Attestation Update – A&A for CPAs

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Posts Tagged ‘bank fiascos

Wells Fargo update.

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Instructions on how to seal a bag of gold and gold dust for shipping, from the days when Wells Fargo was the gold standard of integrity. Photo by James Ulvog.

There are still a few enforcement actions ongoing over the Wells Fargo fake account fiasco, primarily individual cases against senior officials from a few agencies who haven’t previously settled the charges.

11/13/20 – Wall Street Journal – Wells Fargo Ex-CEO Settles SEC Claims, Former Consumer-Unit Head Faces Fraud Case –  The former CEO settled up with the SEC, agreeing to pay a $2.5 penalty for his role in the fake account scandal. As is typical, he neither admitted nor denied the claims.

Article reminds us he previously paid $17.5M penalty to OCC and was also banned from working in the banking industry.

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Written by Jim Ulvog

November 14, 2020, 10:06 am at 10:06 am

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Recap of fines for major banking fiascos.

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Image doing that to seventy billion dollars. Intentionally. Image courtesy of Adobe Stock.

It is so sad to say, but a reality never-the-less, there are so many major banking fiascos with such a wide range of willing participants that it is impossible to keep straight the players and disasters and fines based just on memory.

So, that means I have a spreadsheet to track the willful disasters I’ve been following.

My tally does not include all the billions of dollars paid to settle mortgage issues arising from the Great Recession. That is another massive set of disasters all by itself.

Here is my running tally of the amount of stockholder equity wasted for a range of different debacles. Amounts in millions of dollars:

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Written by Jim Ulvog

October 26, 2020, 7:00 am at 7:00 am

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Yet another banking fiasco. This time Goldman Sachs

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Image courtesy of Adobe Stock.

There is a long list of banking scandals in the last decade or so with a long list of banks choosing to play in each of the fiascos.  Plenty of banks have joined multiple schemes.

The time I’ve allocated to watching the apparently unending disasters has been concentrated on the money laundering and interest rate / exchange rate / pricing manipulation messes, along with the unending variations of cheat-your-customer plans at Wells Fargo.

Until now I’ve not been focused on the bribery disaster involving 1MDB’s shenanigans in Malaysia. If you’ve not tuned in, you can categorize this mess in the international corruption and bribery sector of bank fiascos.

Goldman Sachs was apparently full-in with the bribes and corruption. Wall Street Journal on 10/22/20 summarizes the mess:  Goldman Pays Billions – And Takes Millions From Top Execs – To End 1MDB Scandal.

On 10/23/20 Goldman settled up with the U.S. and several other national governments. The bank agreed to clawback $174M from several executives.

They also admitted breaking U.S. corruption laws, specifically with a plea of guilty to charges of conspiring to violate antibribery laws. To keep the parent company in business it was actually a subsidiary of Goldman who entered a guilty plea. Only two executives have been hit with criminal charges.

The feds say billions were stolen from 1MDB and bribes aggregating $1.6B were paid to various government officials around the world.

Financial penalties paid by Goldman:

  • $2.9B – US Department of Justice and other regulators around the world
  • $2.5B – government of Malaysia
  • $0.154B – Federal Reserve Bank
  • $5.545B – total of above

From browsing headlines it looks like there are a few other fines but those are in the mere $50M or so range. Chump change for the big banks.

So, five and a half billion dollars of stockholder money burned by bribery and corruption. The irritated populists will loudly remind us that only two executives, merely two, have drawn criminal charges in the U.S.

Written by Jim Ulvog

October 23, 2020, 11:51 am at 11:51 am

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More updates on major bank fiascos. Another billion here. Three billion there.

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Painting on side of Concord stage coach at the Wells Fargo museum in San Diego. Photo by James Ulvog.

It has been a long time since I did an update on the money wasted by major banks in violating sundry laws and regulations. Last update was all the way back in February.

Today’s news about JPMorgan throwing away another billion can got me to thinking about what other biggies have been in the news.

9/29/20 – Wall Street Journal – JPMorgan Paying $920 Million to Resolve Market And Pollution Probes – These fiascoes keep showing me the creative brilliance of crooks.

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Written by Jim Ulvog

September 30, 2020, 7:00 am at 7:00 am

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Additional penalties for Wells Fargo and former executives over the fake-account fiasco.

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Concord coach, from the days when Wells Fargo was the undisputed gold standard of honesty and integrity. Photo at Wells Fargo’s San Diego museum by James Ulvog.

The wheels of justice grind slowly, but grind they do.

Wells Fargo agreed to pay the feds three billion dollars for the fake account fiasco. Actually, the board agreed to hand over stockholder’s money.

Also, the feds (specifically OCC) laid sanctions on seven former executives of the bank for their role in the fake account mess.

2/21/20 – Wall Street Journal – Wells Fargo Reaches Settlement With Government Over Fake-Accounts Scandal.  To settle with the SEC and U.S. Department of Justice for the fake-account fiasco, the bank will pay $3 billion.

For those keeping score at home of bank disasters (like me) this settlement is only with the SEC and DoJ and only for the fake account scandal.

The bank also accepted a deferred prosecution agreement and will continue cooperating with the feds over the fake-accounts mess for another three years.

Running total of fines and penalties

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Written by Jim Ulvog

February 22, 2020, 9:13 am at 9:13 am

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Updates on the wide range of fiascos at Wells Fargo

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Concord stage coach, from the days when Wells Fargo was the gold standard of honesty and integrity. Photo at Wells Fargo’s San Diego museum by James Ulvog.

Range of issues in Wells Fargo have grown in the time since I last described their internal disasters.

Here is an overview of the last two years:

Some money returning to Wells

3/1/19 – Reuters – Wells Fargo officials enter $240 million settlement over bogus accounts – Article says the insurance companies representing 20 Wells execs and directors (tally includes current and former staffing) have reached a settlement to pay the bank $240M collectively. This is compensation for the damage caused by the fake account fiasco.

Plaintiff lawyers assert this is the largest derivative lawsuit settlement in the U.S. Article does not say what cut the lawyers get.

Additional settlements and new fiascos

12/28/18 – Wall Street Journal – Wells Fargo to Pay States About $575 Million to Settle Customer Harm Claims – Settlement with 50 states plus District of Columbia is for the fake account, improper auto loan fees, and improper mortgage & life insurance ad-on fees.

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Written by Jim Ulvog

January 3, 2020, 7:00 am at 7:00 am

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Getting caught up on the cost of big bank fiascos – part 2

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Interior of Concord stage coach, Three people sat on each of the two benches round the clock, for many days, getting out to stretch their legs and grab a bite to eat only during a swap of horses. Photo at Wells Fargo’s San Diego museum by James Ulvog.

Previous post mentioned I’ve fallen far behind on covering the fines and penalties on the big banks for their massive fiascos.

Here is a list of some messes happening since I was last discussing their messes:

11/19/18 – Reuters – Société Generale to pay $1.4 billion to settle cases in the US – French bank agreed to $1.34B fine for laundering money to Cuba and other countries on the prohibited list. Paid an additional $95M other anti-money laundering violations.

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Written by Jim Ulvog

December 20, 2019, 7:20 am at 7:20 am

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Getting caught up on the cost of big bank fiascos – part 1

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Close up of stage coach. Strong box would be stored behind driver’s feet. Photo at Wells Fargo’s San Diego museum by James Ulvog.

For well over a year and a half lots of life has been happening to me. Have had to set priorities on what I can and cannot do, which means I’ve not been focusing on the ongoing fiascos and foolishness and waste as the big banks get caught with a never ending list of laws they have violated in stupendously spectacular ways.

Yet another in a string of money laundering settlements hit the news yesterday which drew my attention. So, I’ll try to do a little catch-up on the billions of stockholder dollars the big money banks have been continually throwing on the bonfire over the last two years.

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Written by Jim Ulvog

December 11, 2019, 9:49 am at 9:49 am

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Fed imposes stiff sanctions on Wells Fargo

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Photo at Wells Fargo San Diego museum in January 2018 by James Ulvog.

The Federal Reserve will prohibit Wells Fargo from growing in size past its $1.95 trillion asset base in place as of 12/31/17. That means any gains from new deposits must be offset by selling off other assets and liquidating some liabilities.

In addition, the bank will be replacing three directors by April who previously announced their retirement and replacing another director by December 2018.

Article at Wall Street Journal by Ryan Tracy and Emily Glazer, Wells Fargo’s Growth Will Be Limited, Directors to Be Replaced After Fed Cites “Abuses”, provides more details.

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Written by Jim Ulvog

February 5, 2018, 7:21 am at 7:21 am

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Wells Fargo staying in the headlines.

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Photo at Wells Fargo San Diego museum in October 2016 by James Ulvog.

When I look at the news about Wells Fargo over the last few months, it is amazing to see the number of individual messes the bank has and the amount of time it is taking to get past the issues. Also odd is that new issues are surfacing every month or two. Here are a few articles that I notices in the last month:

8/15/17 – Emily Glazer at Wall Street Journal – Wells Fargo Elevates Former Fed Governor Elizabeth Duke to Chairman Role – As was previously expected (and reported by Ms. Glazer), the bank will replace its current board chair with the former Federal Reserve governor.  This is not as big a deal as it would otherwise seem. The current board chair would have hit the bank’s mandatory retirement age four months later anyway.

8/18 – Reuters – Wells Fargo troubles shift from phony bank accounts to real ones – The bank disclosed yet another problem in regulatory filings, explaining the Consumer Financial Protection Bureau is looking at the bank improperly closing real accounts.

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Written by Jim Ulvog

September 11, 2017, 8:09 am at 8:09 am

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Not only will Wells Fargo fake account fiasco not go away, but new fiascos keep appearing – 2

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Photo at Wells Fargo San Diego museum in October 2016 by James Ulvog.

I have accumulated a long list of articles on the mess Wells Fargo has create for itself. Here is the rest of the articles I’ve gathered in the last few months, including two new fiascos. Previous list of articles I’m catching up on are found here.

7/23/17 – Wall Street  Journal – Wells Fargo Discloses Accidental Client-Data Release – Oops.

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Written by Jim Ulvog

August 16, 2017, 6:58 am at 6:58 am

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Not only will Wells Fargo fake account fiasco not go away, but new fiascos keep appearing – 1

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Photo at Wells Fargo San Diego museum in October 2016 by James Ulvog.

I’ve been sitting on a string of articles describing the mess Wells Fargo has created for itself by opening accounts without customers’ permission. That issue keeps hanging around like a bad hacking cough.

At the same time some new fiascos have surfaced.

It is time to get caught up, so here are some articles I saw a few months ago:

4/4/17 – Wells Fargo advertisement in Wall Street Journal – The bank published a full-page public letter from the CEO.

He describe the steps taken by the bank to make things right. I will paraphrase or nearly quote the steps:

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Written by Jim Ulvog

August 12, 2017, 8:30 am at 8:30 am

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Ongoing internal investigation and disciplinary actions at Wells Fargo

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October 2016 photo at Wells Fargo’s museum in San Diego by James Ulvog.

The Wells Fargo fake account fiasco doesn’t seem to be generating any more major headlines. Still some notable news if you go several pages into the second section of the WSJ. Also, the WF living trust plan got a failing grade.

2/21/17 – MarketWatch – Wells Fargo fires 4 managers as part of investigation into sales scandal – Titles of fired senior managers shows decent level of seriousness in accountability:

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Written by Jim Ulvog

March 15, 2017, 8:13 am at 8:13 am

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Credit Suisse under investigation. Again. For money laundering. Again.

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A different type of money laundering. Image courtesy of Adobe Stock.

A different type of money laundering. Image courtesy of Adobe Stock.

Looks like Credit Suisse is in trouble again. The feds and NYDFS have opened another money laundering investigation.

Check out the report on 2/23 at Wall Street Journal – Credit Suisse Probe Opens Old Wounds for the following info.

A retired professor invested $500K in a startup back in 2000. When the company went public in 2008, his shares were worth $80M.

Cool!  Good for him!

He didn’t want to share a lot of that with Uncle Sam, so he got some help from the Israel branch of Credit Suisse to cut his tax bill.

By 2013 he had $200M parked in his accounts in Switzerland.

Well, somehow the revenuers caught up with him.

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Written by Jim Ulvog

February 24, 2017, 6:00 am at 6:00 am

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Efforts continuing to clean up fake account fiasco at Wells Fargo

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October 2016 photo at Wells Fargo's museum in San Diego by James Ulvog.

October 2016 photo at Wells Fargo’s museum in San Diego by James Ulvog.

There haven’t been a lot of high-profile articles about the Wells Fargo fake account fiasco recently. I’ve noticed a number of articles though, which suggest there is ongoing activity addressing the intentional, systemic failure. This disaster will not be cleared up soon.

  • How does Wells fix the indirect harm it caused?
  • New compensation plan removes cross-selling as a benchmark
  • Possible MD&A enforcement action?
  • Branches received 24 hour notice of internal inspections
  • Bank may eliminate 2016 bonuses for senior staff

12/27/16 – Wall Street Journal – Wells Fargo Is Trying to Fix Its Rogue Account Scandal, One Grueling Case at a Time – Making customers whole will be easy if the customer was only charged a few dollars a month for a while. Still simple to resolve if there were monthly charges and a bunch of overdraft fees because money was taken out of an account unknowingly which resulted in some bounced checks.

What do you do when the unpaid fees on a credit card flowed into negative information on a credit report which resulted in a customer being denied funding for a home loan somewhere else? That’s what happened to one interviewed customer.

Destroying someone’s credit is a tough thing to make right.

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Written by Jim Ulvog

February 13, 2017, 9:14 am at 9:14 am

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