Loyal readers, as I am sure you have heard by now, the largest bank in the United States—by market value, Wells Fargo—just paid out a record $185 million dollars in both fines and penalties deriving from opening fraudulent accounts for their “customers.”
A common misconception about the banking industry is that you go to a teller window to open a new account or product at said bank. Tellers do not have the ability or access to your Sensitive Personal Information (SPI) only personal bankers (the people that work in cubicles they refer to as offices) have access. SPI is a term very common in the financial service industry. SPI refers to a customer or potential customer’s date of birth, driver’s license number, social security number, and wife’s maiden name, etc. We refer to this as sensitive because this information is what makes you unique in our country and these numbers are supposed to be kept confidential. I will lay out in this installment how the fraud went down, and an executive getting a large “golden parachute.”
The banking industry is notoriously low paying. Tellers usually start around $11 or so dollars an hour. Their only path to promotion is to become a personal banker. Once established at this level they might eventually venture off into mortgages, retirement accounts, insurance etc. Personal bankers may make around $14 an hour but usually get generous bonuses based on “multi-lining” or “upselling” as some call it.
X has had this happen to him before. I opened a checking account at Bank of America, and ended up leaving with said checking account as well as a savings account; nice job by the banker, likely netting him a fair bonus.
This is not what happened at Wells Fargo. You see, at Wells Fargo the bankers are put on strict quotas, and failure to hit “the numbers” each quarter results in no bonus, additional training and sometimes termination. Enter the fraudsters, every time a bonus exists people will naturally find a way to game the system. You would think only a small group of rogue employee’s right – say 10-15 companywide? Maybe a few more give or take? Try 5,300 folks, over a span of about five years! This is serial fraud, and should have ended up with a US attorney starting a federal investigation.
These “employees” (and I use that term very loosely) would open an account for a customer legitimately, then unbeknownst to the customer open several other accounts and even credit cards! Yes, that meant filling out and likely forging a signature for someone on a credit application. Even more appalling is the fraudsters changed the mailing address to various PO boxes so the customers never had any idea this fraud was going down. To make the whole situation that much more bizarre the customers were even charged fees associated with these accounts. Talk about arrogance, and extreme double dipping.
This type of fraud likely came from an intra company memo. I find it hard to believe 5,500 employees could all be on the same page as far as running a fraud scheme like this. These orders came from the top, more specifically the C-suite. I think the world’s most famous and well known investor was involved personally. Yes folks I am talking about the snake from Omaha, Warren Buffett. You see Buffet makes money based on how big his conglomerate (or as I call the USA’s first legal monopoly) does on investments, insurance and dividends from the companies he owns. Buffett—through Berkshire Hathaway—owns almost 7% of Wells Fargo Common Stock shares, or a measly 320 million shares of stock. Wells Fargo also pays a dividend and has been growing its disbursements over the years since the housing crash. Wells Fargo like most financial institutions reports earnings but also puts an emphasis on new accounts opened during the quarter. This is where the scam comes full circle, Buffett wants good earnings so his portfolio grows in value, the company wants more new accounts, and executives and employees get bonuses.
So you tell me, you think only a few rogue employees were in on this fraud scheme? Well we know a vice president was canned over it; Carrie Tolstedt was terminated last week; however, for her expertise in running fraud schemes, she netted $125 million dollars in severance pay. Warren Buffett was behind or knew all about this.
X is writing a three part series and is going to continue to expose the serial fraud that the snake from Omaha is behind. Once you read what I have uncovered about this guy, it will likely change your mind. Warren Buffett—through his conglomerate—is a very horrible human being. Like the Robber Barons of old, he enriches his family and friends while screwing the common working man. All of this will be laid out in an in depth report likely worthy of a Pulitzer Prize—if only they were given to people with Conservative views.
Back to a serious note, what happened at Wells Fargo is extremely upsetting. An executive got rewarded, employees got paid bonuses for engaging in fraudulent activity, Buffett made millions, and common people got nothing except the privilege to pay bogus fees and fines to the bank. After the fraud was detected; Wells Fargo was fined a hefty sum, the federal government got their pound of flesh, the City and County of Los Angeles got their pound of flesh, but what did the common person who was a victim get? Oh that’s right a whole lotta nothing.
The Consumer Finance Protection Bureau was created to stop this kind of behavior, but nothing happened. When they were needed they were impotent to do their job. So what about the consumer?
Now eventually a class action lawsuit against Wells Fargo will happen and customers who were affected by this fraud will likely get a $10 rebate back for each $50 fee they were forced to pay, not exactly justice. Again, the lawyers will get more than the victims. But hey everyone important got paid in this scheme so maybe we just let it pass, right? Besides, Wells Fargo is too big to fail, or so we were told. Good Lord
Until next time,