Wells Fargo: Will They (We) Ever Learn?
An unfortunate side effect of the heated presidential campaign is that it sucks away important stories from the daily headlines. One example has to be the disgrace at Wells Fargo, one of America’s largest banks. It’s a mind-boggling scam with far reaching implications, yet it’s received scant coverage in the general media.
Briefly, thousands of Wells Fargo employees, in an apparent effort to hit sales goals, secretly created bogus bank and credit-card accounts for customers. Employees even created phony PIN numbers and fake email addresses to enroll customers in online banking services, according to the Consumer Financial Protection Bureau. It’s estimated that as many as two million such accounts were set up. In many cases the customers didn’t know about the accounts until they were hit with fees.
Last week Wells Fargo was fined $185 million by the CBPB. That is the largest such penalty the agency has imposed in its five years of existence. It’s not nearly enough, in my opinion, but enough to send a strong message.
After the news came out Wells summarily fired 5,300 of its employees who it said were involved in the scam. But they neglected to fire the executive in charge. She will, in fact, be retiring in a few months with her full stock awards intact, which could net her as much as $125 million.
Prior to this story breaking I would have had a hard time believing even 300 people could be involved in this type of flat out fraud. But 5,300 boggles the mind. The only way for that to happen would be for all types of employees, of various backgrounds and educational levels, and at many different levels within the corporate hierarchy, to have participated.
Understand, this fraud was not some massive error of omission, the failure to catch something that had gone amiss. No, the scammers actively set up false emails and filled out phony applications, and they did it perhaps two million times.
For many of the unsuspecting victims, the damage went beyond surprise fees. That’s because credit ratings agencies don’t like to see borrowers holding too many credit card accounts, and so these new, hidden accounts almost certainly impacted credit scores for thousands of innocent bank customers.
This sorry episode serves as another reminder for you to check your bank statements, and periodically keep an eye on your credit score.
The Consumer Financial Protection Bureau came into being as part of the Dodd-Frank legislation that passed in the wake of the Great Recession of 2008-09. Without the CFPB the Wells Fargo scam might have been caught, eventually, by another agency. Or not. All we know for sure is that this agency stepped in to stop the damage and it imposed the fine.
So here we are, eight years after the start of the worst financial crisis since the Great Depression, and people in the financial world still think they can scam boatloads of customers and get away with it.
Worse is the sheer scope of it; five thousand three hundred of our fellow Americans committed fraud, seemingly on a daily basis, and knowingly hurt their fellow citizens. It’s so damn disheartening.
This article originally appeared in the Huffington Post, 9/19/16.