Monday, September 26, 2016

While Elizabeth Warren Yaps About Wells Fargo Fake Accounts: What Really Went Down

Back in the good old days, banks use to regularly send out credit cards to their good customers hoping they would use them. The customers didn't ask for the cards, they just arrived in the mail. Sometimes even from banks you had never done business with. You could throw them away if you wanted to. These weren't called "fake cards," they were real and the banks took on the risks of issuing the cards.

Somewhere along the line, a regulator poked his nose into this business and the sending out of unsolicited credit cards was ordered stopped.

The banks complied.

Now, the banks have to go through the much more expensive process of requiring its employees to solicit from their customers authorizations for these credit cards. This, of course, is a much more expensive process and likely contributes to some degree to current sky-high credit card interest rates.

The banks, of course, really didn't want to have to put this expensive middle-person in the process. It was the regulations. They would have preferred to just pass the damn cards out. It was much more efficient and a lot cheaper.

When a bankster middle-person was put in the middle of the entire process, pressure was put on the middle-person to sign up as many accounts as possible. The bank didn't really care how much slam dunk approval the customer gave---the bank would have sent these without any approval if it wasn't for the regulations.

Apparently, Wells Fargo really got aggressive about this "approval" thing. Wink, nod, nod, "get the customers approval" to open a credit card account, an online account, whatever.

This was an aggressive workaround of a government regulation that is about it. It is really a stretch to call these "fake accounts." Wells Fargo was just doing what it would have been able to do in a free market---and had done decades earlier.

Elizabeth Warren is much more of a fake Indian than these are "fake" accounts.

And yet when the pressure was put on Wells Fargo by Warren and other circling government yahoos, Wells Fargo fired the 5,300 employees that used the workaround that was surely understood by many in senior management.

Not for one second did any Wells Fargo senior management stand up to the government. I watched part of the testimony of Wells Fargo Chairman and CEO John Stumpf when Warren questioned him during a  Senate Banking Committee hearing, he acted like a total wimp.

And Warren yapped on about "fake accounts" that will do nothing but make it more difficult for 5,300 fired Wells Farge employees to find another job after doing what I am sure appeared to them standard operating procedure of the bank. But all the world knows is that these 5,300 were opening "fake" accounts. Hey, Warren lets see your blood genealogy test results before you start calling anything fake.

Warren and Stumpf deserve each other. They are both creeps seeking to protect their own career regardless of how many decent people, in this case 5,300, they hurt.

I wish the best of luck to the 5,300 employees who were fired. May their next jobs be at firms that will stand by their employees and not throw them out at the first sign of creeping regulators.



  1. As I recall, the banks used to send them out to people who became Juniors in college. Too many over indulgent parents then complained about "having to" bail out their irresponsible adult children.

  2. I'll be impressed when Warren gets all the corrupt people in this current Administration to resign.

  3. I don't completely agree with your analysis here. In a free market, I don't believe the banks would be able to just generate instruments of debt on your behalf. While it may be true that the bank ultimately assumed the direct financial risk of the instruments, in reality, it potentially committed a massive amount of the unsuspecting recipient's time and increased real borrowing costs of a damaged credit rating should the "unrequested" instrument fell into the hands of someone who used the card fraudulently.

    While the solution might not be a government regulator, the issuing of an insecure instrument of debt on behalf of an unsuspecting person is a violation of the NAP.

  4. The division head in charge of this operation at wells fargo got huge bonuses and escaped any criminal prosecution. Meanwhile over at VW the engineer in charge of playing a rules work around with their diesel engines (which in a free market sense are clean) is facing prison time and didn't get to my knowledge and I would be very surprised if he did, any bonuses anywhere close to seven figures let alone what the Wells Fargo bonuses totaled to.

    This says everything that needs to be said about how things work in the USA.

  5. Does Elizabeth Warren actually believe that it would be prudent for a CEO to fire a very highly compensated and resourceful female executive without actual criminal charges to justify such an action?