The recent Wells Fargo scandal is raising many questions among so called management experts regarding the size and scope of the world’s largest banks. Many of their critics think their corporate bureaucracies have become too large and are virtually unmanageable. When you look at the number of their customers that were victimized by this debacle, it certainly gives you pause. When bank employees can create as many as two million bogus accounts using their own customers’ information to perpetrate the fraud under the noses of their multimillion dollar CEO and CFO you must ask whether you could ever trust this company with your money again.
Over five thousand employees have already been fired as a direct result of this scam and there will probably be more to come. But that pales in comparison to the number of victims who must now do the hard work of restoring their credit worthiness after their check bounced when trying to pay their monthly bills because the cash in their real accounts had been transferred out to bogus accounts. They even targeted illegal immigrants who didn’t have social security numbers by giving them pseudo numbers to create their fake accounts!!
The Consumer Financial Protection Bureau claims the practice was wide spread victimizing customers in the USA and Europe, and most of them will probably end up hiring a qualified attorney to help them restore their credit worthiness. Now usually I recommend to those who view my web site and purchase my publications that they try to solve their own credit problems first. In this case, however, they will have to deal with three major corporate bureaucracies, Wells Fargo and the three multi billion dollar credit bureaus, a daunting task to say the least!!
This brings us back to the Mortgage Backed Securities debacle of 2008. Millions of people lost trillions of dollars in that scam and no one was prosecuted except for a few low ranking brokers. The Securities and Exchange Commission claimed that they couldn’t find actual evidence of criminality among the top level managers. This time, however, we are looking at real criminal acts of fraud and theft perpetrated directly on unsuspecting individuals and California’s Attorney General has vowed not to let this go unpunished.
In the process of constructing this article I happened to catch an interview on TV by Fareed Zakaria on CNN with Lloyd Blankfein, the CEO of Goldman Sachs. The interview included different topics and eventually the subject of Wells Fargo came up. Try as he may, Zakaria could not convince Blankfein to use the word “fraud” to describe the situation. In fact, he was very uncomfortable about the entire topic. I’ll bet his lawyers had a significant influence over his lack of his decision not to have an opinion.
Finally, however, his true sentiments came out when he admitted that one of his biggest fears was one of more of his thousands of employees world wide would go “rogue” and do similar things to disgrace the organization.
Returning to the theme of this article, can you trust your bankers? I trust mine, but then they work for a local community bank.