Wells Fargo: Who Says Crime Doesn't Pay

Tyler Durden's picture

Authored by Mark St.Cyr,

Unless you’re one of the few people still watching CNN,  you may have missed what can only be one of the most scandalous in-house criminal activities to be uncovered at a bank. And not just any bank. It happened at none other than Wells Fargo, which, up until the scandal was revealed, was the number one bank (as measured via its market cap) in the U.S. The scandal? Here are just a few highlights as reported. To wit:

“On Thursday, federal regulators said Wells Fargo (WFC) employees secretly created millions of unauthorized bank and credit card accounts — without their customers knowing it — since 2011.


The phony accounts earned the bank unwarranted fees and allowed Wells Fargo employees to boost their sales figures and make more money.


“Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses,” Richard Cordray, director of the Consumer Financial Protection Bureau, said in a statement.”

And to use CNN’s own words to describe it: “The scope of the scandal is shocking.”

How shocking you may ask? Fair enough, here’s a little more from their reporting…

“The way it worked was that employees moved funds from customers’ existing accounts into newly-created ones without their knowledge or consent, regulators say. The CFPB described this practice as “widespread.” Customers were being charged for insufficient funds or overdraft fees — because there wasn’t enough money in their original accounts.


Additionally, Wells Fargo employees also submitted applications for 565,443 credit card accounts without their customers’ knowledge or consent. Roughly 14,000 of those accounts incurred over $400,000 in fees, including annual fees, interest charges and overdraft-protection fees.”

As scandalous as all the above is, what is far more insidious, is the damage it inflicts (once again) upon the very fabric of free market capitalism, trust in laws, and last but not least: trust and belief in actual contrition. i.e., “No we’ve really changed, really!”

As I implied, that “trust” has just been obliterated by the very people and institutions that created the last crisis in the first place. e.g., Banks, bankers, boards, and the very CEOs that run them.

Yes, I said it: i.e., Not some intimate object such as “bank.” But the very people who work there; from low-level staff, all the way up to the top as made evident in this latest banking scandal.

Again, as egregious as these revelations may be. What has been far worse (in my opinion) is the way the bank (Wells Fargo) handled this whole sordid affair both during, as well as after the fact.

As reported by the WSJ™, CEO John Stumpf defended his firm with this gem of damage control retort. To wit:

“There was no incentive to do bad things,” Mr. Stumpf said in an interview with The Wall Street Journal. He called the conduct that led to last week’s settlement with federal and local authorities “not acceptable,” adding that the bank doesn’t “want one dime of income that’s not earned properly.”

Here’s a tip for Mr. Stumpf, (after all, it is what I do) if that’s the best you could come up with at that time, not only should your PR team be fired along with the 5300 others you’ve dispatched. But so should you. Immediately.

Not only did you not show a minuscule of righteous indignation – you seemed to bend-over-backwards as to defend the payment of (wait for it…) $125,000,000.00 as a parting gift to Carrie Tolstedt, who has been reported to have been the executive in charge of the unit where all this fraud took place. You know, the division where “sandbagging” customers continued long enough to have created its own internal moniker. Absolutely disgusting and shameful. Period.

It has been said that Ms. Tolstedt’s timing to exit was a result of “personal decision to retire after 27 years” with the bank. Geez, I wonder why. Yep, nothing to see here, move along. Just pathetic.

When asked about clawing it back? (Insert non-committal, illogical, double speak here) But if you need to hear what Mr. Stumpf thought about her back in July:

“Tolstedt’s team is a leader in building and deepening customer loyalty and team member engagement across the business, which today serves more than 20 million retail checking households and 3 million small business owners, and employs 94,000 team members.”

It would appear “sandbagging” pays, no?

I suppose everyone was rewarded, even those at the top by the “added shareholder value” produced by such a “team player.” Everyone that is – except the poor customers who trusted one of the largest banks in the U.S. to be watchful stewards of their money, and personal identities. No, it would appear they were preyed upon like minnows thrown into a shark pool. Glad we have all that Dodd-Frank type stuff enacted so people could once again “trust” the banks and their bankers. But I digress.

If the CEO (e.g., Mr. Stumpf) would have hit the news wires first in some form of scathing rebuke of not only the people involved, but the audacity that the people at the very top of this scandal (which, in my analysis, directly implicates him either by willful ignorance or just plain incompetence) could walk away veritably unscathed with $millions to-boot? There might, and I say “might” have been a chance for credibility of deniability. But now it looks far more like implicit, willful, ignorance more than anything else. i.e., “Hey, her numbers are good – don’t ask questions. By the way, have you seen our latest stock price?!”

Because of this, it is my sentiment, that both Wells Fargo, as well as its CEO, have added their images to be poster-child’s in the growing list of what crony capitalism produces.

What the CEO (i.e., a true CEO with an ethical backbone) should have done was to come out swing with something along the lines of the following:

This scandal is not only repugnant, it is unconscionable that some of the employees, some that I personally trusted and regarded highly, have been found to have violated our customers trust, along with our own, with criminal activity.


I have recommended to the board, and our legal team, to do everything in our power to claw-back every single dime possible that we have paid out seemingly under false pretenses, whether they were in the form of salary or bonuses. And, I want every possible criminal charge brought forth against them that may be applicable. Yes, even those which may result with the need of time being served. Let me be clear: against everyone responsible.


This is a blatant urination upon the sacred trust that is supposed to be upheld when a customer, regardless of how large or small, deposits funds or opens credit terms at any bank. Not just Well Fargo. This is unacceptable and it must not go unpunished. And I won’t rest with anything less than the full repercussions that the law can provide.”

Did you hear, read, or see anything resembling 10% of what I just stated? Hint: Nope.

Read the above quotes I referenced earlier as a reminder. Makes you want to run out and open an account and dispense with any of that troubling, filthy vehicle known as cash that far too many so-called “smart crowd” intellectuals are touting you should do. Doesn’t it? i.e., Don’t trust cash – trust the bank. Only criminals care about cash.

The only problem that now appears with that logic? It seems those criminals are within the banks just waiting for one to “hand it over.”  That’s a reality which is now becoming downright frightening. Just imagine what Jesse James would think about all this. It’s down right laughable if it wasn’t so infuriating.

And, by-the-way, if you’re concerned about such things: you’re insulted or portrayed as some type of “alarmist” (or worse – you must be a criminal) if you dare argue against the idea of a cashless society and the inherent problems contained within the theory.

Take the latest insult to intellect as proposed by Ken Rogoff, a chaired economics professor at Harvard, and a former chief economist at the International Monetary Fund.

In his case against cash, Mr Rogoff likes to build his case for a “cashless society” around all the boogeymen an Ivory Tower can muster. James Grant of Grant’s Interest Rate Observer™ wrote a cogent, scathing rebuke of Mr. Rogoff’s thesis. Here is just one line, yet, notice how perfectly it fits into this whole story. (The entire article is a must read) To wit:

“Terrorists traffic in cash, Mr. Rogoff observes. So do drug dealers and tax cheats. Good, compliant citizens rarely touch the $100 bills that constitute a sizable portion of the suspiciously immense volume of greenbacks outstanding—$4,200 per capita. Get rid of them is the author’s message.”

That’s right. Mr. Rogoff want’s you to deposit that filthy cash into a bank as to keep it out of the hands of criminals. The issue?

Well as of today it seems if you followed his advice and deposited at, oh let’s say, Wells Fargo? What you did in actuality was to hand it over to some greedy, dirty, disgusting criminal within where it was used to fuel criminal activity and self gain for themselves.

What’s the take away from all this? Hint: If there’s going to be criminal activity (as far as academia is concerned) might as well have it inside the bank rather than outside. After all: Criminals hate competing with each other. Whether in digitized currency or actual.

To people like Mr. Rogoff it would seem when it comes to criminality – banks are exempt. I wonder how Mr. Rogoff would feel if it was his “cash” that was suddenly misappropriated when it came time for him to use his ATM card only to find “insufficient funds” displayed when he knew he made a deposit days prior? I would wager he’d want his account closed – and paid in cash – as opposed to a “check” or “balance transfer” if he just found out “the bank” had been playing criminally with his hard-earned money. Bet on it.

Now Mr. Rogoff and his ilk could care less what a person like myself has to say about their ideas. After all, we’re nothing but a bunch on illiterate, economically challenged plebes that need to be herded into doing what “they” believe is “best for us.” Whether it’s in our best interest – or not.

So to that I would like to remind this Ivory Tower set of exactly what transpires when the banking system that issues all those digitized ones and zeros goes into free fall because of the reckless nature of those within that system created. e.g., The Great Financial Crisis of 2008. You know, the one that’s not even 10 years past and is requiring central banks around the world to continue “spinning plates” that would make a circus performer blush as to keep it all from crashing.

In, or about, 2008 during the heat of the crisis with the markets gyrating widely, none other than Mohamed El-Erian then at Pimco™ (someone I have great respect for) said in a televised interview on one of the financial shows I was watching (I’m paraphrasing): “My wife called me and asked me what she should do. I told her to go the nearest ATM and withdraw as much money as possible. For we both had no idea of just how bad things were going to get.”

I just wonder how well Mr. Rogoff’s argument about “cashless” would have stood had he needed to argue that position to Mr. El-Erian during that period? i.e., “Hey Mohamed, tell her not too worry, cash is for criminals and low lifes. She or you don’t need no stinkin’ cash! Have faith, faith in the system, faith in the banks!”

I don’t know what the response might have been, but I bet it could be summed up today in two words: Wells Fargo.

Yeah, I guess those other two words you were thinking of (e.g., FU) might be more appropriate. For I was thinking the same. Yet, on the other hand; don’t they mean the same thing as of today?

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ebworthen's picture

"No intent" my ass.

Why could those things even be done?

How is it the "secure" banking system allowed phony accounts to be created?

Anyone who doubted that their money in a bank can be vaporized instantly doubt no more.  "It's gone".

"They can't do that" or "they wouldn't do that" or "the government wouldn't allow it" are the thoughts of fools.

They already have!  No one in jail!

I M DeMan's picture

Stealing a pair of pants out of Macy's will get you in jail faster and longer then stealing millions by a Banker.

Infocat's picture

Bankers are the greatest thiefs of human history. One day Kek will no longer tolerate their blasphemy! http://www.truthjustice.net/politics/esoteric-kekism-is-a-religion-of-pe...

wee-weed up's picture

Jon Corzine approves of this message.

Bastille Day's picture

Having a bank hold your money for safekeeping is like having a crackhead hold your crack for safekeeping.

Luck Dragon's picture

This fraud happened to a friend of mine.


He opened an account at a WF for some special financing or loan scam they suckered him into, never once telling him that a minimum monthly balance was required.

Many months goes by accumulating fees, and they never tried to bill him directly. They waited until it got up to about $50 and sent it to collections. Then he calls WF and says hey wtf is going on, you never told me about this, and they tell him sorry, there is nothing we can do once it's sent to collections. Good scam.


Fuck them.

Kirk2NCC1701's picture

That's why, if you want to rob a bank on the 21st century, you buy or create one.

Old fashioned physical robberies are for low-IQ bozos.

Zip_the_Zap's picture

You are so right. And when you want to empty a treasury, you do not kill the king, you have the king create a Federal Reserve that you own.

Chupacabra-322's picture

Give a man a gun and he robs a bank. Give a man a bank and he rlobs the World.

logicalman's picture

Here's a partial quote from a piece on is-a-cunt.com (well sorth the visit, IMHO- The site HAS to be run by a Brit!)

“Sir” Philip Green can get away with stealing millions whilst some junkie cunt is thrown in chokey for stealing a DVD player. The banking cunts wreck the entire Western economy and the fucking taxpayer picks up the bill.

Replace the name with any banker, congressman...........




jaxville's picture

The big payout was "hush" money.  Same sort of thing happened after 911.  Bonuses, promotions and more power for those who failed the American people so miserably.

piceridu's picture

Known as "The Hillary defense" ...Rob a 7/11 for $1000 everyday, get caught and pay a $50 dollar fine. What a system.

Bank_sters's picture

Come on now.  All the bankers went free after the 08 collapse.   It was like Ted Bundy and Jeffrey Dahmer leaving a house with bloody axes and and  while chewing  on human body parts as the cops say have a nice day gentlemen.    Same fucking thing.


The game is over.

GRDguy's picture

Guess nobody here bothered to read the book:

"The Best Way To Rob A Bank Is To Own One" by William K. Black.

That included the bank's customers.

JustPrintMoreDuh's picture

Bankers are not trustworthy!?  Hmmm.  Who knew?  I suppose next you'll tell me that neither are politicians ... 

crossroaddemon's picture

Small crime is getting harder... the guys who shoplifted for a living are going the way of the dodo thanks to the draconian security being thrown around anything that is actually worth stealing. But the big criminals? Those guys are never, ever going to get their comeuppance. They own the courts.

Paul Barrett's picture

The majority of people are broke - so crime is the only alternative 

I M DeMan's picture

"Crooked" Comey will get right on it!

maldorer's picture

And who will pay the fine? Retirement accounts, mutual funds, pension funds etc as they hold a majority of its stock.

TwoHoot's picture

Now we know how Warren Buffett stole his billions and why he supports Clinton corruption.

Nobodys Home's picture

Apparently, this went on for years. I think I'd have noticed my account misbalances within a month.

Are there really that many financial idiots (2 million) in only one bank? How many others are getting ripped off as we type?

Yah..I know...All of us!

Tom Green Swedish's picture

Must have been a test to see how stupid people are. This was already tried out . Vancouver it's are greedy

gregga777's picture

Conporations are nothing more than organized criminal enterprises operating with the full approval of the United States government.

Criminal crony CAPITALIST conporations, especially the banking gangsters and Con Street swindlers, own the Feral government and the US Department of Corruption & Injustice lock, stock and barrel.

The exceedingly corrupt Feral Bureau of Intimidation is nothing more than the national political police charged with protecting the scams, swindles and crimes of the status quo.

Chupacabra-322's picture

The Criminal Fruad UNITED STATES, CORP. INC. is a Corporation posing as a functional Government of the people, for the people & by the people.

Exactly as the Criminal Federal Reserve poses as branch of the "Government" when it is not. It's a Private Corporation owned by Pure Evil Criminal Psychopathic Central Bankers.

Joebloinvestor's picture

The ? to ask is what the fuck do these people do for such high salaries?

Did they even do any cursory spot checking?

What the banksters fear the most from a Trump presidency is actual prosecution.

RaceToTheBottom's picture

Anyone using a bank for anything other than a VISA deserves what they get.

They have CUs for all your needs unless you run a multi state business.

Tom Green Swedish's picture

I'm really not understanding this. Ok what they sid was wrong but 1 million in bad charges? That is like zero.they paid a fine and will get their image back. However author are you in your right mind? Drug dealers are better because they hoard cash? You have something wrong with your head?and What is the real message of this article? You get paid to write some crap down ? Look I just wrote some crap. You get paid by the word for your crap because there is a whole lot of it here. Where's my take?

gregga777's picture

Crime paid 125,000,000 times for Wells Fargo's Carrie Tolstedt. How many times did crime pay for Criminal Crony CAPITALIST Wells Fargo? At least 10X what they gave Criminal Carrie Tolstedt. Carrie Tolstedt should be swinging from a lamppost instead of heading off to retirement to enjoy her $125,000,000, that's just in bonuses mind you.

That's what CAPITALISM really is in the exceptional United States of America. It's organized crime on a scale that even J. Edgar Hoover, who never did manage to discover the Mafia, could have located. CAPITALIST = CRIMINAL. Period.

BuddyEffed's picture

Carrie could be offered immunity to see where that leads.

jcaz's picture

Fuck that-  Carrie can testify or face obstruction charges on top of any racketeering charges with her pals-  we can already figure out who and what was involved, it's on their damn spread sheet.

Carrie has received more than enough for being a criminal already.

jaxville's picture

  She will never speak against the bank unless facing the guillotine or something similar.  The $125 million she received assures that. Hush money

 Technically it can be considered proceeds of crime.  That won't happen either.  DOJ (and other enforcement) people don't want to mess with the lucrative security jobs they receive from the banks after taking early retirement.

adanata's picture


NO SIR... that's NOT capitalism; that is fascist criminal crony corporatism. I wish people would please stop slandering capitalism. No wonder the kids are confused and seem to believe "socialism" is the answer to their problems. They don't know what socialism is either. :/

Chupacabra-322's picture

Wachovia's Drug Habit. Bloomberg article. Yep. The same Wachovia which was absorbed by Wells Fargo who also launders drug money for Rhe Pure Evil Criminal Psychopaths at the CIA.

Just before sunset on April 10, 2006, a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. As soldiers on the ground approached the plane, the crew tried to shoo them away, saying there was a dangerous oil leak. So the troops grew suspicious and searched the jet.

They found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million. The stash was supposed to have been delivered from Caracas to drug traffickers in Toluca, near Mexico City, Mexican prosecutors later found. Law enforcement officials also discovered something else.

The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corp. and Bank of America Corp., Bloomberg Markets magazine reports in its August 2010 issue.

This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers -- including the cash used to buy four planes that shipped a total of 22 tons of cocaine.

Nunya Bidness Gogl's picture

Which tells you (if you didn't know already) that the war on cash has nothing whatever to do with stopping drugs nor terrorism.

Fuku Ben's picture

Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses

At least a few criminals are smart enough to know what money is in this world. They just don't have a fancy title or degrees and wear a suit. And they don't work for a bank. See the link.


I wonder if the shareholders, board members and executives were fully informed about how these crimes will be directly affecting them? Maybe they should ask their boss for the memo that he never sent out.

Kirk2NCC1701's picture

They should have donated to the Clinton Global Initiative (CGI), and "no reasonable prosecutor would have pursued them".

pitz's picture

I don't understand something here.  How exactly did they get any money from these fake accounts?  I know I sure as heck wouldn't ever pay a dime towards a credit card that I didn't open.  Nor service fees on bank accounts that clearly weren't mine.  Where did the money come from? 


I can understand though, that if WFC reported fake deliquent accounts to a credit rating agency, that they might be on the hook for significant damages.  As everyone in that situation should be, sooner or later, joining a class action lawsuit.

BuddyEffed's picture

Often those whose net worth is anywhere from a quarter million to hundreds of millions won't notice 10 or 40 dollars in fraudulent fees charged to a linked account due to the other quantity of activity on their accounts.

Urban Redneck's picture

This whole thing wasn't about Wells Fargo making a profit, they LOST money.

What the active crime was about was low wage ($20/hr or less) quota monkeys gaming the system to have more bankster like bonuses.

Management looked the other way. There is ZERO chance they were unaware of exactly what was going on and the exact scope of what was going on... in real time (or +1 business day at the slowest).

So WHY did management look the other way? Particularly since their passivity/feigned ignorance was costing EPS, not making EPS? Someone should go back and review the old earning calls and see what management was promising the street in regards to CUSTOMER and ACCOUNT growth. (ASSET growth can purchased wholesale, since the analcysts only get to see the public/published financials, and not the raw data).

So if Wells had a good earning call- customer and account GROWTH targets were met (and the wholesale and treasury groups tag team and deliver both growth in AUM and an acceptable NIM) then Wells Fargo stock price rises (until the FED stops the printing music).

Bottom line- Glorified burger flippers in pinstripes pocketed OPM (shareholders' money), management looked the other way because as long as the net result is rising stock price, they were lining their much deeper pockets with OPM (MOAR shareholders' money).

Every bank management team cuts corners and window dresses, it's the nature of the business, but this was complete bullshit, even by crony wall street insider standards.

Lost in translation's picture


< Wells Fargo

Who's the bigger gangster?

Tremel Jackson's picture

The Podesta Group is a registered lobbyist for WF. The Podesta Group is run by HRC's campaign chair. Also registered to lobby for WF is Covington & Burling— Eric Holder's new employer.

This is why no one goes to jail.

headless blogger's picture

I imagine a lot of business are licking their chops on this one, because if this happens they can force all their customers to be on "automatic deduction". If you do something the Government doesn't like they can freeze your account. Their options against liberty are limitless....

DOGGONE's picture

Deception by omission pays:

VWAndy's picture

 Duc look in your chat window.