I don't buy that the raw number of accounts drives stock price even remotely. I have never once heard it mentioned as a meaningful driver without being connected to revenue or profit figures and don't think any serious investor would see account creation as a motive to buy a bank stock.

I agree with this while also maintaining that the argument Warren is making is disingenuous. The reason the CEO made all that money has nothing to do with this scandal, and he certainly is not taking the money this scam generated and walking away scott-free. Any thinking person would have to conclude that the negative exposure and massive fines from the scam almost certainly cost him money way more money then it generated, for him personally.

I like you but I'm going to lol at you with great prejudice for that take, that's complete trash of the absolute lowest order.

The point is that these people making $12 or $15 and hour (numbers the Senators kept bringing up) got to go home on time or stayed employed by creating the accounts. Their bosses got bonuses/raises/promotions for getting their teams to hit their goals. To the business as a whole and the high level executives there is absolutely 0 benefit of these accounts being opened.

Audited Report: "Wells Fargo is outpacing its account generation trajectory! They're doing good business and capturing additional market share!"

CDL: "No serious investor would ever care about that."

Guys CDL has clearly given 15 minutes of though to how Wall St. works and figured all this stuff out a priori. We can go home.

Agree. Seems like a bad sales culture and he probably did know about how lower level employees were being treated by low level managers. Arguing that this is not a good way to run a company is perfectly valid and should be addressed by any competent board. If the board wants the company run that way then its up to investors to speak out against it if they don't think its getting results, but otherwise its a valid albeit probably terrible business decision.

investors absolutely do not care about account growth when it has no monetary connection. This is a completely inane line to take.

Does the $12/hr employee directly benefit from extra accounts? No. So they were pressure to do it.

Would the manager force $12/hr employees to open a bunch of extra accounts if the manager doesn't benefit? No.

Would the manager's manager be happy to have the manager force $12/hr employees to open a bunch of accounts if the manager's manager doesn't benefit? No.

...

Turtles all the way down my friend.

Wall St loves growth.

So 2 million new accounts, let's say that wells fargo can get $50/yr from these new accounts.

That is $100 million/year

Wells Fargo's market cap is 237 Billion.

So this growth constitutes .00042 of Well's Fargo's total Market Cap

That is half of a ten thousandth of a percent.

I know that people value growth, but this is not the growth you are looking for.

This is fair. However, I don't think it should be the government's job to pressure the CEO or punish them. This should be the board's job (who the CEO reports to) and the board answers to investors. Thus, the shareholders should make the decision and not Senators.

I did that math quick and may have made a mistake, but the point stands.

There is no way this mattered much at all.

having someone do their day to day banking with you is valuable for reasons other than the $50/yr you get from checking account expenses or whatever

eg: existing customers far more likely to come to you when they need to borrow. far easier to cross-sell **** to them. far easier to get them to open a credit card associated w u

establishing a banking relationship with a new customer = £££££. is why banks are throwing money at you to get you to switch to them (at least they are here, i assume they are over there too)

I think I said this a long time ago, but I would honestly pay like $1,000 to watch CDL argue with Judge Posner for two hours. CDL's takes are the dark matter to Judge Posner's baryonic economic reasoning.

It is specifically the job of the government (or, more specifically, the market maker). The market maker is what protects ALL participants in an exchange, and particularly the participants who are at the mercy of capital and information asymmetries.

The investors DON'T GIVE A ****. Why should they? Wells Fargo stock price is up over the 5 years this scam was ongoing (and even though it's down since the scam was revealed, it's hardly tanked).

Did you not see the math Larry did?

yes the $12/hr employee benefits. Opening a fake account takes less work than getting a real one opened.

How would the 3rd level up from these employees even know the accounts are fake as opposed to real when it behooves the people at lower levels to cover this fact up?

The numbers that are being discussed here are orders of magnitude off from materially impacting the market cap of the company.

Sorry it is such an emotional topic for some of you, but logically it makes no sense that 400k in fines and 2 million up-sold accounts would make a huge difference to a 237 Billion market company that makes 20 Billion in profit.

I mean lol.

IDK if this came from a 10-K or what, but these are extremely long and detailed documents and I can assure you they have lots of things in them that do not matter at all to investors.

At Wells Fargo, the buck stops...at the teller window!

They don't benefit from the fake account unless:
(a) their boss gives them a benefit for opening an account
(b) they have profit sharing / stock options

This is true of the manager. And the manager's manager.

Someone is in charge.

Good thing Wells Fargo happens to be in a business where one of their chief concerns is using data to detect anomalous / fraudulent activity.

http://gizmodo.com/how-banks-use-mac...g-y-1744771152

Again, if they gave the slightest **** about this, and didn't know it was happening, they are grossly incompetent.

The government should be responsible for pursuing people who committed crimes. Like I said before, if Stumpf was complicit then he should be charged criminally. If he merely didn't know then he shouldn't. The people who knew should be pursued by the government.

I'm no Wall St analyst but to my simple mind if a company is aggressively demanding that its sales staff hit certain targets for the sales of certain products, and actively punishing those who fail to hit these targets, then the sales of these products are assumed to be profitable for the business.

Larry, you are calculating the impact of the account growth based upon the potential direct fines. I just explained why this is a total and fundamental failure to comprehend the scheme.

2,000,000 fake accounts is not .0011365316136 or whatever you said growth in accounts. It is not infinitesimal growth in accounts. It is meaningful growth in accounts. That's the whole point - no investor can possibly know the accounts are not going to perform because they are entirely fake.

Wells Fargo has approximately 40,000,000 retail customers. 2,000,000 new accounts is not necessarily 2,000,000 new customers, but it is a notable increase in purported banking activity.

You don't seem to get that to an investor every single one of those accounts is a legitimately generated sale that carries with it the promise of profit generation. That is what growth is.

The lol is with you, sorry.

Put differently, ONLY the bank, which KNOWS the accounts are FAKE, can KNOW the accounts will not generate ****.

That's like the most textbook obvious fraud ever. This isn't hard.

Bank: "Hey look, our existing banking customers open new active accounts at a rate 5% greater than our competitors!"

Larry and CDL: "LOL IRRELEVANT"