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Wells Fargo, Wachovia, B of A Involved with Mexico Drug Cartel Operations

Comment: It is no secret that major financial institutions, American and foreign, are deeply involved with laundering drugs for major smuggling operations.  A recent article notes the involvement of B of A and Wachovia (now owned by Wells Fargo) in an operation that resulted  in the bust of a DC-9 carrying 5.7 tons of cocaine. (Daniel Hopsicker has written of this arrest).

Note that no major U.S. bank has ever been prosecuted for failure to report transfers of $10,000.00 or more, as required by law. The thinking is that such an act would produce a domino effect that would devastate the financial system, so dependent is it on drug money.

“Banks Financing Mexican Gangs Admitted in Wells Fargo Deal” by Michael Smith; bloomberg.com; 6/29/2010.

Excerpt: Just before sunset on April 10, 2006, a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. As soldiers on the ground approached the plane, the crew tried to shoo them away, saying there was a dangerous oil leak. So the troops grew suspicious and searched the jet.

They found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million. The stash was supposed to have been delivered from Caracas to drug traffickers in Toluca, near Mexico City, Mexican prosecutors later found. Law enforcement officials also discovered something else.

The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.:Wachovia Corp. and Bank of America Corp., Bloomberg Markets magazine reports in its August 2010 issue.

This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers.Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers — including the cash used to buy four planes that shipped a total of 22 tons of cocaine.

The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico for the past four years.

‘Blatant Disregard’

Wachovia admitted it didn’t do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007. That’s the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history — a sum equal to one-third of Mexico’s current gross domestic product.

“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” says Jeffrey Sloman, the federal prosecutor who handled the case.

Since 2006, more than 22,000 people have been killed in drug-related battles that have raged mostly along the 2,000-mile (3,200-kilometer) border that Mexico shares with the U.S. In the Mexican city of Ciudad Juarez, just across the border from El Paso, Texas, 700 people had been murdered this year as of mid- June. Six Juarez police officers were slaughtered by automatic weapons fire in a midday ambush in April.

Rondolfo Torre, the leading candidate for governor in the Mexican border state of Tamaulipas, was gunned down yesterday, less than a week before elections in which violence related to drug trafficking was a central issue.

45,000 Troops

Mexican President Felipe Calderon vowed to crush the drug cartels when he took office in December 2006, and he’s since deployed 45,000 troops to fight the cartels. They’ve had little success.

Among the dead are police, soldiers, journalists and ordinary citizens. The U.S. has pledged Mexico $1.1 billion in the past two years to aid in the fight against narcotics cartels.

In May, President Barack Obama said he’d send 1,200 National Guard troops, adding to the 17,400 agents on the U.S. side of the border to help stem drug traffic and illegal immigration.

Behind the carnage in Mexico is an industry that supplies hundreds of tons of cocaine, heroin, marijuana and methamphetamines to Americans. The cartels have built a network of dealers in 231 U.S. cities from coast to coast, taking in about $39 billion in sales annually, according to the Justice Department.

‘You’re Missing the Point’

Twenty million people in the U.S. regularly use illegal drugs, spurring street crime and wrecking families. Narcotics cost the U.S. economy $215 billion a year — enough to cover health care for 30.9 million Americans — in overburdened courts, prisons and hospitals and lost productivity, the department says.

“It’s the banks laundering money for the cartels that finances the tragedy,” says Martin Woods, director of Wachovia’s anti-money-laundering unit in London from 2006 to 2009. Woods says he quit the bank in disgust after executives ignored his documentation that drug dealers were funneling money through Wachovia’s branch network.

“If you don’t see the correlation between the money laundering by banks and the 22,000 people killed in Mexico, you’re missing the point,” Woods says.

Cleansing Dirty Cash

Wachovia is just one of the U.S. and European banks that have been used for drug money laundering. For the past two decades, Latin American drug traffickers have gone to U.S. banks to cleanse their dirty cash, says Paul Campo, head of the U.S. Drug Enforcement Administration’s financial crimes unit.

Miami-based American Express Bank International paid fines in both 1994 and 2007 after admitting it had failed to spot and report drug dealers laundering money through its accounts. Drug traffickers used accounts at Bank of America in Oklahoma City to buy three planes that carried 10 tons of cocaine, according to Mexican court filings.

Federal agents caught people who work for Mexican cartels depositing illicit funds in Bank of America accounts in Atlanta, Chicago and Brownsville, Texas, from 2002 to 2009. Mexican drug dealers used shell companies to open accounts at London-based HSBC Holdings Plc, Europe’s biggest bank by assets, an investigation by the Mexican Finance Ministry found.

Following Rules

Those two banks weren’t accused of wrongdoing. Bank of America spokeswoman Shirley Norton and HSBC spokesman Roy Caple say laws bar them from discussing specific clients. They say their banks strictly follow the government rules.

“Bank of America takes its anti-money-laundering responsibilities very seriously,” Norton says.

A Mexican judge on Jan. 22 accused the owners of six centros cambiarios, or money changers, in Culiacan and Tijuana of laundering drug funds through their accounts at the Mexican units of Banco Santander SA, Citigroup Inc. and HSBC, according to court documents filed in the case.

The money changers are in jail while being tried. Citigroup, HSBC and Santander, which is the largest Spanish bank by assets, weren’t accused of any wrongdoing. The three banks say Mexican law bars them from commenting on the case, adding that they each carefully enforce anti-money-laundering programs.

HSBC has stopped accepting dollar deposits in Mexico, and Citigroup no longer allows noncustomers to change dollars there. Citigroup detected suspicious activity in the Tijuana accounts, reported it to regulators and closed the accounts, Citigroup spokesman Paulo Carrenosays.

Criminal Empires

On June 15, the Mexican Finance Ministry announced it would set limits for banks on cash deposits in dollars.

Mexico’s drug cartels have become multinational criminal enterprises.

Some of the gangs have delved into other illegal activities such as gunrunning, kidnapping and smuggling people across the border, as well as into seemingly legitimate areas such as trucking, travel services and air cargo transport, according to the Justice Department’s National Drug Intelligence Center.

These criminal empires have no choice but to use the global banking system to finance their businesses, Mexican Senator Felipe Gonzalez says.

“With so much cash, the only way to move this money is through the banks,” says Gonzalez, who represents a central Mexican state and chairs the senate public safety committee.

Gonzalez, a member of Calderon’s National Action Party, carries a .38 revolver for personal protection.

“I know this won’t stop the narcos when they come through that door with machine guns,” he says, pointing to the entrance to his office. “But at least I’ll take one with me.”

Subprime Losses

No bank has been more closely connected with Mexican money laundering than Wachovia. Founded in 1879, Wachovia became the largest bank by assets in the southeastern U.S. by 1900. After the Great Depression, some people in North Carolina called the bank “Walk-Over-Ya” because it had foreclosed on farms in the region.

By 2008, Wachovia was the sixth-largest U.S. lender, and it faced $26 billion in losses from subprime mortgage loans. That cost Wachovia Chief Executive Officer Kennedy Thompson his job in June 2008.

Six months later, San Francisco-based Wells Fargo, which dates from 1852, bought Wachovia for $12.7 billion, creating the largest network of bank branches in the U.S. Thompson, who now works for private-equity firm Aquiline Capital Partners LLC in New York, declined to comment.

As Wachovia’s balance sheet was bleeding, its legal woes were mounting. In the three years leading up to Wachovia’s agreement with the Justice Department, grand juries served the bank with 6,700 subpoenas requesting information.

Not Quick Enough

The bank didn’t react quickly enough to the prosecutors’ requests and failed to hire enough investigators, the U.S. Treasury Department said in March. After a 22-month investigation, the Justice Department on March 12 charged Wachovia with violating the Bank Secrecy Act by failing to run an effective anti-money-laundering program.

Five days later, Wells Fargo promised in a Miami federal courtroom to revamp its detection systems. Wachovia’s new owner paid $160 million in fines and penalties, less than 2 percent of its $12.3 billion profit in 2009.

If Wells Fargo keeps its pledge, the U.S. government will, according to the agreement, drop all charges against the bank in March 2011.

Wells Fargo regrets that some of Wachovia’s former anti- money-laundering efforts fell short, spokeswoman Mary Eshet says. Wells Fargo has invested $42 million in the past three years to improve its anti-money-laundering program and has been working with regulators, she says.

‘Significantly Upgraded’

“We have substantially increased the caliber and number of staff in our international investigations group, and we also significantly upgraded the monitoring software,” Eshet says. The agreement bars the bank from contesting or contradicting the facts in its admission.

The bank declined to answer specific questions, including how much it made by handling $378.4 billion — including $4 billion of cash-from Mexican exchange companies.

The 1970 Bank Secrecy Act requires banks to report all cash transactions above $10,000 to regulators and to tell the government about other suspected money-laundering activity. Big banks employ hundreds of investigators and spend millions of dollars on software programs to scour accounts.

No big U.S. bank — Wells Fargo included — has ever been indicted for violating the Bank Secrecy Act or any other federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again. . . .


Discussion

4 comments for “Wells Fargo, Wachovia, B of A Involved with Mexico Drug Cartel Operations”

  1. Here’s another bonus effect from the eurozone financial crisis:

    Organized Crime Now ‘Italy’s No.1 Bank’: Report
    Published: Tuesday, 10 Jan 2012 | 5:11 PM ET

    Organised crime has tightened its grip on the Italian economy during the economic crisis, making the Mafia the country’s biggest “bank” and squeezing the life out of thousands of small firms, according to a report on Tuesday.

    Extortionate lending by criminal groups had become a “national emergency,” said the report by anti-crime group SOS Impresa.

    Organised crime now generated annual turnover of about 140 billion euros ($178.89 billion) and profits of more than 100 billion euros, it added.

    “With 65 billion euros in liquidity, the Mafia is Italy’s number one bank,” said a statement from the group, which was set up in Palermo a decade ago to oppose extortion rackets against small business.

    Organised crime groups like the Sicilian Cosa Nostra, the Naples Camorra or the Calabrian ‘Ndrangheta have long had a stranglehold on the Italian economy, generating profits equivalent to about 7 percent of national output.

    Extortionate lending had become an increasingly sophisticated and lucrative source of income, alongside drug trafficking, arms smuggling, prostitution, gambling and racketeering, the report said.

    “The classic neighbourhood or street loan shark is on the way out, giving way to organised loan-sharking that is well connected with professional circles and operates with the connivance of high-level professionals,” the report said.

    It estimated about 200,000 businesses were tied to extortionate lenders and tens of thousands of jobs had been lost as a result.

    Extortion With A Clean Face

    Old style gangsters handing out cash in bars and pool halls had been replaced by apparently respectable bankers, lawyers or notaries, the report said.

    Small businesses, who have struggled to get hold of credit during the economic slowdown, may have been increasingly tempted to turn to the mafia, said the report.

    Typical victims of extortionate lending were middle-aged shopkeepers and small businessmen who would struggle to find a new job and who were ready to try anything to avoid bankruptcy, it added.

    And the line between the mafia and high finance gets a little blurrier (it’s really less a line and more a vague smudge at this point)…

    Posted by Pterrafractyl | January 12, 2012, 7:48 am
  2. Woah, Hopsicker had quite a bombshell in his recent update on the shooting of two US embassy officials by Mexican police officers. After being taken to the hospital, one of the shot Americans listed as his home address the very same address notoriously used as a secret prison by the CIA for extraordinary renditions. Plus some other stuff:

    Madcowprod.com
    American agents wounded in Mexico linked to CIA drug planes
    Posted on August 31, 2012 by Daniel Hopsicker

    In a violent incident whose explanation daily grows more murky the two “U.S. embassy officials” wounded by Mexican Federal Police officers in an attack outside Cuernavaca were revealed to be CIA agents by major Mexican news organizations earlier this week.

    What has remained undisclosed —until now —is ths: one of the agents is linked to the drug trafficking operation out of St Petersburg Florida in which two CIA-connected airplanes were seized—in separate incidents in 2006 and 2007—on Mexico’s Yucatan Peninsula carrying a total of ten tons of cocaine.

    The wounded agents connection to earlier CIA operations was first discovered by Mexico City newspaper La Jornada, which noted that one of the agents, after being taken to a hospital for treatment of his wounds, listed his home address as a Post Office Box in Dunn Loring, Virginia.

    In a major embarrassment for the CIA, that same address, incredibly, had earlier been used in a CIA operation that received maximum worldwide public exposure: the extraordinary rendition of Al Qaeda prisoners to secret prisons around the world, after the attacks of September 11, 2001, on a fleet of secretly-owned CIA airplanes.

    “Sloppy tradecraft” a continuing problem

    In the Mexican press, where the words “CIA” and “drug smuggling” occur together almost as often as “cookies” and “milk,’ the CIA’s failure to invest in a new P.O. Box as part of the two wounded agents ‘cover’ was viewed with some surprise.

    In fact, however, the gaffe, while extraordinary, was hardly unique.

    What intelligence circles call “sloppy tradecraft” was one of the hallmarks of the rendition-linked drug trafficking operation, which escaped becoming a major scandal in the US only through the efforts (or non-efforts, or collusion) of America’s major media.

    For example, one of the CIA planes frequently used in the rendition operation, a Gulfstream II (registration number N987SA) did double duty running drugs. It crashed with maximum publicity in the Yucatan in September of 2007, splitting apart and spilling 3.7 tons of cocaine across a rural area 30 miles from Merida, the Yucatan State capital.

    Even worse, the downed CIA drug plane shared interlocking ownership with a second American-registered plane from St Petersburg, FL, a DC-9, that had also made headlines in Mexico when it too was busted on the Yucatan Peninsula carrying a massive 5.5 tons of cocaine.

    Occuring almost back-to-back, the two well-publicized incidents proved to be a major turning point, and an investigation by the Mexican Attorrney General’s Office led to the discovery of a massive money laundering effort by major US banks.

    One result was the collapse and forced sale in 2008 of Wachovia Bank, then America’s 4th largest.

    Another has been playing out currently, as federal prosecutors contemplate unprecedented criminal sanctions against the world’s fifth largest bank, Great Britian’s HBSC, for its massive involvement in money laundering for Mexican drug cartels.

    Beltran-Leyva discover meaning of “cartel du jour”

    Contrary to initial assertions that it was an accident, last Friday’s attack on the American agents on a mountain road between Mexico City and Cuernavca was a well-planned ambush by a squad of as many as two dozen men from the Mexican Federal Police (PFP), in which they blocked the American’s SUV before unleashing a barrage of point-blank rounds directly into the vehicle.

    The two Americans, as well as a Captain in the Mexican Marines, the only force trusted by American officials, were traveling in a heavily-armored SUV, which saved their lives during the attack as the vehicle took hundreds of rounds fired at close range.

    A plausible reason for the attack, cited first by Mexico City newspaper Proceso, is that the men were hunting fugitive Mexican drug cartel kingpin Hector Beltran-Leyva, thought by security experts to be at large somewhere nearby.

    Yikes? So a CIA agent that appears to be related to the same group that worked on extraordinary rendition assignments using planes that would later be found in use by Mexican drug cartels just got ambushed by two dozen Mexican police officers in what appears to be a cartel-related hit. This sounds like the kind of stuff that the Department of Justice investigators looking into the CIA’s interrogation abuses might find interesting.

    Actually, probably, not.

    Posted by Pterrafractyl | September 2, 2012, 7:53 pm
  3. So it was all just optional?

    Chicago Tribune
    Most major loan servicers not complying with mortgage settlement

    By Mary Ellen Podmolik Tribune staff reporter

    2:20 p.m. CDT, June 19, 2013

    Four of the five largest mortgage servicers are failing to comply with key aspects of a national settlement designed to improve how struggling borrowers are treated, a report released Wednesday shows.

    The most egregious mistakes involved servicers failing to adhere to timelines set to decide on loan modification applications and other notifications sent to borrowers, according to a compliance report from the independent monitor of the national settlement. that was negotiated between the Obama administration, attorneys general and five companies in February 2012. As a result of the shortcomings found in the report, which government officials likened to a public report card some affected borrowers may receive financial compensation.

    The companies’ results were better during the second half of last year, before all 29 of the tests that measure performance on 304 mortgage servicing standards, were phased in. During the first three months of 2013, four companies self-reported violations, and the monitor is reviewing them.

    “While it is still early in the compliance monitoring process, it is clear to me the settlement has allowed us to uncover issues with the servicers’ activities that need to be rectified,” Joseph A. Smith Jr., the settlement’s independent monitor, said in a letter attached to his report.

    Bank of America told the monitor that during 2013’s first quarter, it failed to provide accurate information to homeowners in a letter that mortgage servicers are required to send to homeowners before initiating foreclosure proceedings. It also did not notify borrowers within five days of receiving a loan application modification if there were missing documents.

    JPMorgan Chase said in the first quarter it failed a test to follow the timeline for making a decision on a borrower’s loan modification application and telling the customer an application had been denied. Smith said he is considering requiring Chase to provide some financial relief to affected borrowers. Chase already refunded premiums to 2,000 borrowers for an earlier error related to forced-placed insurance coverage.

    CitiMortgage failed during 2012’s final quarter to notify borrowers promptly of missing documents in a loan modification application and because the mistake was widespread, Smith said any borrower harmed will be “appropriately compensated.” CitiMortgage also said that during the first three months of this year, it failed a test related to the letter sent to borrowers before a foreclosure action is filed against a borrower, and also did not notify borrowers within 30 days if there were missing documents connected with a short sale.

    Wells Fargo & Co. fell short in 2012’s fourth quarter of a requirement to notify borrowers of missing documents in a loan modification application within five days of receiving it, according to the report.

    Servicers who fail a test are required to devise a way to correct their practices. If they fail the same test within six months of seemingly correcting it, Smith can take enforcement action through the courts and seek penalties of up to $5 million.

    In a call with reporters, Shaun Donovan, secretary of the Department of Housing and Urban Development, said it was understood that the “deep and pervasive problems in servicing” were not going to be corrected in one year but the progress by banks to date is not enough.
    “This is unacceptable and today I want to send a simple message to these banks,” he said. “Today is time to live up to the deal.”

    Note that when Bank of America admitted to failing to provide accurate information to homeowners before initiating foreclosure proceeding there’s a lot more under that rock…

    Posted by Pterrafractyl | June 21, 2013, 6:57 am
  4. Well look at that: Wells Fargo, one of the big banks found guilty of setting up “robo-signing” operations to process foreclosures, often when borrowers weren’t behind on their mortgage at all, just laid off 5,300 employees. 5,300 employees who somehow got the impression that management was totally cool with them meeting their sales quotas by secretly opening and closing credit card and savings accounts in the name of unwitting customers. Now where did they get that idea?

    The New York Times

    Wells Fargo Fined for Fraudulently Opening Accounts for Customers

    By MICHAEL CORKERY
    SEPT. 8, 2016

    For years, Wells Fargo employees secretly issued credit cards without a customer’s consent. They created fake email accounts to sign up customers for online banking services. They set up sham accounts that customers learned about only after they started accumulating fees.

    On Thursday, these illegal banking practices cost Wells Fargo $185 million in fines, including a $100 million penalty from the Consumer Financial Protection Bureau, the largest such penalty the agency has issued.

    Federal banking regulators said the practices, which date back to 2011, reflected serious flaws in the internal culture and oversight at Wells Fargo, one of the nation’s largest banks. The bank has fired at least 5,300 employees who were involved.

    In all, Wells Fargo employees opened roughly 1.5 million bank accounts and applied for 565,000 credit cards that may not have been authorized by customers, the regulators said in a news conference. The bank has 40 million retail customers.

    Some customers noticed the deception when they were charged unexpected fees, received credit or debit cards in the mail that they did not request, or started hearing from debt collectors about accounts they did not recognize. But most of the sham accounts went unnoticed, as employees would routinely close them shortly after opening them. Wells has agreed to refund about $2.6 million in fees that may have been inappropriately charged.

    Wells Fargo is famous for its culture of cross-selling products to customers — routinely asking, say, a checking account holder if she would like to take out a credit card. Regulators said the bank’s employees had been motivated to open the unauthorized accounts by compensation policies that rewarded them for opening new accounts; many current and former Wells employees told regulators they had felt extreme pressure to open as many accounts as possible.

    “Unchecked incentives can lead to serious consumer harm, and that is what happened here,” said Richard Cordray, director of the Consumer Financial Protection Bureau.

    Wells said the employees who were terminated included managers and other workers. A bank spokeswoman declined to say whether any senior executives had been reprimanded or fired in the scandal.

    “Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request,” the bank said in a statement.

    One Wells customer in Northern California, Shahriar Jabbari, had seven additional accounts that he did not consent to, according to a lawsuit he filed against the bank last year in federal court.

    When Mr. Jabbari called the bank asking what he should do with three new debit cards he did not authorize, a bank employee told him to dispose of them, according to the lawsuit.

    Mr. Jabbari said in the lawsuit that his credit score had suffered because unpaid fees on the unauthorized accounts had been sent to a debt collector.

    Banking regulators said the widespread nature of the illegal behavior showed that the bank lacked the necessary controls and oversight of its employees. Ensuring that large banks have tight controls has been one of the central preoccupations of banking regulators after the mortgage crisis.

    Such pervasive problems at Wells Fargo, which has headquarters in San Francisco, stand out given all of the scrutiny that has been heaped on large, systemically important banks since 2008.

    “If the managers are saying, ‘We want growth; we don’t care how you get there,’ what do you expect those employees to do?” said Dan Amiram, an associate business professor at Columbia University.

    It is a particularly ugly moment for Wells, one of the few large American banks that have managed to produce consistent profit increases since the financial crisis. Wells has earned a reputation on Wall Street as a tightly run ship that avoided many of the missteps of the mortgage crisis because it took fewer risks than many of its competitors. At the same time, Wells has managed to be enormously profitable, as other large banks continued to stumble because of tighter regulations and a choppy economy.

    Analysts have marveled at the bank’s ability to cross-sell mortgages, credit cards and auto loans to customers. The strategy is at the core of modern-day banking: Rather than spend too much time and money recruiting new customers, sell existing customers on new products.

    Wells Fargo markets itself as the quintessential Main Street lender, stressing the value of creating long-term relationships with customers over earning a quick buck.

    But that apple-pie approach was undercut, regulators say, by a compensation program that encouraged employees to push the limits.

    “It is way out of character for one of the cleanest banks around,” said Mike Mayo, a banking analyst at CLSA. “It’s a head-scratcher why so many employees felt comfortable crossing the line.”

    In many cases, customers took notice only when they received a letter in the mail congratulating them on opening a new account.

    Many of the questionable accounts were created by moving a small amount of money from the customer’s current account to open the new one.

    Shortly after opening the sham account, the bank employee closed it down and moved the money back, according to regulators.

    But Wells employees were still most likely able to get credit for opening new accounts in meeting their sales goals, the regulators said.

    In addition to the fine from the consumer protection bureau, Wells paid $35 million to the Office of the Comptroller of the Currency and $50 million to the City and County of Los Angeles. The Los Angeles city attorney worked with banking regulators on the case.

    Even regulators concede that the financial harm to consumers was not large. But the more troubling aspect, they said, was how the behavior reflected a broader culture inside Wells’s retail operations.

    “Consumers must be able to trust their banks,” said Mike Feuer, the Los Angeles city attorney. “Consumers must never be taken advantage of by their banks.”

    Wells said the employees who were terminated included managers and other workers. A bank spokeswoman declined to say whether any senior executives had been reprimanded or fired in the scandal.

    LOL! Yeah, those senior executives must be super scared.

    At the same time, considering that Well Fargo was basically scamming itself into paying its sales staff more bonuses, it’s going to be really interesting to learn why exactly a senior executive would have wanted to create the kind of corporate culture where this kind of scam was basically expected. Wells Fargo clearly has a corporate culture that endorsed ‘anything goes’ behavior when it came to making the bank money. But in this case we had temporary accounts created, small amounts of money transferred to those accounts, then the money was transferred back and the account was closed. So what was the incentive for the bank’s bottom line here? Was the bank earning extra money from the credit card companies for opening all those accounts? Is this a way to pay the sales staff a livable wage without actually giving them raise? Or maybe all these temporary accounts with small sums of cash transferred back and forth part of some sort of internal money-laundering scheme? What’s the incentive here?

    If it turns out senior executives knew about this, and it certainly looks extremely possible given the bank’s recent history, it’s going to be very interesting to hear their explanation for why this was tolerated. Of course, since this is a major bank we’re talking about here, and major banks almost never admit wrongdoing even when they’re forced to pay a fine, there’s a good chance the ultimate motive here is going to remain a bit of a mystery, in which case we can add this to the ever-growing mystery of why the public agrees to allow the financial giants to mysteriously get away with just about everything.

    But hey, at least we can celebrate one nice aspect of this story: The Consumer Financial Protection Bureau, one of the most promising new safeguards to emerge after the financial crisis, seems to be actually protecting consumers. So that’s at least a somewhat comforting.

    Don’t get too comfortable.

    Posted by Pterrafractyl | September 8, 2016, 8:24 pm

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