Wells Fargo fires 5,300 employees for opening 2M fake accounts in customers' names

Originally published at: http://boingboing.net/2016/09/09/wells-fargo-fires-5300-employ.html


Only 400 per head? I expected more from our trusted banksters.

Very much this. And the US has one of the more harsh penalty systems for fraud in the financial industry.


How do you get 5,300 employees all simultaneously running the same con without any organization or management?

ETA: Never mind, I just found what I was looking for–

The bank has agreed to pay $2.6 million to refund fees that were charged, according to the Times. Bank managers were among those who were fired for their involvement in the scheme, but a company spokesperson declined to tell the Times whether any senior-level executives were fired or implicated.


We had over $8600 taken out of our checking account so I did a long look at WF and asked a lot of security questions. For example, they store their customer’s password rather than a salted hash of password (ie they should store a token generated by the password rather than the password itself). Every reply from them was basically “well, don’t worry about it because our policies protect you from any fraud liability”.

Maybe a few more incidents like this and they will start listening to their internal security experts. I bet there are a lot of internal folks laughing their ass off about this.


Oh good, I’m sure the authorities will follow this right to the top and some wealthy and powerful bankers will be jailed, as is usual in fraud cases. It must suck to be a banker, eh?


Considering the scale of this outrage and the size of WF, a 9-digit fine is probably a reasonable cost of doing business. 5300 employees sacked? That’s downsizing. I wonder how many people (if any) will be hired to replace them. I doubt any WF execs are going to be crying themselves to sleep tonight - if they play this right, they will get big year-end bonuses for increased profitability and shareholder value.


Goodhart’s law in action.

When the employees are given incentives to sell services and make money for the bank, they’re going to twist the numbers so that it looks like they’re selling services and making money for the bank.


5,300 employees
2 million phony bank accounts
reimbursing known victims to the tune of $5M
The bank is paying a $185M fine

Something here doesn’t foot. The employees went to all this trouble to screw the customers out of $2.50 each. Each crooked employee did this for an average of 375 accounts. Very strange.


265k total employees. But how many of them were actually in a position to be opening accounts for these incentives?


I would guess somewhere ~5,300.


I guaran-damn-tee they were pumping the numbers used for the quarterly/mid-year/yearly reviews and ability assessments in order to get promotions and increases in salary. Beyond any commission made by screwing people with unnecessary accounts, the bank has been leaning on these earnings numbers meaning employees probably had secret target numbers to hit set by management.


Theres also the scam from a stainless steel rat is born.

What man can code or lock, man can decode and unlock. Without leaving any trace. I will give you some examples. Let us begin with the rounding-ofi’ caper, also called the salami. Here is how it works. Let us say that you have 8,000 bucks in the bank, in a savings account that earns eight percent a year. Your bank compounds your account weekly in order to get your business. Which means at the end of the first week your bank multiplies your balance by . 0015384 percent and adds this sum to your balance. Your balance has increased by 12. 30 bucks. Is that correct? Check it on your calculator. “ I punched away at the sum and came up with the same answer. “Exactly twelve bucks and thirty centimes interest,” I said proudly.
“Wrong,” he said deflatingly. “The interest was 12. 3072, wasn’t it?” “Well, yes, but you can’t add seventy-two-hundredths of a centime to someone’s account, can you?” “Not easily, since financial accounts are kept to two decimal places. Yet it is at this precise moment in the calculations that the bank has a choice. It can round all decimals above . 005 up to the nearest centime, all those below . 0049 down to zero. At the epd of a day’s trading the rounding-ups and rounding-downs will average out very close to zero so the bank will not be out of pocket. Or, and this is the accepted practice, the bank can throw away all decimal places after the first two, thereby making a small but consistent profit. Small on banking terms-but very large as far as an individual is concerned. If the bank’s computer is rigged so that all the rounding-downs are deposited to a single account, why at the end of the day the computer will show the correct balance in the bank’s account and in the client’s accounts. Everyone will be quite pleased.” I was punching like fury into my calculator, then chuckled with glee at the results. “Exactly so. All are pleased – including the holder of that account that now holds the round-downs. For if only a half a centime is whipped from ten-thousand accounts, the profit is a round fifty bucks!” “Exactly. But a large bank will have a hundred times that number of accounts. Which is, as I know from happy experience, a weekly income of five-thousand bucks for whoever sets up this seam.”


That’s what I estimate they lose naturally every month. (assuming employees stay an average of 5 years at the job)


Looks like that one was published just a couple years after Superman 3.


If you haven’t read them definately worth a look.


Don’t forget that all of their bonuses were “clawed-back” and returned to shareholders.


Science fiction discussion goes here.


According to WF, this behavior doesn’t fit the company’s values.

And what? The subprime mortgage meltdown, steering the poor and people of color towards bad loans, and accepting huge bailouts for horrible business practices does?