Tuesday, September 13, 2016

Yet Another Reason Why Few People Respect The CFPB...

We are all well aware of the multitude of
detractors arrayed against the efforts of the
Consumer Financial Protection Bureau (CFPB) to bring balance and fairness to the U.S. consumer financial marketplace. 

The new regulatory Agency has made a whole lot of folks very, very mad, often with good reason! The CFPB has forced some "usurious-types" to stop gouging and preying upon some very nice, quite innocent and unsuspecting folks - like your co-workers, neighbors, friends, and your kids!

But it is increasingly difficult to support the
"Bless his heart!"
Agency and its leader, Mr. Cordray when he makes the following statement of "high ridicularity" in connection with the recent fine imposed on Wells Fargo [see CUTODAY story here]:"Wells Fargo employees [See Fact #1] secretly [See Fact #2] opened unauthorized accounts [See Fact #3] to hit sales targets and receive bonuses. Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed [See Fact #4].  Today's action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks, [See Fact #5] which can have legal consequences." [See Fact #6] 


#1: Wells Fargo fired 5300 employees in connection with the fraud or almost 6% of the 94,000 employees in its consumer finance division. This was not a minor "isolated" incident within the bank.
#2: Yah really reckon this was a "secret" (this went on for over 5years!) within the bank?!? If you do, can I interest you in buying a bridge?
#3:  Over 2 million+ fraudulent accounts were opened by those dedicated bonus seekers.  Granted Wells Fargo is a large bank with 40 million customers, but do you think that Wells Fargo's line managers and internal audit staff are all really that slack and "dull as dirt"?
#4: Wells Fargo paid the CFPB a fine of $100 million (a total of $185 million to all parties to the settlement). Would you like to guess what Wells Fargo's net profit for the second quarter of 2016 was... try $5.6 billion [here's the link], which should mean Wells Fargo will earn a $22+ billion net profit for the full year. CFPB's "largest fine ever" is less than 1% of WFB's projected profits for just this year!
#5: Ya' really know how to hurt 'em Richard - almost broke their wrist when you slapped it, I reckon! That what you meant by "carry serious wrists"?
#6: Wells Fargo signed a consent decree with the CFPB neither admitting or denying guilt. In other words CFPB agreed in writing not to prosecute Wells Fargo for incenting its staff to open 2 million+ fraudulent accounts. Kind of brings a whole new meaning to the concept of "legal consequences"!

But here's the BONUS QUESTION:
[so to speak - no cheating!]

Q: What was the fine paid by Ms. Carrie Tolstedt, the Sr. Executive Vice President responsible for the offending Community Banking Division at Wells Fargo, and when was she fired?

"Bless her heart, too!"
You will note from the CUToday article (see above for link) that Ms. Tolstedt is planning on retiring at the end of the year and will leave the bank with $124.5 million in stock options and restricted Wells Fargo shares, plus her annual salary of approximately $9 million.

And, just to let you know how seriously Wells Fargo CEO, John Stumpf takes the CFPB, Mr. Cordray and all this; here's what he recently had to say about Ms. Tolstedt's retirement and leadership:

"A trusted colleague and dear friend, Carrie
Carrie didn't know, I didn't know.
How were we to know?
 It was a "secret"!
Tolstedt has been one of our most valuable Wells Fargo leaders, a standard bearer of our culture, a champion for our customers, and a role model for responsible, principled, and inclusive leadership. Because of her passion for serving our customers wherever and however
[ya' sure got that part right brother John!].... We share in the pride that she has for the legacy, accomplishments and talent she will leave behind."[here's the link to the rest of it, I'm about to "throw"...] 

But with $124 million...
she'll get over it.

... bet Carrie Feels Pretty Bad about all this!


Anonymous said...

You have again told us something we all know. There are crooks, embezzlers, idiots and worse in every profession. The financial services industry has more than their share because of the access to money and the greed to grab as much of it as one can. The Wells Fargo case is by far one of the worst because of its size, the amount involved, the customers taken advantage of and the walk away payment the person who allowed it to go on will get. Credit unions have experienced their share of the crooks but because of their size the story gets told only in the credit union press. The CFPB is and will always be an agency out of control. Cordray thinks he is God and no one in the credit union industry will take him on. Can't you just wait to hear the introduction of him by Ham Berger at the upcoming NAFCU conference? I hope Ham has bought enough Chapstick.

Anonymous said...

It's a shame that past NCUA chairs didn't help stand up to the CFPB and Cordray and push back on them creeping into their business.

Greg said...

Cordray is another no talent clown working for the government. If he's the best we can do for that position, we are in serious trouble.

David Mildenberg said...

Great column Jim.