the most aggressive, the House had asked Stumpf for a hearing before the Senate hearings.

      Agnotology is against this site’s written policies. One more bit of partisan trollery from you and you will be banned. That is all the overwhelming majority of your comments have amounted to.

  13. Tony

    Anyone else get the feeling that, in this election year, somebody decided that one of the TBTF crowd was gonna get raked over the coals? It is impossible to believe that Wells was the only bank doing this. I worked at a regional midwest bank in the early 2000’s and the foundation for this kind of abuse was well established by the time I quit in 2003. If the small fry types were cracking the formula, how could the big boys not have it perfected?

  14. Kris Alman

    In the mean time, Wells Fargo gets a thumbs up on corporate transparency for political disclosure and accountability.

    “Transparency” ain’t gonna cut it when it comes to our corrupted political economy.

    Big business continues trend toward political transparency
    https://www.publicintegrity.org/2016/09/28/20276/big-business-continues-trend-toward-political-transparency

    http://files.politicalaccountability.net/index/2016_Index.pdf
    “CPA-ZICKLIN TRENDSETTERS: Thirty-five companies in the S&P 500 received top-five rankings for political disclosure and accountability, earning them the new designation of CPA-Zicklin Trendsetters. The number of companies designated Trendsetters grew 52 percent from 23 top-five ranking companies in 2015. Fourteen
    new companies climbed into these rankings, and one that had slipped between 2014 and 20
    15 regained its superior score.

    Seven companies tied for a first-place rating of 97.1 points. They were Becton, Dickinson and Co.; CSX Corp.; Edwards Lifesciences Corp.; Noble Energy Inc.; PG&E Corp.; and Sempra Energy and State Street Corp., both newcomers to the top-five rankings. Other top-five companies included Edison International; Microsoft Corp.; Morgan Stanley; Unum Group; Capital One Financial Corp.; Express Scripts Holding Co.; Intel Corp.; Norfolk Southern Corp.; Symantec Corp.; United Parcel Service Inc.; Wells Fargo & Co.; AFLAC Inc.; Bank of America Corp.; Biogen Inc.; EMC Corp.; General Mills Inc.; International Paper Co.; JPMorgan Chase & Co.; Tesoro Petroleum Corp.; Visa Inc.; Altria Group Inc.; Bristol-Myers Squibb Co.; Celgene Corp.; Coca-Cola Co.; Exelon
    Corp.; Gilead Sciences Inc.; Prudential Financial Inc.; and United Technologies Corp.”

  15. mk

    Techies – create an app for customers of particular banks so they can organize actions to FORCE their bank to negotiate for betters terms/products/etc.

    For example, take a period of time (a year?) to organize and unite all the wells fargo customers with the app, everyone agrees to move their money during a particular month if wells doesn’t give the customers what they want. Give us 5% return on a CD for “x” amount of time or we move our money. (maybe not the best example, maybe some banking nerds have better suggestions).

    I don’t understand why people aren’t doing this. Politicians aren’t going to do anything for us, people have to get organized. We are fast becoming the United Corporations of America if we’re not already there.

  16. Expat

    Yves, how many times have we (I, you, us, etc.) said of the oligarchs and especially the bankers, “Well, this time they have to do something about them!” A few excessively greedy, unpleasant and clumsy bankers and CEO’s have gone to jail for a short stint but with each new crisis we hope for a change and get nothing.
    Stumpf will never do time and will, at worst, retire with over $100 million in the bank. Wells will never be broken up or prosecuted.
    Each and every major bank in the US could be charged under RICO and have all of its assets seized…ALL of its assets! The entire management could be jailed using RICO without any direct proof of their involvement in specific acts of fraud. They could be sent away for decades simply for being key figures in a criminal organization.
    It will never happen. Did anyone from HSBC go to jail for laundering cocaine money? No. What about Citi and blood diamonds and drugs? Nope. What possible hope is there to send someone to jail for a crime as petty as Wells’s crimes?
    This is grandstanding and political drama at its finest because Congress will be able to trot out individual victims with names and the crimes are easily understood by the typical low-browed, Kardashian-watching American.
    But when it’s over, nothing will have changed.
    Bring on the nukes!

    1. Yves Smith Post author

      Don’t straw man me. I’ve made very careful and well documented arguments over a decade and you are grossly misrepresenting what I’ve written. And knee-jerk cynicism when we are finally seeing the elites rouse themselves to discipline one of their own members is not a helpful attitude.

  17. Chris

    Any chance of this scandal being the opening advocates of Postal Banking need? If there’s any argument against the current “TINA” banking system, this mess has to be Exhibit A.

    1. Yves Smith Post author

      I don’t think anyone is plotting that many steps ahead but that’s an excellent thought, to use this scandal to revive that idea. But I can’t see a Clinton or Trump administration getting behind it.

    2. BecauseTradition

      Accounts at a Postal Savings Service would constitute an alternative, risk-free payment system to the one that must work through banks – so their hostage holding of the economy would end.

      Except who will use a Postal Savings Service if they can still have insured deposits at a bank and receive interest on those?

      It’s said that government provided deposit insurance killed the original Postal Savings Service in the US. It would be poetic justice if a new PSS was used to kill deposit insurance and other privileges for the banks.

      1. crittermom

        Many of us living rural would welcome a postal bank, including local business owners.

        Post Offices we have for each small town.
        Banks? Not so much. (Only an ATM)
        The nearest bank here is 50 miles away in another small town. Next closest 70 miles–in another state, or 100 miles minimum to stay with another in this same state.

        I continue to bank in my former state, by snail mail. Makes it hell when I need small bills for change to do a craft show, however. Must plan weeks in advance, breaking larger bills (20’s) here and there on small purchases to come up with enough ones and fives.

        The plus is that I’ve been with ’em for twenty years and they have some of the same employees, so they know me if I have a need to call, and I get good service (imagine THAT!).

        They recently merged with another small bank, however, which concerns me, but so far, so good.

        1. BecauseTradition

          But a Postal Bank should be more than just a fill in for the banks or they will continue to hold the economy hostage.

          Not to mention that the poor should not be forced to lend (a deposit is legally a loan) to banks to lower the borrowing costs of the rich.

          Nice to hear of where you live. I plan to live in the country someday if I can.

  18. Moxpin

    Why is this fellow stumpf not being sent to jail? Why no criminal investigation? Why are we wasting tax payer dollars embarrassing him in senate hearings? When is something really meaningful going to happen?

    1. Yves Smith Post author

      The DoJ is making a criminal investigation. It typically takes 2 years to bring a criminal case. Even if they rush it, it will take months.

  19. john stumpf

    This CEO should be indicted on Rico charges. If it was you or me who stole identities and opened accounts for our own personnel gain, we would be in jail! If this man caused me to forfeit my home in foreclosure I kid you not I would hunt him down and make him pay by means that you honestly never want to know the details of! You would never find John stumped again! This should be forwarded to john himself, because if you know me you would know that this is no idle threat.

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