Did Wells Fargo Management Know? Should They Have??
[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.]
Unh-unh.
Wrong answer.
When you get paid almost $20 million a year to manage banking behemoth Wells Fargo, you don’t get to say that the staff screwed up.
Either CEO John Stumpf knew that more than 5,000 employees were systematically — and fraudulently — opening millions of fake accounts, putatively on behalf of Wells Fargo customers.
Or, he should have known — and therefore isn’t doing a very good job.
Call it the difference between fraud and gross negligence.
Explanation #3
Of course, there’s a third, possible explanation, albeit with graver implications.
Namely, Stumpf didn’t know — and reasonably shouldn’t have known — because Wells Fargo is so ginormous and sprawling that it’s effectively unmanageable.
If that’s the case (and I’d argue it is), the solution, still, is to cut banking goliaths like Wells down to size.
As former Treasury Secretary George P. Shultz opined more than 30 years ago, “if they’re too big to fail . . . make ’em smaller.”
See also, “Out-of-Control Mega-Banks? I’ve Got Your Problem Right Here (and Here, and Here, and . . .)”; and “How Fining Rogue Banks Instead of Jailing Rogue Bankers Disserves Society.“
