DOJ Investigation of Too-Big-To-Manage Wells Fargo Underway
Sept. 14, 2016 (EIRNS)—Bloomberg News reported today that Federal prosecutors have issued subpoenas and begun an investigation of Wells Fargo Bank for having opened literally millions of fraudulent accounts and credit cards for unknowing customers, who then suffered fines and late fees. Wells Fargo has fired 5,300 employees for conducting such fraud against depositors, and paid a relative $185 million in fines to regulators. But top management either knew the fraud— astonishing in its scale—was taking place, or was unable to manage the bank.
Camden Fine, president and CEO of Independent Community Bankers of America (ICBA), told CNBC-TV today, "This is the dictionary definition of too big to manage and too big to regulate, isn’t it? That’s what too big to manage and too big to regulate looks like." The ICBA is a trade group that represents thousands of community banks, and has supported restoration of the Glass-Steagall Act to break up such Wall Street giants.
The Senate Banking Committee will hold a hearing Sept. 20 on Wells Fargo’s fraud, with CEO John Stumpf called to testify. The Committee’s five Democrats demanded the hearing, and fireworks are expected from Sen. Elizabeth Warren and perhaps others.
In the Wall Street Journal on Sept. 13, Stumpf claimed that "There was no incentivizing of bad conduct." The Journal reported,
"Mr. Stumpf appeared to lay blame for the problems with the employees involved [rather] than with any flaw in Wells Fargo’s systems or culture. He said that some employees won’t ‘honor the bank’s culture’ and that the bank had changed its sales goals to put in more discipline and to take ‘more risk off the table. I wish it would be zero, but if they’re not going to do the thing that we ask them to do—put customers first, honor our vision and values—I don’t want them here, he said. ‘I really don’t’."
Yet, Carrie Tolstedt, the Wells Fargo executive who oversaw what the employees called "sandbagging" their customers, just left the bank with a $125 million severance package.
Stumpf claimed that the 5,300 fired employees included bankers, managers, and their superiors, but wouldn’t name the highest-ranking employee fired.
The fraudulent accounts opened are now said to total two million.