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Posts Tagged ‘Wells Fargo’

Sen. Warren Accuses Wells Fargo Chief of “Gutless Leadership”

Posted by Steve Markowitz on September 22, 2016

Earlier this month Wells Fargo admitted that its employees created thousands of bogus credit card accounts to meet sales goals.  This led to bonuses for many employees including high level ones.  Wells Fargo fired over 5,000 employees for their involvement in the scandal.

The Wells Fargo scandal is inexcusable and heads should roll at the bank’s highest levels.  At the same time it is amusing to read Elizabeth Warren’s scolding of Wells Fargo’s CEO John Stumpf’s “gutless leadership” for his pushing responsibility for the scandal onto lower-level employees.  As an associate said of Warren’s double standard:

“I’m not defending this guy by any means, but I wonder if Elizabeth Warren told Hillary she is a gutless leader when she blamed her email issues and subsequent attempts at cover-up on her low-level employees.  Something tells me I already know the answer…. “

Wells Fargo Chief Accused of ‘Gutless Leadership’
The chief of Wells Fargo, John G. Stumpf, appeared before the Senate Banking Committee. He apologized. He expressed regret. He vowed to make amends.
But the senators were not having any of it. And the more he tried to explain, the more skeptical they became.
Senator Elizabeth Warren even suggested he resign, saying that his pushing responsibility onto low-level employees showed a “gutless leadership.” On the issue of clawing back pay, Mr. Stumpf said it was a process that he could not get involved in.
And this is not the end of it — Wells Fargo is under fire from multiple directions:
• Mr. Stumpf has been invited to testify before the House Financial Services Committee, which is also investigating Wells Fargo.
• Prosecutors are examining the scandal.
• The Securities and Exchange Commission has been invited to join the fray by Senator Jeff Merkley, Democrat of Oregon.

Posted in Banks, Politics | Tagged: , , , , , | Leave a Comment »

US Banks’ Earnings Significantly Up

Posted by Steve Markowitz on November 22, 2011

Federal Deposit Insurance Corporation (FDIC) released a report on U.S. banks earnings that indicates overall profit levels are the highest they have been in four years.  While the  government may trumpet this as a sign that their interventions and bailouts have succeeded, a broader look says otherwise.  Here are some of the figures released:

  • The banking industry earned $35 billion in the last quarter, up from $24 billion in last year’s Q3.
  • The FDIC currently considers about 11% of U.S. banks as financially problematic, marginally down for the same period last year.
  • The very large banks made the bulk of the earnings increase.
  • These very large banks accounted for about $30 billion of the industry’s $35 billion in earnings for the third quarter.

The FDIC’s fugues are telling and indicate that the very large banks like Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, the very banks bailed out by the U.S. taxpayers, are now making most of the banking profits.  In addition, these banks are not making the profits by lending money in the quantity needed, but rather by taking nearly interest free money from the government and then loaning that money back to the government at a huge profit.  Ludicrous.

It has become evident through hindsight that the bailouts of the large banks benefited the banks themselves, not the overall economy.  A question remaining is whether the bailouts were the result of mistaken policy or the government’s purposeful attempt to assist fellow elitists in the banking industry.

Posted in Bailouts, Banks | Tagged: , , , , , , , | Leave a Comment »

Moody’s Again Threatening U.S. Credit Rating

Posted by Steve Markowitz on June 5, 2011

Moody’s Investors Service (Moody’s) last week indicated it may reconsider America’s debt rating next month, which currently stands at a pristine Aaa rating, for a possible downgrade.  Their stated concern is America’s huge $14 trillion dollar federal debt and the Country’s need to barrow more via raising the current debt ceiling.

Treasury Secretary Tim Geithner gave an optimistic view of negotiations between the White House and Congress on increasing the ceiling stating:  “I am confident two things are going to happen this summer.  We’re going to avoid a default crisis, and we’re going to reach agreement on a long-term fiscal plan.”  While Geithner’s view is likely pervasive in Washington, let us not forget that this same financial genius didn’t even know how to properly calculate his personal Federal tax bill.

Moody’s has had challenges properly evaluating debt in the past.  Only a few days before the cataclysmic financial meltdown of 2008, this firm rated many bonds based on the housing market (i.e. mortgages) as Aaa quality.  While Moody’s is currently focusing on the potential for political gridlock in Washington, the real problem is the exploding U.S federal debt, not negotiations to raise the debt ceiling, as the chart shows.

Adding insult to injury, last week another division of Moody’s made negative comments relating American’s biggest banks ratings.  Their concern is that the new financial regulations included in the Dodd-Frank FinReg bill may make it more difficult for the government to rescue of the large banks, should there be a future systemic meltdown in the financials system.

The backs mentioned in Moody’s warning are Bank of America, Wells Fargo, Citigroup, Goldman Sachs, J.P. Morgan, Morgan Stanley, Bank of New York Mellon and State Street Corporation.

Investors and politicians would do well to look beyond Moody’s warnings that focus and rely on governmental bailouts for the banks to receive high ratings.  Governments change the rules with political winds.  In addition, banks that were deemed too big to fail in 2008 are even larger today.  That offers their managers comfort, real or not, that the government will not allow them to fail in the future.  That belief will lead to riskier behavior on the banks part and more danger in the future for investors.

Posted in Bailouts, Banks, Debt, Deficits | Tagged: , , , , , , , , , , , , , , , | Leave a Comment »