Yesterday, Wells Fargo CEO John Stumpf addressed the Senate Banking Committee about his bank’s years of fraud, driven by threats of firing for low-level employees if they didn’t meet unrealistic sales-targets, overseen by an executive who was given a $125m retirement bonus when she quit last summer, just before the scandal broke (though the bank had known it was going on since 2011).
Stumpf, who appears to have put his fist through a wall, did not handle himself well. Naked Capitalism’s Yves Smith parses through his blunders and suggests that this will likely lead to criminal prosecution, in part because of Stumpf’s unwillingness to consider giving back any of the millions the bank paid to him and his top execs while they turned a blind eye to a fraud that affected 2,000,000 Wells Fargo customers — trashing their credit records, pilfering from their accounts, then hitting them with fines and penalties.
Stumpf also refused to consider calling the credit reporting bureaux to repair the customer credit ratings damaged by his fraud; instead, his bank will take the much more expensive step of phoning each of those customers — and then trying to sell them more Wells Fargo products.
The bank requires its customers to surrender their right to sue, submitting instead to binding arbitration when they open accounts — and now they say that this clause applies to accounts that weren’t opened by the defrauded customers, but rather, by bank employees who were committing frauds against them. That is, you “agree” to binding arbitration with Wells Fargo even when the “agreement” is made without your knowledge and consent in the course of Wells Fargo committing a crime to which you are the victim.
Better still: the bank signed up those defrauded customers for an expensive “fraud protection” service, charging the premiums to them even as it defrauded them.
Some of the actions look to set up a criminal case. I’m getting out in front of serious legal analysis, but some of the actions were so rancid that they would seem to set up criminal charges. The San Francisco bank would transfer money from deposit accounts to cover fees in unauthorized credit card accounts. In addition, bank employees would forge customer signatures to create phony accounts.In many ways, this is worse than the robosigning scandal, since the signatures were thousands of fakes of a single mortgage servicer or law firm employee, who presumably was in on the con or would not have objected. It was still a fraud on the court, since the affidavits in question affirmed personal knowledge, where there was often none even if person whose signature was robosigned had made all those signatures him or herself. But forging customer signatures on a widespread basis is another kettle of fish entirely.
Wells Fargo CEO’s Teflon Don Act Backfires at Senate Hearing; “I Take Full Responsibility” Means Anything But
[Yves Smith/Naked Capitalism]