Not nearly good enough

The serious press — Times, Post, LA Times, Bloomberg — is calling the “sanctions” against Wells Fargo a stunning example of serious repercussions for criminality at Wells Fargo.

Stunning is right, as I didn’t expect anything, but serious, no. (As I write this, Todd Zwillich on “The Takeaway” is calling it calling “rare and remarkable.”) You’d get more time for stealing hubcaps.

Let us be clear about this. Wells Fargo is a thief. As Woody Guthrie said about Pretty Boy Floyd,

“Some will rob you with a six-gun,

And some with a fountain pen.”

When hubcap stealers come before a judge for sentencing, they often offer a statement of remorse. Most judges, if they think the remorse real and/or sufficient, will sentence more lightly because of that.

If the Times’ background report is accurate, the Wells leaders showed no remorse at all. Not even any sense that what they had done was wrong.

“Executives had convinced themselves last year that they were out of the woods, according to the people familiar with their thinking, who were not authorized to speak publicly about interactions with regulators. But that illusion was shattered in September, when Ms. Yellen said the bank remained under investigation.In early January, Wells officials heard from the Fed that the central bank planned to impose stiff new penalties.

“Executives were furious that the proposed sanctions seemed more draconian than those imposed on banks that nearly cratered the global economy a decade earlier, according to people familiar with the thinking of top bank executives.”


And, of course, as RtO has explained many times, from their point of view, they hadn’t done anything wrong. What they had done was merely what had to be done to compete with other banks, which were (and remain) equally thievish.


The government caved.

“After an opening round of talks, Wells concluded that the Fed was not likely to budge on its central demand: that the bank put the brakes on any growth until it proved that its governance was substantially improved. That meant the bank would not be able to increase the assets — like loans or investments — it was holding above its current level of about $2 trillion.

“Wells wanted wiggle room. Executives negotiated to have the assets calculated over a rolling two-quarter average. That meant they could swell above $2 trillion at times, as long as they dropped lower at other times.”

With a bank as big and as multifaceted as Wells, that means no cap at all. Wells will be able to conceal growth over a 6-month window.

The replacement of directors punishes nobody.

So, window-dressing but nothing more.

Watch this space. There will be more Wells scandals.

After my earlier post where I suggested Wells have its charter revoked, I sent a copy to Sen. Schatz. After a time, he replied:


“Thank you for contacting me about the revelations that Wells Fargo unlawfully created millions of unauthorized accounts under the names of customers without their knowledge and consent. I agree that Wells Fargo’s actions are deeply troubling, and I appreciate your sharing your blog post with me.

“On October 3, 2017, I had the opportunity to question Wells Fargo CEO Timothy Sloan when he came before the Senate Banking Committee. During that hearing, I asked whether the Office of the Comptroller of the Currency should review and possibly revoke Wells Fargo’s banking charter in light of its many consumer abuses and violations of U.S. banking law. I was extremely disappointed that Mr. Sloan’s answer was essentially that Wells Fargo was too big to punish. I remain very concerned that the size and concentration of our banking system makes it difficult to enforce important laws and regulations that protect consumers. I am also not convinced that Wells Fargo has done enough to address problems with its corporate culture and internal governance. To view my questioning of Mr. Sloan, please click here.

“I will remain vigilant to ensure adequate rules and oversight are in place to protect consumers. As the Senate conducts its legislative and oversight duties to address unscrupulous banking practices, I will keep your thoughts in mind. Mahalo again for contacting me.”

I consider this a satisfactory response, for a senator. The Senate is not where action should be taken.