Incredibly, Wells Fargo Fraud Is Even More Massive Than Previouly Believed

I can't let the weekend go by without mentioning that Wells Fargo, my favorite criminal Wall Street enterprise, has "discovered" an addition 1.4 million bogus accounts set up by its employees in order to meet unrealistic sales goals and receive additional bonuses. This brings the total of fraudulent accounts the bank has set up to 3.5 million. That's 3.5 million cases of individual fraud and 3.5 million cases of probable anti-money laundering violations. That also comes to a two-thirds increase in the number of fraudulent accounts from the company's initial admission. The mob would be proud.

What is shocking about this new revelation is that it is clear there are millions more fraudulent accounts yet to be found. The investigation that uncovered these additional accounts only goes back to 2009, yet the bank has already admitted that the fraudulent practices extend as far back as 2002. The latest investigation used a more sophisticated method for uncovering these accounts but only extended the period covered in the initial investigation by two years, indicating that the bank could have been setting up more than a half million bogus accounts every year. Extend that back another seven years, and it is possible the actual number of fraudulent accounts could nearly be triple the 3.5 million already uncovered.

So far, the bank has been fined only $185 million for these abuses although there are ongoing court actions in multiple states. CEO John Stumpf was able to retire with a significant, but reduced, payout package and a few other senior executives have been forced out with similar deals. As usual, there are no criminal proceedings against any Wells Fargo executives.

In a true twist of irony that is all too common in Trump world, the same day these new fraudulent Wells Fargo accounts were announced, the NY Times had a full on expose about the Republicans attempts to oust Richard Cordray and decimate the Consumer Financial Protection Bureau (CFPB) that he heads. Of course, the CFPB is the agency that was specifically designed to protect consumers from these kind of financial abuses and the CFPB, along with the OCC, uncovered these fraudulent accounts and brought Wells Fargo to account in the first place. In addition, the agency has been focused on eliminating forced arbitration, allowing class action suits by customers defrauded by the financial industry, restraining the abuses of the payday lenders, and has clawed back at least $12 billion for 29 million consumers from these rogue financial firms.

All this has made the agency and Mr. Cordray a target for the financial industry and it cronies in the Republican party. The attitude towards the agency was best illustrated  by Republican Jeb Hensarling, the chairman of the House Financial Services Committee, who said. "This latest revelation of customer abuse is further evidence of catastrophic mismanagement at the bank [Wells Fargo]. Regrettably, the CFPB’s failure to provide documents the committee subpoenaed is slowing progress on our investigation." Yes, the evidence of fraud and a massive criminal enterprise is overwhelming. But Hensarling's real regret is the CFPB. Why the Oracle of Omaha continues to be associated with this mafia business is beyond me. But it certainly highlights the already questionable reputation that Buffet and Berkshire Hathaway have for well managed companies.

Meanwhile, no one except those low-level employees who were either fired for not meeting their unreasonable quotas or being actual whistleblowers will pay any real price for Wells Fargo's illegal behavior. Until a senior executive spends some real time in jail, not even the CFPB will be able to change the overall behavior of the financial industry.