“Greed, that’s what it comes down to.” I was sitting across from a family friend. We were discussing the premise of the movie The Big Short.
“So, one of the characters has this big moral dilemma,” he continued, “because he feels that even though they have the right to ‘short’ the money, he feels that it’s morally wrong to profit off of people losing their homes.”
Thought No. 1: I have to see this movie.
Thought No. 2: The latest Wells Fargo incident.
Picture this: You open your mail box after coming home from work and you’re shuffling through your regular assortment of brightly-colored ads, the occasional bill, and your latest bank statement. Later over dinner, you open the bank statement with the familiar Wells Fargo horse and carriage symbol in the corner and scan along the familiar until something catches your eye. Suddenly, you’re paying bank fees for a ghost account that you didn’t even sign up for!
Something seems suspicious, and rightly so. This is exactly what happened to Wells Fargo customers nationwide.
On Thursday, Wells Fargo admitted to the act of employees secretly creating millions of unauthorized bank and credit card accounts in customers’ names. The phony accounts generated unwarranted fees, allowing Wells Fargo employees to hit sales targets and receive bonuses.
So how deep exactly was the subterfuge? Five years in the making. Starting in 2011, employees went so far as to create fake PIN numbers and email addresses in order to enroll customers in online banking services. By the time the scandal was revealed, bank employees had opened over 1.5 million deposit accounts that may not have been authorized. In addition, Wells Fargo employees also submitted applications for 565, 443 credit card accounts without their customers’ knowledge or consent. Think about that. 1.5 million fake bank accounts? 565, 443 phony credit card accounts?
That’s one huge black box that rivals a giant illusionist act: the money goes into an account, and then it disappears… into other newly-created secret accounts. And then as these accounts generate overdraft fees, bonuses are conveniently placed directly into the pockets of employees.
In a statement, Wells Fargo said “We regret and take responsibility for any instances where customers may have received a product that they did not request.”
This seems like a light of way saying that we’re sorry you trusted us with your hard-earned savings, but we can’t really control whether or not your money will be used to create a fake account and generate unwarranted fees. That wasn’t the product you requested? Well, we’re sorry about that.
It reminds me of a time when I ordered a Solutions Manual for a genetics class in college. I scraped together enough to buy the book from Amazon, and two days later, I grimly carted the package back from the post office all the way to my apartment only to discover that it was the wrong edition. When I looked online to see if I could return it and switch for the right edition, I learned that I would have to pay a shipping and processing fee.
So when Wells Fargo stated that “we regret any instances where a customer may have received a product they didn’t request,” here’s the scenario that plays out in my head:
“But I didn’t want this!” I would cry out. “And now I’m being charged for the wrong product! How is this right?”
“Too bad,” they would shrug their shoulders at me, “You already gave us your money. But that product is yours now. And even if you don’t want it, you’ll have to pay the shipment fee and the late fee. You’ll also have to cart the package back on over to the post office.”
(Side-note: my experience with Amazon has a happy ending. As in the end, I didn’t have to pay for shipping and they sent me the right solutions manual. My fairy-tale ending with Genetics did not, alas, play out that semester. I would label it an “It’s-not-me-it’s-you” situation).
Now picture this. You’re an employee at Wells Fargo, and you’ve just had two new customers open bank accounts. You wait a day or two, and then you create two new bank accounts under the names of those new customers. You also submit a couple of applications for credit card accounts under those names too. You handle it like the deceptive pro that you are, because, lo and behold, you’ve been doing this for a while. Your colleagues have also been doing the same since 2012 and it’s almost become second-nature now. You generate that fake pin ID number while day-dreaming of those tickets to Europe that you’ll buy with the new bonus and then you clock out. All in an honest day’s work.
But unlike in the movie The Big Short, you don’t technically have the ‘right’ to short this money. You don’t the right to do any of the above. So what does it all boil down to?
Thought No. 3: Greed.
Wells Fargo has agreed to pay $185 million in fines, along with $5 million to refund customers. Of the total fines, $100 million will go toward the Consumer Financial Protection Bureau’s Civil Penalty Fund.
But David Vladeck, a Georgetown University law professor and former director of the Federal Trade Commission’s Bureau of Consumer Protection, questions the severity of this penalty. “One wonders whether (the CFPB) penalty of $100 million is enough,” Vladeck says, “It sounds like a big number, but for a bank the size of Wells Fargo, it isn’t really.”
The worth of Wells Fargo rings in at just about $250 billion, a number I can’t even begin to comprehend (I tried to picture all of the genetics textbooks this would buy. Ha! Just kidding. That would be a nightmare). Wells Fargo has the highest market valuation among any bank in America, and Berkshire Hathaway, the investment firm run legendary investor Warren Buffet, is the company’s biggest shareholder. All this to say, $100 million is maybe a dent for the company, but it’s no bigger than the time I lightly backed into a pole in the parking garage, and when I took it in to inquire about the damage, the car mechanic informed me that “it wasn’t even worth it.”
How the scandal surfaced remains unclear. Wells Fargo declined to make a statement when it hired a consulting firm to investigate the allegations. But, despite the lack of transparency relating to the national scandal, one thing remains apparent:
Greed fuels greed. It’s a vicious cycle that torches most everything in its path, and if left unchecked, it can consume mindsets and completely change individuals that may not have thought they were capable of doing something so morally wrong. Money may “make the world go round,” but it doesn’t have to be the center of gravity in your world. Strive to find fulfillment elsewhere.
And while you’re at it, maybe invest in a bank other than Wells Fargo.
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