The Mike Luckovich cartoon above reflects how banking giant Wells Fargo fired 5,300 low level employees who opened bogus accounts on behalf of clients, all because they were pressured and then threatened with dismissal if they did not meet account quotas. Because new accounts generated new fees, top level executives were able to pay themselves big bonuses, while demanding higher salaries, as "new accounts" began piling up across the company.
The problem, as Senator Elizabeth Warren (D-Mass) points out, is that many (most?) clients had no idea new accounts were being opened in their name, or how much in fees they were actually paying. They were being scammed, under the guise of "deepening customer relations" at Wells Fargo.
It apparently doesn't matter to Wells Fargo's CEO, John G. Stumpf, that thousands of low level employees, who were just following orders, got fired for running the scam. As long as senior executives got their bonuses from "producing" so many new accounts, there seems to be no sense of guilt or remorse at Wells Fargo, as Senator Warren helps us see in the epic smack down she issues to CEO Stumpf below.
There's more, but you get the point. Many of America's financial executives learned nothing from 2008 and, quite frankly, operate as if the "logic of the market" gives them the right to operate like con men and crooks.
Addendum: For the record, opening new accounts (cross selling) simply because it generates new fees and revenue - and not because the clients want or need the accounts - is a classic example of wealth extraction.
Today is September 15th. It was 8 years ago today that our country went into a national economic tailspin that we're still experiencing, and paying for, on many levels. As a reminder, I had been following our slow motion market collapse (which I discussed throughout 2008 here, here, here, here, here, here, here, here, here, here, here, here, here, here ... well, you get the point) and suspected that the impending market collapse was upon us. It was. So, 8 years ago today, I blogged about what was happening in the market in real time, and on a Sunday no less. I haven't blogged that many times on a Sunday since. But one thing was clear. Ordinary Americans weren't happy with what had happened, and were ready to go after Wall Street ...
In the days after the market collapse, I discussed the possibility of Golden Parachutes for those who caused the collapse (which turned out to be a serious understatement), how global markets were responding (not well), and other market ugliness. To be sure, I didn't think that the collapse would be so big that it would put the U.S. taxpayer on the hook for at least $12-14 trillion in bailout cash, and other market guarantees. I didn't want to believe that our government would fill up the tank and turn the keys over the people who ran our nation's economic car into the ditch. But this is exactly what happened (while there are few, this market handout is my great disappointment in the Obama administration). Today, banks are flush with bailout cash and corporate America is sitting on trillions in cash as a result of government's decision to make them whole. I bring all of this up because it appears Senator Elizabeth Warren (D-Mass) wants Wall Street to finally pay for the collapse and financial bailout that followed. Senator Warren is using the market collapse anniversary as a platform to suggest that the next presidential administration "investigate and jail" those responsible for the market collapse. While I would like to see this happen too, I'm not holding my breath. Barry Ritholtz has a nice discussion on the proposal, which you can access here. In all cases, Happy Anniversary (I think). - Mark
Below is a Community Voices opinion piece from one of our Political Science majors, Randy Villegas.
Apart from being an exceptionally gifted student, Randy Villegas is currently participating as an intern through the Panetta Institute for Public Policy. Located on the California State University Monterey Bay campus, the Panetta Institute was created by former Secretary of Defense and CIA director Leon Panetta. The Panetta Institute selects and prepares one student each from every CSU campus to participate in their semester long program, with most interns finishing up working in the Washington DC area for a member of the U.S. Congress.
Enjoy the article ...
Lisa Green, closing libraries won’t make us safer
During a recent Board of Supervisors meeting, Kern County District Attorney Lisa Green declared that public safety must remain the top priority. “If that means closing every library in the county so you can put deputies on the street,” she said at the meeting on Sept. 6, “you need to do that.”
If you really want to prioritize public safety, you need to attack the real threat: lack of education and lack of opportunity. Numerous studies show the link between education and crime rates, and the overwhelming consensus is that the more educational opportunity communities have the lower the crime rate.
Why do people turn to a life of crime in the first place? Oftentimes it’s because they feel as though they have no other opportunity. When a person doesn’t have a high school diploma, a degree, or the basic literacy or skills to pursue a career, their options become extremely limited. For many, crime becomes the only option left.
This is exactly why we need to invest in our libraries and other programs that help keep people on the right track. When youth in Kern County are greeted by a locked door at a local library branch that is only open 2-3 days a week, and for limited hours, what does that say about our priorities?
Who is there to help that student learn how to conduct proper research, or find that specific book for a paper? These things might seem trivial, but for many young people in our community libraries are the only place they can connect to the internet, find a quiet place to study and do the basic things that are expected of all students.
And it isn’t only young people who benefit. When a homeless person needs help building a resume and looking for a job, who is there to help them find their way out of poverty? It’s not the District Attorney’s office. It’s the Kern County Libraries and the dedicated staff that work under already limited resources.
Green’s comments also fly in the face of public opinion, as seen in the over 50 percent of residents who supported a measure that would have imposed an eighth of a penny sales tax that would go directly toward funding our public libraries. Although the proposal didn’t get the two thirds vote it needed, it was a step in the right direction and clearly showed that our community support its libraries.
With Bakersfield ranked the #1 most illiterate city in the nation, it’s clear we can’t afford to allow this cycle of illiteracy — which fuels the poverty and crime — to continue. If we truly want to save money and make our public safer, we need to educate our community and provide the proper resources for people to pull themselves out of poverty.
And if we shift our focus to education and resources like our libraries, perhaps in the future we won’t have to make such drastic cuts to our departments, because those who earn more ultimately contribute more to the local economy.
Lisa Green, I bet you read at least a few books growing up. If any of those books ever came from a public library, then maybe you can consider the 864,124+ people living in Kern County whose only access to the internet, books and basic resources is the local library. I sincerely hope that you apologize to the people of Kern for your statement last week.
Randy Villegas is a student at Cal State Bakersfield and a youth reporter for South Kern Sol.