NO ADVERTISING, GOVERNMENT OR CORPORATE FUNDING
DONATE TODAY


  September 16, 2016

Media Grossly Downplaying the Depths of the Wells Fargo Scandal


Former financial regulator Bill Black says media coverage has falsely portrayed Wells Fargo's image as untarnished by previous financial fraud
Members don't see ads. If you are a member, and you're seeing this appeal, click here
   


audio

Share to Facebook Share to Twitter



I support TRNN because it is the closest expression of the ideal of a free press I have seen. - Daniel
Log in and tell us why you support TRNN


biography

William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. Black was a central figure in exposing Congressional corruption during the Savings and Loan Crisis.


transcript

Media Grossly Downplaying the Depths of the Wells Fargo ScandalJAISAL NOOR, TRNN: Wells Fargo scrapped its product sales goals for retail bankers and may take further disciplinary action against its employees in the wake of a fake account scandal that has already led to a hundred ninety million in fines and the firing of fifty-three hundred employees. Wells Fargo has been hit hard by allegations that staff opened more than two million bank accounts and credit cards for customers without their consent in a bid to meet internal sales goals. Politicians are calling for an investigation in Wells Fargo and regulators are expected to testify in the senate, next week.

Now joining us to discuss this is Bill Black. He’s an associate professor of Economics and Law at the University of Missouri, Kansas City. He’s a white-collar criminologist, former financial regulator and author of The Best Way to Rob a Bank is to Own One and, of course, a regular contributor at The Real News. Thanks so much for joining us again, Bill.

BILL BLACK: Thank you.

NOOR: So, Bill, it’s been interesting to kind of see the fall out for this Wells Fargo scandal. I’m looking at the headline from Marketplace, Wells Fargo CEO John Stumpf, has to resign now. What’s interesting is that, purportedly, Wells Fargo is one of the most respected financial institutions that hasn’t been caught up in the scandals around the financial crisis because it did not rely on risky trades or complex derivatives to turn a profit. Give us your thoughts about this latest scandal and that narrative that’s being put forth in the mainstream media.

BLACK: Starting with the narrative, Wells Fargo did engage in many of the practices and Wells Fargo has entered into many prior settlements for criminal conduct during the crisis and the lead up to it. But you’re quite correct that the narrative, in big chunks of the financial press in particular, is “Oh my goodness, how could this happen. This is a place that was supposedly unusually clean." In the particular context that we’re talking about, the newest frauds – they’re not new, even Wells Fargo agrees that this goes back at least five years. But the workers who are actually the folks who blew the whistle on these frauds, along with Wells Fargo customers. In fact, this is a place that has absolutely refused to clean up its house and, by the way, while it was firing over five thousand of the employees, the people who were being coerced and not only encouraged but demanded and praised by Wells Fargo managers to cheat. The person who was in charge of the entire consumer banking division was allowed to retire. Praised as the model of what a banker should be, by the CEO and given millions of dollars with absolutely no claw-back for the abuses.

NOOR: If I’m not mistaken, Bill, there’s some talk of having some of that money returned. I think he retired with something like seventeen million. I think there’s some talk of getting some of that money back.

BLACK: Well, talk is a little late when you’ve done the settlement, right? You have your leverage as the regulators and you should have demanded the entire bonus structure that this person got. Remember, she’s running one of the largest criminal enterprises in world history. For that, you should go to prison. You shouldn’t get paid bonuses.

But worse than we’ve been discussing, first, the Wall Street Journal’s phrase is – and this goes back over a year – was that Wells Fargo was “The envy of the entire banking industry” because of “cross selling.” It’s a phrase we haven’t explained but what this is all about was: if you came in to Well Fargo to be a customer for anything, including opening the tiniest account, the sales personnel were trained and coerced to try to “cross sell” to you many other Wells Fargo products that you had no need for, that would be harmful to you in the sense of wasted money, for your perspective. And all of this made Wells Fargo unusually profitable. Indeed, Wells Fargo, was the only major bank, in the U.S., that broke out in its financial statements – these are the 10-Qs and 10-Ks that you file at the end of the quarters and the years, how much money they were getting from these “cross selling” operations.

What you’re not seeing in the press coverage is that this became public many years ago because employees protested, because employees sued. In fact, the employees and customers got together and brought a suit against these exact practices three years ago, in December 2013. In 2015, approaching a year and a quarter ago, Los Angeles County brought a suit making public all of these things. Through all that time period, the senior executive that got the seventeen million, as you said, nothing happened to her, other than good things. Wonderful things happened to her, personally. So there was zero accountability.

More to the point, the key was “cross selling.” They weren’t hiding that they were doing “cross selling,” they were bragging to the world that they were “uniquely profitable” because they were “cross selling.” They had t-shirts made up that senior executives were wearing: “Cross Sell!” They had, in some cases, monthly and sometimes hourly and daily conferences, in which, if you didn’t meet their quotas for this “cross selling” you would be humiliated and threatened with being fired. But here’s the historical context all the coverage has missed: Again, Wells Fargo, international bank, big big thing, was “cross selling.” Well, what was famous in “cross selling” is the United Kingdom. Its something that we’ve talked about in prior programs, of payment protection insurance. This was a fifty billion pound – roughly seventy-five billion dollars – scam. And there was another scam aimed at small business borrowers. This has been, if you follow international banking, one of the largest scandals, in the world, for eight years, in fact nine years. In the UK context, the major story in the big papers, essentially, every three weeks or so.

Wells Fargo was emulating this British scam that had gone on for twenty years, which produced, according to the Parliamentary Inquiry, all of the profits. All of the banking-retail profits of British banks came from this scam. That’s the context in which Wells Fargo emulated exactly the same perverse incentive systems and this extortion of employees to do the wrong thing. And then, if the individual employees got caught, well then, you fire the individual employee and you give bigger bonuses to the managers who are causing them to act this way. And the maraschino cherry on this disgusting sundae was the interview with the CEO, Stumpf, of Wells Fargo in which he said, “The Bank didn’t do anything wrong, it didn’t have any perverse incentives, its just that there happened to be more than five thousand fraudulent employees.” Who apparently got hired by somebody but not by Wells Fargo, except, of course, it was Wells Fargo. The whole story is preposterous.

The media has also not brought to the public the fact that almost all of the hard work was done by the employees. Employees even did public protests in Wells Fargo branches to try to warn the public of these practices. Not only did employees get no positive “umphf” for trying to do this, in most of this coverage, they get denounced as the criminals. Its just disgusting, beyond belief.

NOOR: Well, Bill, we’ve already discussed that no one has gone to jail for this or any other major scandal at one of these financial institutions. But I wanted to ask, do you have advice for Wells Fargo customers? Should they be moving their money out of banks, like Wells Fargo, and going to credit unions? Is that a good alternative or do we need, at least, on a short-term level, we’ve talked about long-term deeper changes that need to happen in the financial sector overall. But on a practical, short-term level, can people talk with their pocketbooks?

BLACK: Yes, certainly, Wells Fargo is the type of institution that they should take their money out of. There are some not-so-great credit unions, so I can’t do an endorsement of them, generically. But you’re correct, on average, they are dramatically greater on this score. We should also have a public banking option -- like postal banks and such -- that give plain, vanilla accounts, which is what ninety-eight percent of us need. Have it absolutely forbidden to have any of this “cross selling” junk. I want to emphasize the hard work was done by the customers, by the employees, and by Los Angeles county, that brought the suit in 2015, building on these whistleblowers. You see almost no credit for that, in the coverage. Instead these federal agencies held absolutely not a single individual accountable, there were no admissions, there were absolutely no admissions in the settlement agreement. So this settlement agreement, principally negotiated by the CFPB, the Consumer Finance Protection Bureau, is disgustingly weak.

NOOR: Alright, as always, thank you so much for joining us.

BLACK: Thank you.

NOOR: Thank you for joining us at The Real News Network.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.



Comments

Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at contact@therealnews.com

latest stories

Women of Color March on Washington
Students Plan National Day of Action Against Trump's Climate Denial
Millions Around the World March in Solidarity with Women's March on Washington
Iran in Crosshairs of New Administration
Women's Voices Rise in Baltimore and Beyond
Trump's Inauguration and the Reverence of the State
Trump/Pence Can't Fulfill Promises to Workers and to the Billionaire Class
Trump's Inaugural Speech Calls for American Jihad
Trump's Infrastructure Plan: Public Investment, Private Profit
Women's Protest Against Trump Goes Global
When Trump Says 'America First,' It's About the America of the Elites
The Bizarre Far-Right Billionaire Behind Trump's Presidency
An urgent letter from Emma Thompson & Danny Glover
As Trump Takes Office Baltimore Remains Defiant
"The Democratic Party Can't Just Whisper Sweet Nothings Anymore" - Nina Turner on RAI (1/4)
Trump Resisters and Supporters Clash on Inauguration Day
Police Use Pepper Spray, Tear Gas and Arrest Over 200 at Trump Inauguration Protest
Whistleblowers Can Pose Real Challenge to Trump
From Washington to Tokyo, Tens of Thousands Take to the Streets to Oppose Donald Trump
Interior Secretary Nominee Zinke Supports Fracking and Drilling on Public Lands
Inauguration Protest Organizer: Trump-Pence Administration Fomenting Climate of Hate
Scott Pruitt Acknowledges Climate Change While Denying Scientific Consensus of Human Responsibility
Bernie Sanders Hammers Tom Price Over Right to Healthcare in Senate Hearing
Sensing Trump Will Give Free Pass to Israel, Palestinians Announce Plans for Unity Government
Nina Turner Show Coming to The Real News
Nina Turner Kept Off DNC Stage as Punishment for Supporting Sanders - RAI (2/4)
"Any Democrat Won't Do" - Nina Turner on RAI (3/4)
Balancing Coming from a Police Family with Holding Cops Accountable - Nina Turner on RAI (4/4)
Theresa May Reassures British and Foreign Capital Over Brexit
Wilbur Ross's Economic Expertise: Exploiting Tax Law

TheRealNewsNetwork.com, RealNewsNetwork.com, The Real News Network, Real News Network, The Real News, Real News, Real News For Real People, IWT are trademarks and service marks of Independent World Television inc. "The Real News" is the flagship show of IWT and The Real News Network.

All original content on this site is copyright of The Real News Network. Click here for more

Problems with this site? Please let us know

Linux VPS Hosting by Stack Star Hosting