So, 55-hundred people walk into a bank, guns drawn and get away with millions. Um… well, that’s not exactly the way it happened. But Wells Fargo just paid $185 million in fines and is working to restore the actual amount its workers stole.
How does something like this happen? Easy.
Say you’re the bank. First you spend all kinds of effort and money on market position. Hey! We’re the cuddly bank, just like in the old west where we’re headquartered. Just mosey in and a friendly guy in a cowboy hat and a ‘49ers jersey will take care of you.
Except that’s just teller’s window dressing. What’s the reality? Here are some of the bank’s autobiographical stats: Two trillion dollars in assets, profits $22.9 billion in 2015. Employees: 265 thousand including the 5500 robbers who’ve been fired. That’s close to General Electric’s head count and higher than GM’s.
So it’s a big place. And like many big places, most of the work gets done in boiler rooms and computer massifs. And that’s where the real robbery took place.
Five thousand- plus people opening fake bank accounts for real existing customers, sending them valid credit cards and other accounts they didn’t apply for. Letting them run up fees.
Apparently the boiler room and massif crowd received a dollop of cash for opening each new account. So at least 55-hundred were getting extra money they worked for but didn’t earn.
Snoozing regulators awoke long enough to fine the bank. And Wells Fargo’s front office woke up long enough to fire the holdup men and women (surely there were women in on this unless there’s a glass ceiling in this kind of organized crime.)
This had been going on for awhile. A customer sued them over it last year. Now, all of a sudden this is big news.
Wall Street likes this stock. Consistent profits, big name major stockholders like Berkshire Hathaway and Vanguard and State Street. The three together own about 20% of the stock. “Tight ship” is a description one often hears. And although it doesn’t look that way to the naked eye, it may be so.
Part of the tightness may be the whipmasters whipping the people rowing until they go over the legal line to meet targets. Could this be? Here? In the capitalist paradise?
How about a committee of the 20%-ers to find out and fix this.
Note to CEO John Stumpf: If you see Warren Buffett wandering around in the executive suite, worry. And don’t stand near any windows on high floors.
--It’s no secret that Wells Fargo grew to elephantine size by buying competitors. What many don’t know is that the trend started in its very first years. The founders owned American Express and formed WF in 1852, then bought out other stagecoach companies. Along the way, they gobbled up Crocker National Bank, First Interstate and Wachovia among others.
I’m Wes Richards. My opinions are my own but you’re welcome to them. ®
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© WJR 2016