Yet Another Wells Fargo Scandal
Hey monkeys,
Wells Fargo is starting to get used to apologizing. It was just disclosed that Wells Fargo & Co. has pushed thousands of car buyers into loan defaults and repossessions by charging them for unwanted insurance. Much of this is pointing to major failure in their "internal controls".
An internal review of the bank’s auto lending found more than 500,000 clients may have unwittingly paid for protection against vehicle loss or damage while making monthly loan payments, even though many drivers already had their own policies, Wells Fargo said in a statement late Thursday. The firm said it may pay as much as $80 million to affected clients -- with extra money for as many as 20,000 who lost cars, “as an expression of our regret.”
Each customer apparently received a WHOLE $140 for the troubles that Wells Fargo caused them.
The bank was run for superior revenue growth and its obvious that the controls around managing these revenues are insufficient. Wells Fargo is still cleaning up last September's scandal which affected over 2 million accounts.
“We take full responsibility for our failure to appropriately manage the CPI program,” Codel said in the statement. The bank has publicly promised that it will do better, he said. “Our actions over the past year show we are acting on this commitment.”
It seems that Wells Fargo ineffective controls are deep rooted and will be difficult to change.
What do you monkeys think of this fiasco? Will Wells Fargo finally get past its scandals or are more to come? How have your opinions about Wells Fargo changed over the last 2 years?
New Wells Fargo Scandal Seen as Proof Controls Still Lacking
Where there's smoke, there's fire.....
If there wasn't more coming, you would have expected WF to throw this into the pile of problems with the phony accounts last year. They wouldn't have gotten more beat up than they did if they announced this at that time.
The best thing about this for WF was having the fortunate timing of having this announced during the week of Scaramucci, so he could take some attention away from them.
I have a feeling this won't be the last time we here from Wells Fargo about internal problems
Things like this get through audit, legal, and compliance when they are actively being subverted from within. There is a good chance of a conscious and ongoing effort we haven't heard of yet.
This should be the part where I tell you monkeys to pay attention to activity in 2015-2016 Subprime Automotive Asset Backed Securities but that would be unrelated news for another day.
I get credit card and student loan application offers from them all the time and I haven't been a student in years. I would bet this isn't the only issue yet to surface.
There was just a post on the front page telling people that the IB placement process at WF is terrible. Probably best to avoid this place like the plague.
Masters in the art of sandbagging. They're so good, I'm actually more impressed than I am disgusted.
Hey man, that's a whole $140. So much cash! All joking aside, it's disgusting how these people continue to get away with this horseshit.
This is what happens when you let sales people run everything. A company I used to work for was run the same way. It's hard to watch, but good luck changing it.
Wells had everyone fooled as the quiet, conservative "family" bank about 10-15 years ago. Great plan, made us all look the other way while they were doing this shit.
I was thinking more about how they mostly stayed on the sidelines during the securitization boom, and sort of put themselves in that position up until last year when all this good old-fashioned-style fraud came out.
After the second scandal they must be noticing a mass exodus of customers from their services. As a customer you have to be asking yourself now, what else have they been charging me for? What are the things I'm not being made aware of?
I wouldn't be surprised if more customers move on from WF out of sheer paranoia, rather than actually being taken advantage of.
I have one CC with them and that's it, but I don't want to close it because it's my oldest line of credit and really helps to have that seniority there. Maybe once the other two I have get old enough I'll ditch it. More trouble than it's worth at this point.
Did ya hear the one about the guy who couldn't afford personalized plates, so he went and changed his name to J3L2404?
Yah, that's a good one, Margie.
Another Wells Fargo Rant (Originally Posted: 09/25/2016)
I couldn't not share this...
There are reports of brokers being investigated by Wells Fargo for reporting the unethical behavior to their superiors. Apparently these brokers were also investigated by FINRA on behalf of Wells Fargo and unable to sell products anymore due to their "record".
Could anyone even imagine something like this happening with Wells Fargo?
Perfect example of what happens when government gets too big. In this case, the oversized and overpowered regulators are being manipulated by special interests in the private sector to 'get rid of' employees, where it would otherwise be unethical for the employers to do it themselves (according to regulation implemented by the regulators themselves!). A completely ironic and self-sustaining circle-jerk of crony capitalism and corruption. And guess what? This year, like every other election, you get to elect one of two people whose interest is to keep the circle-jerk going.
This is why its idiotic to get mad at anyone who plays along in this game. That's all there's left to do.
You do realize that FINRA isn't a government agency, right? It's a self-regulatory organization.
https://en.wikipedia.org/wiki/Financial_Industry_Regulatory_Authority?w…
I don't post often, but have been around quite a while. And this is one of the stupidest comments I've ever seen here.
Why are you and other people acting like this is some apocalyptic event? Customers were barely affected and the fine was barely a dent for Wells.
what about their credit scores and 5,300 fired employees for WF own unethical practices?
What did the CEO know and when did he know it?
If he knew and he didn't try to stop it, legal action needs to be taken against him. (Not necessarily criminal unless there's a clear case he was a party to fraud, but this is a textbook case of failure to supervise)
And if he didn't know, maybe Wells Fargo is too big. And maybe this is still failure to supervise.
There's no getting around the fact that this is fucked up.
Without rehashing the other, better thread, the mismanagement of new accounts is being overblown but the part about firing people for whistle-blowing is actually REALLY bad. If true it is a direct violation of federal law.
I bet that Capital One, Chase, Citi, and BAML are scrambling to figure out if they too messed this exact same thing up...
Wells Fargo – Do You Abandon Ship? (Originally Posted: 11/22/2016)
I came across this article on Wells Fargo yesterday in at least several news sites on tightening the straitjacket by the Fed. It’s basically the government enforcing even more restrictions on Wells Fargo than on other banks, as for example, being able to reject the hiring of senior officers at Wells.
Now, this is all following the big scandal on the 2 million fake accounts that Wells Fargo had along with the exit of Wells Fargo’s CEO with a 130 million comp (I know I wouldn’t be too sad leaving my job there in his place).
The interview with Buffet is interesting with the bottom line that Buffet is not willing to sell and will hold his shares (Berkshire is the biggest holder with more than 10% of the shares). A reminder, Well’s Fargo’s shares plunged below $45 on Monday after the fine which is the lowest level the shares have been since February 2014. This is approximately 10% down following the 185 million fine Wells Fargo was charged with for those 2 million fake accounts.
Now, what are the implications?
What does it mean if you're an investment banker at Wells Fargo or another employee? I’d assume you wouldn’t rely on any comp for the year. Do you change banks?
Also, do you sell the stock or should you and I buy at this low? Buffet is certainly not letting go of it.
What does this mean for big banks and regulations? With so many regulations tightening around the big banks is it time to move to elite boutiques?
So here is my take - Wells Fargo runs a great business, with no question. however the damage caused by the scandal is not neglectable, given the fact that the scandal was rooted in the bank's retail unit, which historically generates ~60% of WF's profit. And already we see what's the market's reaction to the scandal. Plus the checking accounts opened with WF in September fell 143k yoy. So can we say the bank is now dead? Probably not, since the bank has a solid business model which was build though time. I would say it is just too early to tell. There is no doubt that one day WF will eventually recover from the scandal and earn back its reputation but it will certainly take time and lots of efforts. As investors, we can definitely hold our positions on the bank like what Buffet said he is doing, but do we really want to lock up our money there with a timeframe that we are not even clear if we know we could have better options?
Hmmm...Isnt the regulatory environment across Wallstreet expected to loosen across the board moving forward with Trump now elected?. The pop across the big banks in the days after the election confirms this, no? Personally I'd prob look to switch banks if I was working for wells for not very long as it may take a few yrs for their rep to improve.
Wells Fargo- What does it mean to the banking community at large? (Originally Posted: 09/27/2016)
Hey guys,
Please forgive me if there is already another discussion on this subject that has answered my questions but just out of curiosity, how does the Wells Fargo debacle affect the banking industry at large? Sure the actual financial hit Wells will take will probably be small and not be 2008 crisis debilitating, BUT this will lead to additional hate for Wall Street and Big Banks in general (and as we know, reputation is everything when it comes to finance and banking). That being said, would this allow for further regulations in both retail AND investment banking? Nothing at all?
Curious to hear what you guys have to say. Thanks!
This really isn't a systemic problem to the banking industry and it's a much smaller issue than the events leading up to the 2008 recession.
This is a governance issue where Wells Fargo had an inappropriate incentive plan for its retail banking reps that basically would force them in some situations to inflate sales in order to either a) keep their job or b) get a bigger bonus.
This could be easily fixed with more relaxed sales targets and a revamped incentive plan. And because it's the bank, it's blown completely out proportion so the CEO had to be publicly berated for a little while to calm the public down from going on yet another riot.
Aside from the usual "break up the banks" BS that happens every time a bank gets in trouble, there is a real threat of regulatory crackdown coming out of this. Congress basically lynched Stumpf in front of the entire country, and God knows they'd love to use it as an excuse to 1) impose pay controls 2) ban or limit the selling of certain products or 3) pass blanket regs that could impact the Wall Street side of banking as well. Basically, every bank is scrambling to make sure their house is in order, because any more bad publicity right now will be the perfect excuse for a crackdown.
Wells Fargo Buying Opportunity?? (Originally Posted: 09/22/2016)
Wells Fargo has declined over 10% in the last month. Buffet isn't commenting on the situation till November. John Stumpf took his beating from congress. The fines only account for 3% of the company's last quarter earnings. Buying opportunity or to many unknowns?
Buy it - this is hardly a real long term issue for Wells Fargo. It's just politicians lining up to brow beat banks b/c their dumb constituents have been told to hate banks. Buy the dip IMO.
Yeah I was already long before I wrote this. I just wanted to see what people had to say about it.
I bought it. The way I see it - they fired a bunch of people who were providing zero value to the company. Only uphill from here... unless Buffet sells
I would avoid, not buy or sell. Anytime you start dealing with the ire of regulators, you can't calculate the downside. For a bank with a sterling reputation, this is a severe tarnish.
It's still trading well above book value, so it's not like it's a screaming buy, even without this news.
The stock might do fine, but a ten percent drop is nothing to get too excited about even if there is no news. I think that drop is warranted, if not more.
Stumpf out at Wells (Originally Posted: 10/12/2016)
Stumpy to retire, effective immediately.
Can't say I'm surprised to see him go, but am a little surprised at the timing...especially after the management call the other day.
While there was a fairly clear lack of organizational oversight, you'd think he'd try to at least steer the ship back on course before leaving.
What's the over/under on WFC for tomorrow?
tomorrow? they report Q3 Friday I think....
Yep....looking for any pop/downside from the annoucement.
Also, earnings just out -- both top-line and bottom-line beat. Will be interesting to see what the next few quarters bring.
Sacrificial lamb. Sucks for him, but it had to be done for the company.
He should go work for you at Matrix. John Cryan will be next.
I think he will land on his feet, especially with the help of a golden parachute
No comment.
Interview with Wells Fargo: Bring up their recent problems? (Originally Posted: 10/26/2016)
I have an interview with Wells Fargo coming up. Not IB, but a Corporate front office finance role. Do I bring up the recent problems with their CEO and scandals as question in an attempt to show my interviewers that I a actively read up on the industry and educate myself on current events or should I rather not? Has what has happened been so obvious and in the news that it won't really impress them that I can talk about this? This isn't for a community banking job where I'm going to be dealing with mom and pops and opening up accounts, so don't know if its relevant to bring up.
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