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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.
- Mark
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.
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