Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation | Hacker News Reader

Warren Says Wells Fargo's Stumpf Should Resign, Face Criminal Investigation

bloomberg.com

59 pointshelloworld26 comments

Lifecycle of a banking executive:

1. Commit fraud on a massive scale

2. Say "I accept responsibility" but fire subordinates

3. Ride off into the sunset with obscene personal wealth

Well, he said he will accept what the board says. If the board doesn't tell him to return his bonus, they should get sued by the shareholders.

He's the chairman of the board most likely stuffed with hand-picked cronies for exactly this situation.

This activity was quite costly to the bank and Stumpf didn't benefit from it. Banks aren't popular, but I don't want a world where you can go to jail for making a mistake or being bad at your job.

We are in a world where being bad at your job can send you to jail, for criminal negligence.

Are you arguing that you want to get rid of all of those criminal laws, leaving only civil laws?

Bear in mind that Wells Fargo's agreement requires arbitration and prevents class action suits (http://www.reuters.com/article/wells-fargo-accounts-arbitrat... ), leaving very little external check on systemic failures due to high-level negligence.

Matt Levine gives a great rundown of this https://www.bloomberg.com/view/articles/2016-09-09/wells-far... ; you're exactly right, this wasn't Wells Fargo cheating customers. It was Wells Fargo putting some pressure on their employees who turned around and gamed the system in a way that earned the bank almost no money and mostly didn't cost their customers anything. Yes, some of the customers got some fees charged to them, but they were mostly small and most of the customers with accounts opened didn't lose anything.

That this should cause the CEO, who was several layers up the org chart from the person who came up with a bad retail bank employee performance metric, to go to jail is madness.

The CEO was the one pushing the metric. This wasn't just a localized problem.

He also stated that he never considered firing the head of the unit responsible for the problem. I mean, come on.

The previous Wells CEO gave a talk at stanford GSB in 2009 in which he explained the company's core strategy in consumer financial services: distributing decentralized products and services through cross-selling. [1]

Since cross-selling has been core to the Wells Fargo business model for many years, and proven an effective growth mechanism over that time, it wouldn't make much sense to just go round firing people over pursuing that mechanism responsibly. What does make sense is adjusting course sternly when that pursuit starts to look irresponsible, and it appears the current leadership is doing that.

If Elizabeth Warren had the brains to understand the financial services industry, she wouldn't have time to fling baseless legal allegations at dinosaur incumbents like Wells Fargo. She would be too busy disrupting them.

With an institution as old and large as Wells Fargo, the problem isn't that their strategy is bad. "How can it be bad when it's been good all these years?" It's actually much deeper than that: their strategy is yesterday's strategy, and that can be a big problem when you have the kind of organizational inertia Wells does.

1. https://youtu.be/XTh4ELp2VDc?t=2678

I'm confused. My impression is that Wells Fargo made de minimus profit on these practices and there's no evidence at all that Stumpf himself did anything illegal (creating shitty incentive programs is just stupid, not criminal). Maybe there should be a criminal investigation into Stumpf, but to call for resignations and bonuses to be returned is premature, no?

Of course. It's simply too early to say. However, Warren is known for her political grandstanding. It's kinda her thing.

I guess I knew that when I wrote my comment. It would be nice if we all collectively remember when politicians spout nonsense like that the next time they grandstand or run for re-election.

I'm not familiar with the US legal system, but what senators have to do with this? shouldn't it be the role of a prosecutor to deal with this case?

I also find the politicians quite hypocritical. Aren't they to blame if the laws they voted for (or didn't vote for) are such that guys like Stumpf get unpunished for their wrongdoings?

Congress can hold hearings, they can issue subpoenas, and they can hold someone in contempt of Congress.

There is currently no case. Congress is simply holding a hearing to roast the guy for making some stupid decisions. If information comes to light that would indicate criminal wrongdoing of a private citizen or a non-elected member of the government during a Congressional hearing the justice department takes over. For elected officials Congress (specifically the Senate) has the option of initiating an impeachment trial.

> For elected officials Congress (specifically the Senate) has the option of initiating an impeachment trial.

No, it doesn't.

(Impeachment trials in the Senate are neither restricted to elected officials nor do they extend to all elected officials, and in any case the Senate does not have the "option" to initiate such a trial, an impeachment trial happens only after impeachment by the House of Representatives.)

They can also change the laws.

True, but that takes a heck of a lot more effort than berating a CEO for 30 minutes straight.

Then it's a good thing they did more than that.

Even that meeting, titled "An Examination of Wells Fargo’s Unauthorized Accounts and the Regulatory Response", was more than three hours long, and with three other witnesses.

Why, it's as if it were part of a larger effort to change the laws.

Ahhhh. The headline refers to Elizabeth Warren. I was really confused as to why Warren Buffet (a big Wells Fargo shareholder) would be making a public statement like this.

That congressional hearing was by far the most toothless circus I've ever seen on CSPAN. They're all in the tank with the banking industry.

Link please? From reading, it sounded like Elizabeth Warren spanked him.

And how can you not love Elizabeth Warren? <3

Embedded here: http://www.nakedcapitalism.com/2016/09/wells-fargo-ceos-tefl...

This is quite insane. Is it too early to toss around the idea that the US government is slowly trying to take over the banking system?

From a political perspective, attacking the Wall St label is an effective "enemy of my enemy is my friend" strategy for gaining democratic power with the lower classes -- the people who comprise a democratic majority. Nevermind that the allegations won't stick, not necessarily because of government conspiracy, but because they aren't smart allegations that attack real problems.

Real problems are big and hairy. It's much easier to witch-hunt than it is to solve real problems. The real problem might be that the products Wells Fargo is cross-selling are outdated. It might be that cross-selling is an outdated strategy. These are much harder problems to solve than locking up or fining a CEO who made mistakes in leadership. That's much easier. Because every CEO makes errors in leadership.

The US banking sector should be regulated like utilities. Take over? No need for that with the proper laws in place to constrain their misbehavior.

Maybe... maaaaaaybe.. the former will happen. The latter? Never.

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