[ I know this is “old news” from 2016, but the drawback of newspapers is that stories aren’t repeated. What an insane level of corruption we’ve reached! Just look at the financial book list I haven’t yet posted at the bottom. Yet not one banker or wall street firm member went to jail after the mortgage bubble and other illegal actions after the financial crash in 2008. Get your money out of the big banks before the Republicans shut down the Consumer Financial Protection Bureau (CFPB) and there’s no one to protect you.
Alice Friedemann www.energyskeptic.com author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: KunstlerCast 253, KunstlerCast278, Peak Prosperity]
Hongo, H. September 8, 2016. Wells Fargo Is in Trouble for Charging Customers Millions for Bogus Accounts. gizmodo.com
On Thursday, federal regulators announced that they were slapping Wells Fargo with a $100 million penalty after discovering employees created hundreds of thousands of bank accounts and credit cards in customers’ names without their knowledge, costing account holders an estimated $2.5 million in fees.
According to the Consumer Financial Protection Bureau, 5,300 Wells Fargo employees have been fired for using “improper sales practices,” which included transferring customers’ funds into newly created, unauthorized accounts to meet incentivized sales goals. In other cases, employees secretly applied for credit cards, signed up for online banking and activated debit cards in customers’ names.
In a 2013 L.A. Times story credited with first uncovering the scheme, former Wells Fargo employees claimed that managers coached workers on how to artificially raise sales numbers to meet the “relentless pressure” of sales quotas:
“They’d just tell the customers: ‘You’re getting a credit card,’” [former banker Erick] Estrada said. He admitted to opening unneeded accounts, though never without a customer’s knowledge, he said.
When customers complained about the unwanted credit cards, the branch manager would blame a computer glitch or say the card had been requested by someone with a similar name, Estrada said.
One former branch manager who worked in the Pacific Northwest described her dismay at discovering that employees had talked a homeless woman into opening six checking and savings accounts with fees totaling $39 a month.
“It’s all manipulation. We are taught exactly how to sell multiple accounts,” the former manager said. “It sounds good, but in reality it doesn’t benefit most customers.”
“This widespread practice gave the employees credit for opening the new accounts, allowing them to earn additional compensation and to meet the bank’s sales goals,” said the CFPB in a press release. “Consumers, in turn, were sometimes harmed because the bank charged them for insufficient funds or overdraft fees because the money was not in their original accounts.”
An analysis commissioned by Wells Fargo found that some 1,534,280 deposit accounts and 565,443 credit card applications may have been created without customers’ knowledge since 2011.
In addition to the $100 million fine—the largest handed out by the CFPB since it was created after the 2008 financial crisis—Wells Fargo has agreed to conduct a comprehensive, independent review of sales practices and pay refunds to all affected customers, who will not be required to take action. At least one former financial regulator, however, questioned whether the penalty was large enough for a bank worth over $250 billion.
“It sounds like a big number, but for a bank the size of Wells Fargo, it isn’t really,” David Vladeck, the former director of the Federal Trade Commission’s Bureau of Consumer Protection, told CNN.
In a statement on Thursday, Wells Fargo said it has set aside $5 million for refunds to customers, 100,000 of whom have already been repaid.
“Wells Fargo is committed to putting our customers’ interests first 100% of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request,” said the bank.
Financial corruption booklist (in progress)
- The Barbarous Years. The Peopling of British North America: The Conflict of Civilizations, 1600-1675. Bernard Bailyn.
- The Corporation: The Pathological Pursuit of Profit and Power. Joel Bakan.
- Barbarians at the Gate: The Fall of RJR Nabisco. John Helyar
- Extraordinary Circumstances: The Journey of a Corporate Whistleblower. Cynthia Cooper
Financial cycles and the History of Stock Exchanges
- The Coffee Trader. David Liss.
- Reminiscences of a Stock Operator: With New Commentary and Insights on the Life and Times of Jesse Livermore. Edwin Lefèvre.
- Mobs, Messiahs, & Markets: Surviving the Public Spectacle in Finance & Politics. William Bonner.
- Devil Take the Hindmost: A History of Financial Speculation. Edward Chancellor
Fraud and Corruption on Wall Street
- Liar’s Poker: Rising Through the Wreckage on Wall Street. Michael Lewis
- Smells Like Dead Elephants: Dispatches from a Rotting Empire. Matt Taibbi
- The Looting of America: How Wall Street’s Game of Fantasy Finance Destroyed Our Jobs, Pensions, & Prosperity—& What We Can Do about It. Les Leopold
- Catching the Wolf of Wall Street: More Incredible True Stories of Fortunes, Schemes, Parties, and Prison. Jordan Belfort
- Fiasco: The Inside Story of a Wall Street Trader. Frank Partnoy
- Infectious Greed: How Deceit and Risk Corrupted the Financial Markets. Frank Partnoy
- Den of Thieves. James B. Stewart
- Young money. Inside the hidden world of Wall Street’s post-crash recruits. Kevin Roose
- When Genius Failed: The Rise & Fall of Long-Term Capital Management. Roger Lowenstein
- The Predators’ Ball: The Inside Story of Drexel Burnham and the Rise of the Junk Bond Raiders. Connie Bruck
- A Fool and His Money: The Odyssey of an Average Investor . John Rothchild
- Serpent on the Rock: Crime, Betrayal and the Terrible Secrets of Prudential Bache. Kurt Eichenwald
High Frequency Trading
- Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market. Scott Patterson.
- Flash Boys: A Wall Street Revolt. Michael Lewis
- The New Empire of Debt: The Rise & Fall of an Epic Financial Bubble. William Bonner
- O.U.: Why Everyone Owes Everyone and No One Can Pay. John Lanchester
Accounting firm corruption
Final Accounting: Ambition, Greed and the Fall of Arthur Andersen. Barbara Ley Toffler
Insurance Deceit and Fraud
- Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claim and What You Can Do About It. Jay M. Feinman
The Banksters: Savings and Loan Crisis
- Big Money Crime: Fraud & Politics in the Savings & Loan Crisis. Kitty Calavita
Real Estate Bubble
- Reckless Endangerment
- Housing Bubble Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon by Gretchen Morgenson
- All the Presidents’ Bankers: The Hidden Alliances that Drive American Power by Nomi Prins
- The unauthorized biography. Felix Martin.
- Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—and Themselves by Andrew Ross Sorkin
- Catching the Wolf of Wall Street: More Incredible True Stories of Fortunes, Schemes, Parties, and Prison by Jordan Belfort
- Betrayal: The Life and Lies of Bernie Madoff by Andrew Kirtzman
- Ponzi’s Scheme: The True Story of a Financial Legend by Mitchell Zuckoff
- Stolen Without A Gun: Confessions from inside history’s biggest accounting fraud – the collapse of MCI Worldcom by Walter Pavlo
- Unaccountable: How the Accounting Profession Forfeited a Public Trust by Mike Brewster
- Blood on the Street: The Sensational Inside Story of How Wall Street Analysts Duped a Generation of Investors by Charles Gasparino
- Wall Street Versus America: A Muckraking Look at the Thieves, Fakers, and Charlatans Who Are Ripping You Off by Gary Weiss
- Traders, Guns & Money: Knowns and unknowns in the dazzling world of derivatives by Satyajit Das
- Republic of Debtors: Bankruptcy in the Age of American Independence by Bruce H. Mann
- Extreme Money: Masters of the Universe and the Cult of Risk by Satyajit Das
- Reform of the financial system requires changing our political system Republic, Lost: How Money Corrupts Congress–and a Plan to Stop It by Lawrence Lessig
- Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America by Charles H. Ferguson