I'm Right Again Dot ComA new commentary every Wednesday — September 28, 2016
COMING SOON TO A WELLS FARGO BANK NEAR YOU: A revival mix of "Stage Coach" and "3:10 to Yuma"
A double feature starring Wells Fargo Bank's Chief Executive Officer John Stumpf and the former Retail Banking head for Wells Fargo, Carrie Tolstadt, will soon be playing out in many major cities and towns in the America, where the third largest bank in the United States has offices. Minor roles have been assigned to members of the U.S. Senate Banking Committee, supported by a cast of tens of thousands of anxious depositors.
Already engaged in preliminary performances off-screen is Los Angeles City Attorney Mike Feuer, who has been granted the dual rolls once played by John Wayne in "Stagecoach" (1939) and Van Heflin in "3:10 to Yuma," two of Hollywood's classic western adventures—the latter having been produced in 1957 and revived again in 2007.
In real life, Los Angeles City Attorney Feuer stopped a very aggressive marketing practice at the WF Ranch called "cross selling." Incentives were rather strenuously offered to Wells Fargo employees to sell current customers of the bank a variety of "products." Just having a checking account was not enough. Wells Fargo developed a variety of credit cards with all sorts of benefits. Just having a savings account was not enough. Employees urged savers to open more than one kind of account.
When a long-time customer of the bank approached a teller for any transaction, salespeople standing behind the tellers in the cages came round to ply the customer with various offers. The Los Angeles Times quoted employees who decried the continuous, growing expectations and pressure to produce 13 to 15 new accounts of one kind or another each day.
That's when the wheels came off the stagecoach. It was too easy for customers' money to be moved into fictitious accounts about which they were not aware. Costs to depositors and credit card holders were not great in the beginning. Pennies here and service charges there were assessed for making late payments, etc. The effort was producing results—profits began to add up.
As the old saying goes, "little drops of water will eventually get you all wet." The landslide sales effort apparently began about February of 2011.
By the time the Los Angeles Times began to get word of allegations, Wells Fargo employees had issued 1.5-million accounts without customers' authorizations. By the time Feuer, acting on behalf of City of Los Angeles, became involved — due to the newspaper's investigative reporting — something like 2-million unauthorized and/or fictitious accounts were alleged to have existed in Wells Fargo Bank.
Soon, federal regulators were involved. They, the U.S. Consumers Protection Bureau (CPB) and the Office of the Comptroller of the Currency (C of C) joined with Mr. Feuer in making a deal with Wells Fargo. It agreed to pay a fine: $100-million to the CPB, $35-million to the C of C and $50-million to LA County. It also set aside $50-million in a special fund to reimburse injured customers, should they come out of the woodwork later.
As Shakespeare said, "There lies the rub." In recent testimony before the Senate Banking Committee, Wells Fargo CEO Stumpf stumped the committee with the announcement that his bank was not guilty of any wrongdoing and therefore neither he nor his head of their Retail Banking Division were about to relinquish any part of their multimillion-dollar bonuses. He was shocked that all of this questionable activity was going on for so long unbeknownst to him or his board. YES, SHOCKED... both by the magnitude and the long time frame of the game. My goodness gracious, tell me it isn't so!
Here's the takeaway from this commentary: This agreement was wrought after many months of tough wrangling by the City Attorney for Los Angeles.
My question: what now, if more cities and aggrieved individuals weigh in for their share of the pickings?
-Phil Richardson, Observer of the human condition and storyteller. "He goes doddering on into his old age, making a public nuisance of himself." - Joseph L. Mencken
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