Wells Fargo Preyed on Natives, Elderly and College Students
Wells Fargo has been at the center of a scandal for creating millions of unnecessary and sometimes unwanted accounts since 2011. Some Indians were targeted. Several investigations continue and the Senate Banking Committee has served the bank with 58 questions, including what proportion of the victimized persons were elders, veterans or minorities?
Reporting in The New York Times detailed how Wells Fargo targeted the most vulnerable—quoting a former employee that it was “Lions hunting zebras”—and discovered one bank location that had zeroed in on Indians.
People from the Salt River Pima-Maricopa Indian Community were attractive prey because of their quarterly per capita distributions. One Wells Fargo branch manager created “per capita day packages” with everything his employees needed to hoodwink an Indian who just wanted to cash a check into opening five accounts and sometimes even more.
According to Forbes, Wells Fargo CEO John Stumpf indoctrinated the bank’s employees with the slogan “Eight is great!” Each customer should end up with eight Wells Fargo products.
The basis for the scam was convincing the Indians that they needed separate accounts to keep track of different kinds of expenditures. Going from being what the bankers call “un-banked” to having several accounts overnight caused understandable confusion.
Ricky Hansen, a former manager of a Wells Fargo branch in Scottsdale, told the Times “[The Indians] would use the wrong debit card and overdraw their travel account, and then when they came back three months later, they would lose hundreds of dollars from their next check paying off those fees.”
Indians were not the only prey. Wells Fargo employees, under pressure from management to open new accounts, took in elders with memory problems, immigrants with English language problems, and college students who signed blank applications the bankers promised to complete later. They were stealing from vulnerable populations that did not have that much money available for stealing.
According to CNN Money, a consulting firm report to Wells Fargo management concluded that bank employees opened over 1.5 million bogus accounts and 565,443 credit card applications were submitted for people who did not ask for them. Some of those unwanted accounts incurred annual fees and overdraft protection fees. Others incurred overdraft penalties when the account the customer actually knew about became overdrawn because of diversion of funds to the fake accounts. According to Forbes, Wells Fargo raked in some $2.6 million in fees from accounts that ought not to have existed.
The Consumer Financial Protection Bureau, an Obama Administration creation in 2011 (over the objections of Congressional Republicans and an issue in this year’s election), hit Wells Fargo with $185 million in fines, in addition to requiring it to pay back $5 million stolen from customers.
Wells Fargo told CNN Money it has fired 5,300 employees in connection with the scandal. On September 20, Stumpf testified before the Senate Banking Committee and got raked by Sen. Elizabeth Warren (D-Mass) on National Public Radio. She told him, “You should resign…and you should be criminally investigated.”
Stumpf’s compensation in 2015 was $19.3 million, but Warren pointed out he also held 6.75 million shares of Wells Fargo—shares that went up about $30 while he was pushing the sales quotas that spurred the scandal. That would mean he made over $200 million.
Warren went ballistic:
Here's what really gets me about this, Mr. Stumpf. If one of your tellers took a handful of $20 bills out of the cash drawer, they'd probably be looking at criminal charges for theft. They could end up in prison.
But you squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket.
And when it all blew up, you kept your job, you kept your multi-multimillion-dollar bonuses, and you went on television to blame thousands of $12-an-hour employees who were just trying to meet cross-sell quotas that made you rich.
On October 12, Stumpf resigned and according to Bloomberg agreed to forego $41 million worth of stock options “and some of his salary.” Wells Fargo stock, which had fallen 17 percent since the scandal broke, began to bounce back.
Stumpf’s successor, Tim Sloan, told Bloomberg, “He wasn’t fired” or even “gently pushed” by the Wells Fargo board.
Wells Fargo was born in 1852, when the California gold rush and the genocide of California Indians were going on their related paths. It opened operations in Arizona Territory in 1861. In the 21st century, Wells Fargo is the second most common mortgage lender for American Indians and Alaska Natives, having just lost the top spot to Quicken.
The agencies looking into the Wells Fargo fake accounts scandal have not yet finished their work, but it looks safe to say that the next time the Salt River Pima-Maricopa Indian Community declares a per capita payment, Wells Fargo will still be available to “help.”
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