The Great Stagecoach Robbery

The saying, “The Buck Stops Here” has been going through my mind a lot this week. For awhile, I was confused, thinking it was Teddy Roosevelt. But Teddy's was, “Speak softly and carry a big stick,” a different decisive presidential catch-phrase.. The buck stopping was Harry S. Truman. I clarified my confusion by accessing Google, which lead me to the Harry S. Truman Presidential Library website.

Truman had a wooden sign on his desk that said “The Buck Stops Here.” I learned that the sign was created for him at the Federal Reformatory at El Reno, Oklahoma. A friend of Truman, who also happened to be a U.S. Marshall, asked the warden to have one made for the president. It wasn’t mentioned by the Truman Library, but I can’t help but think of the disgruntled convict making the sign, or the quips of his fellow inmates that “The Crook Stops Here.”

The idea behind the famous quote is that ultimate responsibility rests with the person in charge. For Truman, taking that responsibility meant that he was responsible for using nuclear weapons for the first time in history, forever. Even in my lifetime, in a letter to the Chicago Sun-Times, Truman continued to take full responsibility for his decision.

I compared Truman’s stance to what I witnessed on C-span with Wells Fargo CEO John Stumpf this week. Stumpf was testifying before the Senate Banking, Housing and Urban Affairs Committee. The total testimony was about three hours. His testimony came about because of the record $100 million fine levied against Wells Fargo by the Consumer Financial Protection Bureau, two weeks ago. In addition to the fine, Wells Fargo was ordered to pay $90 million in restitution. So what did Wells Fargo do to warrant a $100 million fine?

Wells Fargo created a strong quota system for its lower-level employees to cross-sell consumers into other financial products -- credit cards, bank accounts, overdrafts, and all those other things banks like to give you. The objective was to have every Wells Fargo customer have at least eight products. This wasn’t based on whether a customer actually needed the accounts, but on hitting number targets. The higher the numbers, the better the analysts like the company and the higher the stock prices rise.

To meet quotas and get bonuses, lower-level bank employees created false accounts without the permission of customers. These false accounts amounted to $90 million in losses for Wells Fargo customers on products they didn’t even request. The bank had no incentive to stop abusive practices by its employees and did little or nothing to discourage their employees' fraudulent actions.. Warning letters had been sent by federal regulators as early as 2012. The fraud first came to public light in a Los Angeles Times investigative report and culminated in the record fine and Stumpf’s testimony this week.

For us mere humans, $90 million seems like a lot of money, like working 90 years at a mere million a year. On the ranking of largest bank robberies in history (people stealing from a bank, not the banks stealing from the people), $90 million would be at number 5 or 6 on the list. But when it is the bank taking from its customers, according to Mr. Stumpf, it is “not a material event.”

As a result of the fines, 5300 lower-level Wells Fargo employees were fired. No one from top management responsible for the policies was fired. During the time the fraudulent activity was going on, Mr. Strumpf pushed the high numbers of accounts held by Wells Fargo customers and managed to raise stock prices in Wells Fargo by about $35 a share. Mr. Stumpf holds almost 7 million shares. His personal profit from the theft by his employees of his customers’ money was somewhere in the neighborhood of $200 million (not to mention his $19 million a year salary).

Given that perspective, you can see why he might think the theft of $90 million from customers isn’t a big deal when the value of the company’s stock has doubled since 2012. Mr. Stumpf testified that he would take full responsibility, but the money being paid back isn’t going to come from him. He isn’t losing his job, unlike the 5300 people he fired. Although if he does lose his job, it will be with a very large golden parachute. He doesn’t have to pay the money back personally. So what exactly is he responsible for?

He is responsible for being in charge of a company that created an environment where its employees could set up fake accounts for the customers, and in doing so, the employees were subsequently rewarded. Selling unnecessary and costly financial products to customers was pushed instead of focusing on actual customer service. He is responsible for customers losing $90 million dollars. He is responsible for putting contract provisions in all of the contracts signed by his customers that prevent them from suing Wells Fargo in court, and instead forcing them into arbitration, using the law to insulate Wells Fargo from class action lawsuits by its defrauded customers. He and others in the banking profession are responsible for a propaganda campaign against the Consumer Financial Protection Bureau (“CFPB”) whose job it is to stop unfair, deceptive and abusive financial tactics, by having his surrogates on the Senate Banking Committee put blame on the CFPB and other federal regulators for not stopping the fraud sooner. Imagine the bank robber blaming the police for not catching him sooner. It is as insane as it is irresponsible.

After listening to Mr. Stumpf’s testimony, I tried to imagine what presidential catch-phrase sat as a sign on his desk and figured it was, “I am not a crook.” Yet realistically, it should be “The Bucks Stop Here,” because for Mr. Stumpf, the phrase isn’t about taking responsibility, but about taking the bucks.