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Comment by kaizendad | Hacker News Reader

OK, but Wells Fargo made $5 billion last year, and the activity they were fined for took place over many years, which leaves me to ask: after the fines, was this activity profitable or not? If it was profitable, do the fines actually dissuade future dishonesty?

Also, apparently Wells Fargo thinks that 27,000 people lost their cars over this. I bet none of those people will be made whole. Cars are really essential things: lose your car and you may be unable to take a child to school, unable to shop for food, or even unable to get to work. It's a pity that can't be undone.

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No, they made 22 billion. You're probably reading their quarterly figures.

source: https://www.nasdaq.com/symbol/wfc/financials?query=income-st...

The scams in themselves were not profitable. For the cross-selling, they made an extra 100 million or so over the course of many years, I don't recall the figures I read.

This billion dollar fine is like a small change for them. Warren Buffet has a lot of exposure to this company and he has been influencing to let them go for a long time. Go figure!

Well, the shareholders have suffered outsize to the amount of damage to the victims in dollar terms by orders of magnitude. Probably 100-150 billion, conservatively, wasn’t realized.

Wells didn’t get in trouble during the financial crisis because they stuck to conventional banking instead of investment banking, like their peers. Their reputation was unmatched.

Since the crisis WFC has floated low double digits percentage wise around their market cap, while all its peers have doubled and tripled in market cap. Wells holders have missed the boat they waited ten years for, and probably will live in purgatory for another 4 or 5 years because of this mess.

Won’t somebody please think of the shareholders?

>I bet none of those people will be made whole.

At this level of fine? Probably not. $1,000,000,000 is a substantial amount of cash but that would only be ~$37,000 a person if 100% of the fine went to the only the victims who lost their vehicles. Certainly enough to replace a lost car but far from adequate to cover damages from the effects of losing a vehicle and living with that repossession on your credit history.

And that doesn't even account for that 27,000 was only the number that suffered repossessions, not the number victimized by Wells Fargo.

They also have to pay back the people they snookered all their money plus interest. That's been stated in the articles that I've ready about the matter.

Will fines dissuade future dishonesty? Not likely. But jail time of the guilty decision makers would.

Steal a candy bar? Go to jail. Knowingly ruin someone's life? No problem. The shareholders pay for it.

Actually there is a lot of real world evidence that fines dissuade honesty.

Were the decision makers involved adequately punished? Will they ever do something like it again?

Fines dissuade from making exactly the same thing but that doesn't seem to prevent different kinds of scam.

ZTE apparently paid bonuses to 30+ people even though that were involved in some kind of violation. I bet Wells Fargo well also pay the CEO and the board very handsomely.

As it was in 2009 where me and you and every John Q Taxpayer contributed to the yacht and private jet fund for the Wall Street execs that stole pension money from millions of Americans, tripled unemployment, caused hundreds of thousands of excess deaths in the subsequent economic downturn...

Nothing pitchforks, molotovs, and sturdy rope wouldn't solve, but I guess we're just too comfortable to do anything but passively let them f*ck us in the butt.

"dissuade" does not mean "completely prevent forever in all circumstances"

Dissuade means something more like "reduce the chances of it happening".

If the OP had written "fines do not completely prevent forever the chances of a bad thing happening" everyone would have realised that was a nonsensical bar because even putting in jail doesn't do that.

The Wells Fargo fine indicates there are gaps in that evidence ;)

"dissuade" does not mean "completely prevent forever in all circumstances"

Dissuade means something more like "reduce the chances of it happening".

I think most people did not read your comment :-)

Why massively put people in jail for everything?

In most countries jails are no good to prisoners. They are used to isolate people from society, not to help people to become a better person. And society is putting tones of money to support penitentiary system.

I believe for economical crimes people who took the decision should be fined a lot and banned from taking positions where they can do the same things again. No need to isolate them from society. At least for the first time. The same for other crimes where people do not hurt or threaten to hurt other people.

I would tend to agree with you because I feel the point isn't to ruin these people's lives, but to prevent them from causing further harm. Banning them from ever working in economics and seizing a large chunk of their wealth could be effective. That being said, it would also do society some good to actually punish these people and make an example out of them. The way they are just allowed to collect a bonus and keep going, at the moment, is terrible, it only reinforce's the impression on Wall Street that they are above the law (which they effectively are). Putting them in jail, like normal people, would serve to correct that.

>The same for other crimes where people do not hurt or threaten to hurt other people.

Isn't that the thing though? Don't these bankers actually hurt more people, and hurt them worse, than any violent criminal could? So the person who hurts one family gets jail but the one that hurts thousands "doesn't get to work in the industry" anymore? That sounds like hogwash to me.

Has everyone just forgotten about the principle of equality under the law?

No, we've just gotten really good at interpreting our contract from the late 1700s really well.

The Lucas critique, or Campbell's law, both refer to the same concept. Any metric that becomes a target is no longer a sufficient metric.

The Constitution has been our metric for 250 years. I don't have a superior alternative, but it occurs to me that we've demanded it be a literal document, but when its our own skin on the line, we suddenly forget the inconvenient parts, and contort our minds to find absolution for something we are going to do anyways.

Massively? How many C Level execs are there?

Well, the bankers have always had their own threat of isolation as a hole card. If you don't like my money, I know a nice place in the Alps where they are isolationists to a fault, Switzerland.

Not that I agree with the idea, but it seems to work in practice.

While I agree prisons are overused, making it a purely economical matter means it's just another investment. Benefit if you get away with it vs risk of getting caught. You have to be pretty draconian to make no one take that risk.

Banning people from an activity is also hard. They can just take a position where they advise others who will make such decisions, or other loopholes.

Jail time may not be the answer, and we clearly do a bad job of making these acts a financial risk (not to mention preventing recurrence), so your suggestion is undoubtedly an improvement over current day, but I don't think we can stop there. (Not that I have better ideas yet)

That will never happen because the lawmakers (i.e. wealthy elite, not democratically elected representatives) will never write laws to punish themselves. As long we live in a plutocracy we have zero hope of personal accountability for these sort of criminals.

They will however pass brutal laws sentencing poor people to 35 years to life for possession, an other disgusting shit like that, but that's another story.

Yes. Agreed.

Look at 2007 / 2008. Wall Street nearly crash the world economy to the ground. Ecnomists estimated it cause deaths into the thousands. (30k or 300k come to mind but I can't find the reference atm.) The Obama admin for all intents and purposes pardoned Wall Street. Yet Obama is hailed as a liberal, a hero, and one of our greatest ever.

I have to believe Orwell is bewildered.

For clarity: you saying the source of the laws are wealthy "elites" that aren't in office? Meaning sone lobbyists and their patrons? Otherwise I'm confused as one can both be a selfish rich person AND a (american-style or noy) democratically elected official.

Ask any American this question:

"Knowing that some people are responsible for _knowingly_ enriching themselves off of messing with the global economy leading to the global economic crisis of 2009 and, for example, hundreds of thousands to millions of excess deaths, would you support: (A) jail time and criminal accountability for all involved; or (B) a $700,000,000,000 bailout for, among other things, their next yacht fund?

If the majority answer is (A) then there's your evidence we live in a plutocracy.

I don't necessarily disagree - I was trying to establish what position the above poster had. (i.e. where they saying the decisions are being made by the officials in office or by the lobbyists or by the people hiring the lobbyists). None of those options deny a plutocracy, they just describe the means.

There are three groups.

- The Elites. In current parlance The 1%.

- Their enablers. They're the next 14%. We really don't have an acknowledgement of the existence of this group. Examples would be politicians, the majoriry of the media, etc.

- Everyone else. In 1984 this was The Proles.

The 1% v 99% lens is __all wrong__. Any discussion via that lens is all but pointless. It puts the 14% on the wrong side of the line.

I really hate the use of "elites" in this context (you're using a common usage, I just don't like it).

To be elite is something to aspire to, to admire. To be truly elite includes concepts like benevolence, compassion, a larger awareness, and a long-term perspective. Being rich and/or educated alone isn't enough to be elite. Having power is definitely not part of being elite. A malevolent dictator is not an elite, they are just a powerful jerk.

This may be yelling to hold back the tide, but I think it's a bad idea to connect concepts of "good" with concepts of "asshole"

Per Wikipedia:

"In political and sociological theory, the elite (French élite, from Latin eligere) are a small group of powerful people who hold a disproportionate amount of wealth, privilege, political power, or skill in a society."

Call it whatever you want. The key takeaway is the awareness of The 14% is nonexistent. The 14% is not part of the so called 99%, the 14% is on the wrong side of divide.

That's essentially the same problem I've had with what you had a problem. I'm confused.

Fines don’t seem to be preventing these cheats from ripping off consumers.

When a bank cheats its customers, they should be prohibited from providing those services for several years. Shut down their mortgage division and force them to sell it off. That is the only real penalty that has teeth.

What about the people currently having a mortgage with the bank? You wouldn't want to hurt them.

Don’t banks generally bundle and sell mortgages anyway?

fannie mae probably owns the mortgage anyway

Well, that's shooting own leg for government and people: 1. This is a business which generates taxes 2. This is a business which generates employment 3. This is a business which provides a service to people and current clients will suffer from shutdown.

If you can simply fine it hard enough to make them stop cheating like that in future, that should be more than enough. Simple fines to make cheats unprofitable should do the thing.

Also the rule "to shutdown" the entire division might be misused on the wrong way or to blackmail the business. Once you shut down the division, it's much harder to reverse it, than simply to return a fine.

If it's sold off then the buyer is going to serve the costumers and pay taxes so no real loss for society.

The larger issue is it's a minimal impact on the company and the people who actually commit ed the crimes.

> I bet none of those people will be made whole

I don't think this is about making them whole, it's just about fining them. I could be wrong, but I believe those victimized are still welcome to conduct a civil action against Wells Fargo.

You're wrong, in addition to the fine paid to the Feds, they also have to pay back the people they lied to along with interest.

They have to pay back the direct damages that they caused. They don't have to pay all of the damages resulting from the initial damage. If the money they took caused someone's car to be repossessed which caused them to lose their job, they don't have to pay for the lost income from the job.

Well, under this ruling they don't have to. But the victims didn't sign off on this, they are perfectly entitled to sue for whatever they think they deserve. (Though if they intend to do so they should absolutely not accept the money they try to give them as a result of this deal, as that will make their case that much harder to win)

I actually agree with you on this, Wells Fargo was doing this malpractice for years and the fine is really disproportionate. I mean even with the fine they still have a net income of over $4 billion. The regulator needs to levy a more stringent penalty. The puny penalty alludes to a bonhomie between the company and the regulators

I think it could be looked at another way also. What amount of potential earnings did they lose out on over the course of several years because the public are now aware they are potentially a dishonest (at least extremely careless) company to be avoided?

I still don't fill my gas tank at BP stations...

HSBC only got $1.9bn for money laundering for terrorists and cartels, there's no intention anywhere in financial regulation to punish big banks.

Fines are usually multiple times more than the value they cheated which seems to be the case here( ~100M$ ) - so it is fair in some sense. Just because they are still profitable doesn’t mean the fine was unfair. There might be other divisions were people worked honestly, let’s not paint everybody with a broad brush or sound despondent.

Cars are really essential things: lose your car and you may be unable to take a child to school, unable to shop for food, or even unable to get to work. It's a pity that can't be undone.

There's an app called Getaround (https://www.getaround.com/) which works really well for this, if you live in a big city.

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