Taking It to the Bank: Wells Fargo Fined $185 Million For Creating Phony Customers
So you still think banks should be allowed to regulate themselves? Still not convinced that the biggest banks in the world need somebody watching what they do? The mortgage crisis and credit default swap wackiness was not enough for you?
Well, check this out:
Wells Fargo invented as many as 1.5 million phony accounts. The Bank just got fined $185 million to settle allegations, but to be fair about it, they admit no wrongdoing. They just paid $185 million. If I were a Wells Fargo Stockholder I’d be a little upset about paying out $185 million for no wrongdoing. I’d at least want to have that payment go to settle and remove actual wrongdoing, but in any event, the allegations are that Management put so much pressure on people working at the bank to make sales that everybody cut out the middle person. They just made up the accounts. There’s a flurry of stories on the web about this now.
We have to give a little credit to the LA Times if what it says is true that its 2013 investigation led to this fine.
Then the LA City Attorney filed a case and the CFPB got involved.
“The investigations found that employees would illegally transfer funds into unauthorized accounts, create PINs for debit cards customers never asked for and even created bogus email addresses to secretly sign customers up for online banking.”
…
“Wells Fargo employees have sued the bank alleging they were forced to work unpaid overtime as they tried to meet goals, while bank customers have sued alleging that fake accounts were opened in their names.”
This appears to be the rare big fraud story that came to light without the aid of a whistleblower. It is nice to see actually that newspapers and government lawyers went after a big bank and stopped this kind of practice this quickly.
Let’s watch this space and see if there are any other new banking revelations reported in the coming weeks, as it seems that opening phony accounts is profitable and too easy to do.
