|Wells Fargo bank got fined big time for widespread|
corruption and hijinks, including opening
bank accounts with fees for customers who did
not ask for the accounts or want them.
Wells Fargo Bank is paying $185 million in fines to various agencies for opening up millions of phony accounts for unwitting customers.
This wasn't just a few bad apples at Wells Fargo doing this. About 5,300 employees have been sacked for doing this, which means it was part of the bank's culture for doing this.
It looks like the trouble started when Wells Fargo brass instituted, shall we say, aggressive sales targets for its employees.
So aggressive that most of them figured they'd never make it to their goals. So they created fake email addresses to sign up customers for online banking services. Apparently, there were about 1.5 million - yes million - such accounts opened.
The emails were fake, but the customers were real. And these customers did not know they were being signed up. Or would be subjected to fees and such that would help make Wells Fargo big, fat, rich and happy. (Wells Fargo will have to repay these customers fees they paid for their unwitting accounts.)
About $100 million of the settlement went to the Consumer Financial Protection Bureau, Elizabeth Warren's favorite consumer protection agency which was created half a decade ago.
"Wells Fargo built an incentive-compensation program that made it possible for its employees to pursue underhanded sales practices, and it appears the bank did not monitor the program carefully," said CFPB Director Richard Cordway, as NBC news quoted.
I'm glad Wells Fargo is being called on their misdeeds, but as is usually the case when big banks or big businesses are up to no good, the top brass that condoned it are totally getting away with it.
It looks like the 5,300 or so people who were fired were pretty low level people. Maybe they deserved to be fired. But with that many people involved, Wells Fargo must have had a culture in which they did bad things to make profits.
Company culture usually comes down from the top. So why aren't the executives who had to know about this and did nothing still collecting nice big salaries at Wells Fargo?
It's not just envy of the fat cats that are getting away with this. We are all victims of this weird money making system.
As Douglas Rushkoff noted on CNN:
".......We are watching what we might call 'extreme capitalism' at work. Banks don't make money by creating value; they make money by extracting funds from anyone who wants to build a business or even just make transactions."
Rushkoff went on to explain that when the economy was growing vigorously, shareholders in banks were happy because the banks were making money through business loans and general commerce.
In the past decade, things have been slower, so to keep shareholders happy with every rising profits, banks like Wells Fargo try to make more money by issuing more credit cards with high fees and new loans with high origination costs.
So we're screwed. Because banks aren't really creating anything or helping anybody. They're just finding creative ways to transfer more wealth away from most of us, and concentrate it in their pockets.
I don't know if I agree with Rushkoff in the following or not, but his idea is intriguing:
"The only real solution here is for banks, like any business, not be required to grow. Banks, particularly savings banks, are more like utilities than businesses. With their monopoly power on the ability to issue currency, they are in a unique role to enable business of every other kind. This makes them at least as responsible to the public good as their shareholders.
By seeking to extract a higher percentage of our economic activity to pay for their financial services, they don't help anyone. Rather than promoting business, they serve as a drag."
Many conservatives and business types hate the CFPB, the consumer protection agency that is collecting fines from Wells Fargo and want to abolish it.
It's the agency I noted Elizabeth Warren loves.
The fines show that CFPB can help rein in the excesses of the banking industry. Paying $185 million isn't a big deal for a behemoth like Wells Fargo. But the publicity sullies its reputation. The CFPB basically shamed Wells Fargo into behaving.
Sometimes a little public shaming is the best way to make people - and businesses behave.
If that doesn't work, maybe we should all withdraw our money and stow it under mattresses, I don't know.