Jim Hardy would be ashamed.

quote:

Originally posted by rocket72:

quote:

Originally posted by Rey HRH:
Millions of fake accounts. These fake accounts has to be seeded with money, right? Otherwise, what's the point of having a fake account on your books.

How much a bank can loan out depends on how much money they keep on the books which is tied proportionately to how many accounts and how much deposits are in those accounts. The more a bank can loan out, the more money they make.

How come the feds are not investigating this as a crime against the banking regulations / federal reserve requirements?

Loaning money is in no way shape or form tied proportionally to the number of accounts.

Banks lend, and by lend, I mean create money through fractional reserve lending

Those fake accounts probably cost the bank money. It sounds like the branch people were getting credit for the accounts open regardless of the quality. They would take Account A and transfer whatever the minimum amount to receive credit ($25 or whatever) to newly created Account B. Then they either moved the money back to Account A after they received credit or they let the account kill itself in fees. This scheme just benefitted the people that were counting tick marks for new accounts opened.

I understand how banks create money; it's based on the money they keep in house which is regulated by Federal Reserve Requirements. That's what I said in my second bolded statement. All other things being the same, the more accounts a bank has, proportionately, the more money a bank has in deposits and the more money they can keep in house and the more money they can loan out. I understand a bank may have only 10 accounts and have more money on deposit than the bank down the street with 1,000 accounts hence I said "all other things being the same."

If all the miscreants did was split money into separate accounts, I would be surprised how the account holders wouldn't recognize how their balances changed.

On-line version of Wells Fargo class action notification.

"If you believe Wells Fargo opened a checking, savings, credit card, or line of credit account for you without your permission, or if you purchased identity theft protection from us, you may be entitled to compensation from this fund."

How would I know if they opened an account without my permission?

quote:

Originally posted by kimber1911:
On-line version of Wells Fargo class action notification.

"If you believe Wells Fargo opened a checking, savings, credit card, or line of credit account for you without your permission, or if you purchased identity theft protection from us, you may be entitled to compensation from this fund."

How would I know if they opened an account without my permission?

Check your credit reports?

quote:

Originally posted by kimber1911:
On-line version of Wells Fargo class action notification.

"If you believe Wells Fargo opened a checking, savings, credit card, or line of credit account for you without your permission, or if you purchased identity theft protection from us, you may be entitled to compensation from this fund."

How would I know if they opened an account without my permission?

If you are a customer, or have ever been, what's to stop them? They have all the info in the database.

My impression is that the branch banking overseer required regional and branch managers to meet quotas for new accounts, deposits with incentives, positive and negative, without an effective way to know how they were doing so.

quote:

Originally posted by JALLEN:
My impression is that the branch banking overseer required regional and branch managers to meet quotas for new accounts, deposits with incentives, positive and negative, without an effective way to know how they were doing so.

That's it exactly.

Most of these large banks have very aggressive quotas that they hold managers accountable for. I've seen it in a small town where a large bank had a branch - they were literally signing up homeless people if they had a valid ID. If they didn't meet quota they were fired. Stupid, stupid policy - clueless management.

Wells Fargo eliminates sales quotas after unauthorized accounts scandal

quote:

Originally posted by BamaJeepster:

quote:

Originally posted by JALLEN:
My impression is that the branch banking overseer required regional and branch managers to meet quotas for new accounts, deposits with incentives, positive and negative, without an effective way to know how they were doing so.

That's it exactly.

Most of these large banks have very aggressive quotas that they hold managers accountable for. I've seen it in a small town where a large bank had a branch - they were literally signing up homeless people if they had a valid ID. If they didn't meet quota they were fired. Stupid, stupid policy - clueless management.

Wells Fargo eliminates sales quotas after unauthorized accounts scandal

When you establish incentives for performance, somebody had better think it through that the incentive works the way you expect and doesn't set up what insurers delicately term "moral hazards."

Wells Fargo bought out First Union where I had my house mortgage. Luckily I had paid it off before the buy out. I use to go in First Union and cash a money order or have something notarized...no problem and the people were always friendly.

Go in there now and you think you are in third world country and they won't even notarize a document. No smiles or hello...I wonder how they stay in business. They probably even sold off the stage coach and horses.

Washington Mutual had a series of ads staring the "Rodeo Grandmas."
In one, the ladies stop a red stagecoach. They find the stagecoach empty and ask the drivers what their business is. One explains that they come up from California empty, fill up with gold then haul it back to California.
Asks one lady "What are you robbers?" He answers "No madmen, we're bankers."

quote:

Originally posted by HKAngusKL:
How did their BSA/AML compliance folks miss this volume of unusual activity? It is not typical for customers to move funds from account to account in that fashion. And KYC profiles would need to have been created for each of those accounts by the relationship manager.

The Wells Fargo BSA department had to have been ignoring the issue, because there is no way on earth their BSA compliance team missed irregularities that glaring. In fact, the Wells Fargo transaction monitoring systems likely have records of alerts generated for fund circulation/transaction velocity spikes.

Makes you wonder if any on the aml teams actually passed the acams

I am about to lose confidence in Wells Fargo.

quote:

Originally posted by Icabod:
Washington Mutual had a series of ads staring the "Rodeo Grandmas."
In one, the ladies stop a red stagecoach. They find the stagecoach empty and ask the drivers what their business is. One explains that they come up from California empty, fill up with gold then haul it back to California.
Asks one lady "What are you robbers?" He answers "No madmen, we're bankers."

Washington Mutual was actually worse than Wells Fargo. It seems impossible but was.

The front operations of a bank, pleasant offices, friendly tellers, etc. mean squat. It is the back office operations that determine bank success, or failure. WaMu was very aggressively acquiring portfolios of subprime lenders and mortgage loan servicing, so rapidly that they didn't get one batch of loans in their system before the next huge batch was acquired, and pretty soon, they lost control of the portfolio, with no idea what payments went with what loans, which pay offs, etc. Think Lucy and Ethel here.

quote:

Originally posted by JALLEN:

quote:

Originally posted by kimber1911:
On-line version of Wells Fargo class action notification.

"If you believe Wells Fargo opened a checking, savings, credit card, or line of credit account for you without your permission, or if you purchased identity theft protection from us, you may be entitled to compensation from this fund."

How would I know if they opened an account without my permission?

If you are a customer, or have ever been, what's to stop them? They have all the info in the database.

My impression is that the branch banking overseer required regional and branch managers to meet quotas for new accounts, deposits with incentives, positive and negative, without an effective way to know how they were doing so.

JALLEN,

What most people do not realize is that in modern banking, there are databases containing account transaction information for every bank account. There are also highly specialized transaction monitoring systems that analyze every transaction to see if pre-set rules are violated.

For example, if a customer deposits $1,001.00 in cash in 10 different accounts where they are a signor, an alert for cash activity gets generated for the customer's accounts because aggregate cash activity is greater than $10,000 within a single business day. A CTR must also be filed with FinCEN. (Financial Crimes Enforcement Network).

The alerts that are generated have to be reviewed by BSA analyst and cleared with a narrative written explaining what happened (or why the transaction is OK). If the activity is suspicious, a SAR gets written and uploaded to FINCEN.

To make a long story short, when account funds are moved from one account into a new account, there would have been transactions recorded and alerts generated. Every transaction monitoring system has rules for transaction velocity and transaction volume. The circulation of customer funds from account to account undoubtedly created alerts that had to have been cleared by compliance analysts.

If I saw regular patterns of account closure and new account creation, I sure as heck would have been making calls to the RMs and asking about that activity. There is also nothing that an RM could make up that would explain why almost all of his clients were circulating funds to multiple accounts.

If federal regulators set up shop at Wells Fargo (like I see them do at regional banks all the time), the scandal would likely be even larger than it already is.

Wells Fargo has spun this as being the result of rogue relationship managers who were looking to get bonuses. The honest truth is, the BSA officers were also likely aware of the scheme very early on, and nothing was done about it. The scandal goes higher up the food chain than Wells Fargo has claimed.