09-28-2016, 09:45 PM
*** 29-Sep-16 World View -- Wells Fargo receives laughable 'punishment' for massive criminal fraud
This morning's key headlines from GenerationalDynamics.com
****
**** Wells Fargo found to have defrauded millions of customers
****
![[Image: g160928b.jpg]](http://www.GenerationalDynamics.com/ww2010/g160928b.jpg)
Wells Fargo branch in New York (AP)
An audit consulting firm has determined that Wells Fargo opened over
1.5 million "ghost" bank accounts in the name of customers who didn't
even know about it.
Apparently the way it worked was as follows:
This wasn't one or two rogue employees. This was thousands of
employees defrauding millions of customers. The size of this fraud is
mind-boggling. The number of crooked employees is staggering. The
number of defrauded customers is beyond belief.
And yet it's clear that nobody will go to jail. The crooked employees
will keep their huge bonuses, and even if they've been fired, they'll
be perfectly free to go on to other jobs and defraud other people,
because with the rise of Generation-X, fraud has essentially become a
free crime.
Wells Fargo was fined $185 million by the Consumer Finance Protection
Bureau. Wells Fargo's net income in the second quarter was $5.6
billion, so the fine is just 3.3% of one quarter's net income (or less
than 1% of annual income). Wells Fargo's CEO John Stumpf was fired
and fined $41 million, but that leaves him with more than $100 million
in company stock and millions in salary.
I've already used the words "mind-boggling," "staggering" and "beyond
belief," so there are no words left to describe the enormity of this
farce. Bankers can get away with almost anything today, with no
punishment except sometimes to give back a small portion of their
fraudulent gains, and then they're free to go to the next fraud.
I've written about this many times in the past. First there was the
"financial crisis" of the mid-2000s decade. That was created by
Gen-Xers who poured out of colleges in the 1990s with masters degrees
in financial engineering. Those crooks knowingly created tens of
trillions of dollars in fraudulent securities, and sold them to
investors knowing that they were defrauding the investors.
And not a single goddam one of these crooks has gone to jail or even
been criminally prosecuted.
Instead, President Obama's Department of Justice adamantly refused to
prosecute these crooks, but instead chose to accept billions of
dollars in campaign contributions from the very banks that had made
trillions of dollars fraudulently, putting millions of people into
bankruptcy or homelessness after being unable to pay their sub-prime
mortgages. I've never believed this massive level of government
corruption was possible in America, but it's happening.
In 2010, congressional Financial Crisis Inquiry hearings provide 'smoking gun' evidence of widespread criminal fraud. I expected investigations and prosecutions to begin
at that time, but there were none. In fact, as described in the movie
"The Big Short," the crooks were financial rewarded by the
administration for their criminal fraud.
I've written many, many times, that the failure of the administration
to criminally prosecute these crooked backs would leave the same
bankers in the same jobs finding other ways to defraud people. That's
exactly what's happened. The massive Wells Fargo frauds began in
2011, according to reports. The massive Libor and Forex rate-rigging
began around the same time.
I believe that when the 2010 Financial Crisis Inquiry hearings were
completed and the crooked bankers were rewarded instead of being
prosecuted, it was a signal to bankers that they could do anything
they wanted, with impunity. This does not mean all bankers, of
course, but it means a significant minority.
As for bankers, I remember when I was growing up in the 1950s how much
my mother hated bankers, and thought they were all crooks. Bankers
seemed like nice people to me, so I never understood why she felt that
way. But I understand now. She had grown up in the 1930s, a time
when bankers were just as crooked as they are today.
If you'd like to take a few moments for some musical entertainment,
then listen to the song "Little Tin Box" from the 1959 Broadway
Musical Fiorello!, about how 1930s politicians made millions of
dollars and claimed they did it by saving their pennies in a "Little
Tin Box." YouTube: Fiorello - 'Little Tin Box' - original Broadway version
and CNN and LA Times
Related Articles
****
**** Reasons given why no criminal prosecutions of bankers for criminal fraud
****
In reading and listening to news reports on the financial crisis,
reasons are sometimes given for why no one has been criminally
prosecuted. Above, I gave what I think is the real reasons -- federal
government corruption. But mainstream media reporters don't want to
criticize this administration, so they look for other reasons.
> [indent]<QUOTE>"All the banking laws were repealed by the Clinton and
> Bush administrations, so they can't be prosecuted."<END QUOTE>[/indent]
The laws on criminal fraud have never been repealed. The 2010
congressional Financial Crisis Inquiry hearings found "smoking gun"
evidence of criminal fraud.
> [indent]<QUOTE>"If bankers are prosecuted, then banks will become
> unable to do business, because they'll be unable to hire the right
> talent for the most difficult jobs."<END QUOTE>[/indent]
Believe it or not, I've actually seen this utterly moronic reason
given for why bankers weren't prosecuted. Of course talented people
will want to work for banks -- to get those 6 and 7 digit salaries,
and also to get HONEST bonuses.
> [indent]<QUOTE>"Sometimes building a strong case against individuals
> can be difficult given how big and complicated banks are, and
> sometimes, even when there is evidence, that evidence points not
> to the C-suite suits, but middle-manager types."<END QUOTE>[/indent]
So what? If some "middle-manager types" are prosecuted, then other
"middle-manager types" will fear committing more crimes. As I said, I
believe that the failure to prosecute after the 2010 congressional
hearings was a signal to bankers that they could do anything they
wanted, with impunity.
Second, prosecuting "middle-manager types" allows for discovery, and
allows for getting low-level employees to turn on their bosses, so
that "the C-suite suits" can be prosecuted as well.
These reasons all miss the major point: that the Wells Fargo, Libor,
Forex and other banking scams came about because bankers knew that
they could do anything they wanted, and the worst that would happen is
that they'd have to give up a small portion of their fraudulent gains.
New York Magazine quotes Notre Dame law professor Jimmy Gurulé in
listing many recent instances of banks engaging in massive criminal
activity, and coming away only with monetary punishments:
> [indent]<QUOTE>"To take just a handful of them: In 2012, Standard
> Chartered was found to have violated the U.S.’s economics
> sanctions by moving hundreds of billions of dollars for Iran, and
> settled for $330 million. In 2012, federal investigators found
> that HSBC had, as the Times put it, “transferred billions of
> dollars for nations under United States sanctions, enabled Mexican
> drug cartels to launder tainted money through the American
> financial system, and worked closely with Saudi Arabian banks
> linked to terrorist organizations.” HSBC paid $1.92 billion. Then
> there was Barclays in 2010 — a fine of $298 million for illegal
> dealings with Cuba, Iran, Libya, Sudan, and Myanmar (before
> reluctantly approving the settlement, the judge in that case
> called it a “sweetheart deal”). Also, Credit Suisse in 2009: it
> settled for $536 million in connection with similar
> charges."<END QUOTE>[/indent]
So if you're a banker, then what's the point of being honest? You can
get away with anything you want, and you won't be prosecuted. It's
mind-boggling. Washington Post and New York Magazine
Related Articles
KEYS: Generational Dynamics, Wells Fargo, John Stumpf,
Consumer Finance Protection Bureau, CFPB,
Financial Crisis Inquiry, Libor, Forex, The Big Short,
Jimmy Gurulé, Notre Dame, Fiorello!, Little Tin Box
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
This morning's key headlines from GenerationalDynamics.com
- Wells Fargo found to have defrauded millions of customers
- Reasons given why no criminal prosecutions of bankers for criminal fraud
****
**** Wells Fargo found to have defrauded millions of customers
****
Wells Fargo branch in New York (AP)
An audit consulting firm has determined that Wells Fargo opened over
1.5 million "ghost" bank accounts in the name of customers who didn't
even know about it.
Apparently the way it worked was as follows:
- A Wells Fargo employee created a new "ghost" checking account
in the name of an existing customers, without notifying the customer.
There were 1.5 million "ghost" checking accounts.
- The employee moved funds from the customer's existing account into
the ghost account, so that the account would look valid.
- The employee's high sales volume would be rewarded with big
bonuses, in addition to their already high salaries.
- Customers were being charged for insufficient funds or overdraft
fees -- because there wasn't enough money in their original
accounts.
- Employees also created half a million "ghost" credit card
accounts, with phony PIN numbers and fake e-mail addresses, to enroll
customers in online banking services.
- Customers would be assessed non-payment fees. Since the customers
weren't even aware of the ghost checking and credit card accounts, the
overdraft and non-payment fees would often be unpaid, harming their
credit ratings, forcing them into car loans or mortgage loans with
high interest rates.
This wasn't one or two rogue employees. This was thousands of
employees defrauding millions of customers. The size of this fraud is
mind-boggling. The number of crooked employees is staggering. The
number of defrauded customers is beyond belief.
And yet it's clear that nobody will go to jail. The crooked employees
will keep their huge bonuses, and even if they've been fired, they'll
be perfectly free to go on to other jobs and defraud other people,
because with the rise of Generation-X, fraud has essentially become a
free crime.
Wells Fargo was fined $185 million by the Consumer Finance Protection
Bureau. Wells Fargo's net income in the second quarter was $5.6
billion, so the fine is just 3.3% of one quarter's net income (or less
than 1% of annual income). Wells Fargo's CEO John Stumpf was fired
and fined $41 million, but that leaves him with more than $100 million
in company stock and millions in salary.
I've already used the words "mind-boggling," "staggering" and "beyond
belief," so there are no words left to describe the enormity of this
farce. Bankers can get away with almost anything today, with no
punishment except sometimes to give back a small portion of their
fraudulent gains, and then they're free to go to the next fraud.
I've written about this many times in the past. First there was the
"financial crisis" of the mid-2000s decade. That was created by
Gen-Xers who poured out of colleges in the 1990s with masters degrees
in financial engineering. Those crooks knowingly created tens of
trillions of dollars in fraudulent securities, and sold them to
investors knowing that they were defrauding the investors.
And not a single goddam one of these crooks has gone to jail or even
been criminally prosecuted.
Instead, President Obama's Department of Justice adamantly refused to
prosecute these crooks, but instead chose to accept billions of
dollars in campaign contributions from the very banks that had made
trillions of dollars fraudulently, putting millions of people into
bankruptcy or homelessness after being unable to pay their sub-prime
mortgages. I've never believed this massive level of government
corruption was possible in America, but it's happening.
In 2010, congressional Financial Crisis Inquiry hearings provide 'smoking gun' evidence of widespread criminal fraud. I expected investigations and prosecutions to begin
at that time, but there were none. In fact, as described in the movie
"The Big Short," the crooks were financial rewarded by the
administration for their criminal fraud.
I've written many, many times, that the failure of the administration
to criminally prosecute these crooked backs would leave the same
bankers in the same jobs finding other ways to defraud people. That's
exactly what's happened. The massive Wells Fargo frauds began in
2011, according to reports. The massive Libor and Forex rate-rigging
began around the same time.
I believe that when the 2010 Financial Crisis Inquiry hearings were
completed and the crooked bankers were rewarded instead of being
prosecuted, it was a signal to bankers that they could do anything
they wanted, with impunity. This does not mean all bankers, of
course, but it means a significant minority.
As for bankers, I remember when I was growing up in the 1950s how much
my mother hated bankers, and thought they were all crooks. Bankers
seemed like nice people to me, so I never understood why she felt that
way. But I understand now. She had grown up in the 1930s, a time
when bankers were just as crooked as they are today.
If you'd like to take a few moments for some musical entertainment,
then listen to the song "Little Tin Box" from the 1959 Broadway
Musical Fiorello!, about how 1930s politicians made millions of
dollars and claimed they did it by saving their pennies in a "Little
Tin Box." YouTube: Fiorello - 'Little Tin Box' - original Broadway version
and CNN and LA Times
Related Articles
- The nihilism and self-destructiveness of Generation X (21-Jan-2008)
- Reader comments on the Nihilism of Generation-X (29-Jan-2008)
****
**** Reasons given why no criminal prosecutions of bankers for criminal fraud
****
In reading and listening to news reports on the financial crisis,
reasons are sometimes given for why no one has been criminally
prosecuted. Above, I gave what I think is the real reasons -- federal
government corruption. But mainstream media reporters don't want to
criticize this administration, so they look for other reasons.
> [indent]<QUOTE>"All the banking laws were repealed by the Clinton and
> Bush administrations, so they can't be prosecuted."<END QUOTE>[/indent]
The laws on criminal fraud have never been repealed. The 2010
congressional Financial Crisis Inquiry hearings found "smoking gun"
evidence of criminal fraud.
> [indent]<QUOTE>"If bankers are prosecuted, then banks will become
> unable to do business, because they'll be unable to hire the right
> talent for the most difficult jobs."<END QUOTE>[/indent]
Believe it or not, I've actually seen this utterly moronic reason
given for why bankers weren't prosecuted. Of course talented people
will want to work for banks -- to get those 6 and 7 digit salaries,
and also to get HONEST bonuses.
> [indent]<QUOTE>"Sometimes building a strong case against individuals
> can be difficult given how big and complicated banks are, and
> sometimes, even when there is evidence, that evidence points not
> to the C-suite suits, but middle-manager types."<END QUOTE>[/indent]
So what? If some "middle-manager types" are prosecuted, then other
"middle-manager types" will fear committing more crimes. As I said, I
believe that the failure to prosecute after the 2010 congressional
hearings was a signal to bankers that they could do anything they
wanted, with impunity.
Second, prosecuting "middle-manager types" allows for discovery, and
allows for getting low-level employees to turn on their bosses, so
that "the C-suite suits" can be prosecuted as well.
These reasons all miss the major point: that the Wells Fargo, Libor,
Forex and other banking scams came about because bankers knew that
they could do anything they wanted, and the worst that would happen is
that they'd have to give up a small portion of their fraudulent gains.
New York Magazine quotes Notre Dame law professor Jimmy Gurulé in
listing many recent instances of banks engaging in massive criminal
activity, and coming away only with monetary punishments:
> [indent]<QUOTE>"To take just a handful of them: In 2012, Standard
> Chartered was found to have violated the U.S.’s economics
> sanctions by moving hundreds of billions of dollars for Iran, and
> settled for $330 million. In 2012, federal investigators found
> that HSBC had, as the Times put it, “transferred billions of
> dollars for nations under United States sanctions, enabled Mexican
> drug cartels to launder tainted money through the American
> financial system, and worked closely with Saudi Arabian banks
> linked to terrorist organizations.” HSBC paid $1.92 billion. Then
> there was Barclays in 2010 — a fine of $298 million for illegal
> dealings with Cuba, Iran, Libya, Sudan, and Myanmar (before
> reluctantly approving the settlement, the judge in that case
> called it a “sweetheart deal”). Also, Credit Suisse in 2009: it
> settled for $536 million in connection with similar
> charges."<END QUOTE>[/indent]
So if you're a banker, then what's the point of being honest? You can
get away with anything you want, and you won't be prosecuted. It's
mind-boggling. Washington Post and New York Magazine
Related Articles
- Financial Crisis Inquiry hearings provide 'smoking gun' evidence of widespread criminal fraud (14-Apr-2010)
- 'The Big Short' - an infuriating movie about the financial crisis (26-Dec-2015)
- Reader comments on 'The Big Short' and the financial crisis (27-Dec-2015)
KEYS: Generational Dynamics, Wells Fargo, John Stumpf,
Consumer Finance Protection Bureau, CFPB,
Financial Crisis Inquiry, Libor, Forex, The Big Short,
Jimmy Gurulé, Notre Dame, Fiorello!, Little Tin Box
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
