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Comment by ckarmann | Hacker News Reader

When there's a couple of rogue employees I can understand. When there are millions of fraudulent accounts it starts to look like a policy or at least criminal neglicence.

And there are also the companies that are convinced of fraud like Deutsche Bank, but it's the company that pays a huge fine when the executives who were overseeing all this go unscathed.

I have worked in a bank and I know a lot of people there have no clue what's going on, but the fact that it's true does not mean it's a valid excuse. If I kill a pedestrian with my car I can not claim it's not my fault because I had my eyes closed.

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I think it somewhat boils down to intention. In the case of Wells Fargo, opening fraudulent accounts couldn't have accrued any benefit for the bank. It seems more likely that it would have increased overall cost for the company. Yes, the fraud is attributable to stressing too much on reaching an upselling goal, but it's hard to imagine it's a thing that CEO would have wanted. Should we start punishing people for managerial oversight?

My understanding is that the multiple accounts were an end run around the per-account limits on various fees.

> opening fraudulent accounts couldn't have accrued any benefit for the bank

Actually, in the hearing Senator Warren tried to connect the fraudulent accounts to the stock price, which would have been a direct benefit for the bank:

> You squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket. And when it all blew up, you kept your job, you kept your multimillion-dollar bonuses and you went on television to blame thousands of $12-an-hour employees.

http://www.nytimes.com/2016/09/23/business/wells-fargo-tests...

That was my first thought, even before I heard what Warren had to say. IIRC, Lending Tree was doing something similar. People associated with the company were opening accounts with which to borrow or lend money in order to juice the books and report increased earnings.

http://www.bloomberg.com/news/features/2016-08-18/how-lendin...

Senator Warren is really good at generating sound bites for people who have no idea about how companies work but are abstractly mad at them. The idea that WF would engage in systematic fraud to goose revenue by about $2.4 million is absurd (or add a bunch of accounts generating only that much in revenue--as if Wall Street analysts won't compute revenue per account).

Revenue growth isn't the only important metric here.

They created two million new accounts, letting them go to the market and tout demand for their banking services.

Having more accounts isn't automatically a good sign for the stock market. It's too easy for a bank to get accounts, you just offer people a sign-up bonus. The number of clients alone will usually not inflate the stock price.

Wells Fargo was touting its new account metrics to investors in addition to the typical revenue numbers. The idea being that if Wells Fargo is gaining that many new customers and new accounts, it would lead to a lot more revenue in the future.

Wells Fargo pushed its employees so hard to open accounts because there was a benefit to doing so.

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