The chief executive of Wells Fargo — where bankers opened secret and unauthorized credit card and deposit accounts for customers for at least five years in an attempt to meet sales goals — told a Senate panel Tuesday morning that the illegal activity might have gone on even longer and that no senior executives had been fired as a result.
Senators on both sides of the aisle expressed anger and indignation at the chief executive, John G. Stumpf, with several lawmakers calling for him to give back some of his rich compensation.
Tuesday, September 20, 2016
Thursday, September 15, 2016
Following up on my post last week "Big Bank, Big Criminal," comes another eye-popping coda to the story: the executive in charge of the division where the massive, 5,000+ employee fraud and looting of Wells Fargo's customers (this blog author among them) occurred, will receive more than $125 million in early retirement benefits. For realz.
In connection with the “widespread illegal practices,” Wells Fargo has also fired 5,300 employees and managers, with one notable exception: the executive in charge.Instead of bearing any responsibility for this scandal, Carrie Tolstedt, the divisional senior vice president for community banking who supervised the 6,000 retail branches where the wrongdoing took place, is retiring, taking with her millions in stock and options.Wells Fargo was aware of the problems in the division when Ms. Tolstedt announced her retirement on July 12. The bank’s sales practices have been under regulatory scrutiny since at least November.Further, the bank itself has been working to identify the affected customers and complicit employees.Despite knowing about the widespread misconduct on her watch, Wells Fargo gave Ms. Tolstedt a glowing farewell. John Stumpf, the chief executive, called her a “role model for responsible leadership” and “a standard-bearer of our culture.”
Her compensation — more than $27 million over the last three years — has never been dinged as a result of these problems. Further, Ms. Tolstedt continues to be employed at the bank through the end of the year. She stepped down only from her division role — getting out of the hot seat just weeks before the regulatory settlement was announced.So, as in most banking scandals, lower- and midlevel employees face repercussions, but senior executives are whisked out of harm’s way, with their reputations and full stock awards intact. For Ms. Tolstedt, that could be as much as $125 million.
Friday, September 9, 2016
For years, Wells Fargo employees secretly issued credit cards without a customer’s consent. They created fake email accounts to sign up customers for online banking services. They set up sham accounts that customers learned about only after they started accumulating fees.On Thursday, these illegal banking practices cost Wells Fargo $185 million in fines, including a $100 million penalty from the Consumer Financial Protection Bureau, the largest such penalty the agency has issued.Federal banking regulators said the practices, which date back to 2011, reflected serious flaws in the internal culture and oversight at Wells Fargo, one of the nation’s largest banks. The bank has fired at least 5,300 employees who were involved.In all, Wells Fargo employees opened roughly 1.5 million bank accounts and applied for 565,000 credit cards that may not have been authorized by customers, the regulators said in a news conference. The bank has 40 million retail customers.
Banking regulators said the widespread nature of the illegal behavior showed that the bank lacked the necessary controls and oversight of its employees. Ensuring that large banks have tight controls has been one of the central preoccupations of banking regulators after the mortgage crisis.Wells said the employees who were terminated included managers and other workers. A bank spokeswoman declined to say whether any senior executives had been reprimanded or fired in the scandal.
UPDATE: As this article points out, the most egregious part of the "settlement" is that the sociopath executives who run Wells Fargo didn't even have to admit wrongdoing.
"Classic Wall Street" indeed. Another victory for big bank thugs and the Keystone regulators who enable them.But with its banking regulators, Wells Fargo was not as contrite. The bank agreed to pay $185 million in fines and hire an independent consultant to review its sales practices, but it was able to settle the investigation into the questionable accounts without officially admitting to any of the suspected misconduct.It was classic Wall Street. Since the financial crisis, regulators have brought dozens of cases against banks and other financial firms, hitting them with tens of billions of dollars in fines and requiring the companies to overhaul their business practices. But frequently, regulatory cases are settled without a bank having to admit doing anything wrong.
Friday, September 2, 2016
A collection of small, quiet towns near the Ohio River, Dearborn County does not look like a prison capital. Violent crime is rare. There are few empty storefronts. And local officials, flush with money brought in by a popular local casino, have built a convention center and a high school football field fit for a movie set.But the extraordinarily high incarceration rate here — about one in 10 adults is in prison, jail or probation — is driven less by crime and poverty than by a powerful prosecutor, hard-line judges and a growing heroin epidemic.“I am proud of the fact that we send more people to jail than other counties,” Aaron Negangard, the elected prosecutor in Dearborn County, said last year. “That’s how we keep it safe here.”Opioid addiction spread early here. Mr. Negangard, the prosecutor, has fought the heroin crisis by aggressively going after drug crimes.“If you’re not prosecuting, then you’re de facto legalizing it,” Mr. Negangard said.Mr. Negangard has faced few obstacles to getting more convictions. He supervises his own police force, an unusual arrangement that allows him to investigate and prosecute most of the county’s serious crime. The police go after even minor drug cases, often offering to dismiss drug possession charges in exchange for information on friends or family members who sell drugs.Probation officials are just as strict. Offenders released on probation are tested for drugs frequently, and hundreds of people who violate the terms of their probation have been sent to state prison in the past few years.By 2014, Dearborn County sentenced more people to prison than San Francisco or Westchester County, N.Y., which each have at least 13 times as many people.“It’s government run amok,” said Douglas A. Garner, a local criminal defense attorney.
The rural resistance to lighter penalties goes beyond Indiana.Prosecutors in New York City have sharply cut incarceration rates in part by diverting drug offenders from prison after state changes encouraged paths to treatment. But in the rest of the state, prosecutors and judges continue to put drug offenders in prison at a steady flow.In Texas, a series of changes intended to cut the prison population led to large reductions in new prisoners from Houston and Austin. But the rest of the state has had only modest declines.
Monday, August 29, 2016
Twenty states and the District of Columbia have abolished capital punishment. Four more have imposed a moratorium on executions. Of the 26 remaining states, only 14 handed down any death sentences last year, for a total of 50 across the country — less than half the number six years before. California, which issued more than one-quarter of last year’s death sentences, hasn’t actually executed anyone since 2006. A new geography of capital punishment is taking shape, with just 2 percent of the nation’s counties now accounting for a majority of the people sitting on death row.An even smaller fraction of these counties still imposes death sentences regularly. In June 2015, in the Supreme Court case Glossip v. Gross, which involved lethal injection, Justice Stephen Breyer noted in a dissent that only 15 counties — out of more than 3,000 across the United States — had imposed five or more new death sentences since 2010. The number rises to 16 counties if Breyer’s count is extended through the end of 2015. Duval County, which includes Jacksonville, a city of nearly 900,000 where Shelby Farah was killed, is among the 16.What separates the 16 counties where the death penalty regularly endures from the rest of the country, where it is fading away? The 16 counties span seven states in the South and the West. They include major cities, like Los Angeles, Houston, Las Vegas and Phoenix; suburban areas like Orange County, Calif., and San Bernardino, Calif.; and semirural pockets like Mobile County, Ala., and Caddo Parish, La. Some are dominated by Democratic voters, some are dominated by Republicans and a few are evenly split. Many of the counties have high numbers of murders, but so do plenty of other places that don’t use the death penalty.
Angela Corey, the state attorney in Florida’s Fourth Judicial Circuit, which includes Duval County, gave no indication of offering a plea deal. Corey prosecuted dozens of murder cases herself over 36 years as a trial lawyer. (In 2012, Gov. Rick Scott tapped her to oversee the prosecution of George Zimmerman for killing Trayvon Martin. Zimmerman was acquitted; she was criticized for overcharging him.) Corey, 61, has made her reputation, in part, by winning verdicts that carry the death penalty. She has one of the highest rates of death sentences in the country, with 24 (19 in Duval) in the eight years since she was elected.In 2008, the same year Angela Corey first ran for office, a 35-year-old Republican who had never tried a homicide case, Matt Shirk, announced his candidacy for public defender. Weak defense lawyering plays a well-known role in determining who gets the death penalty. But until then, the public defender’s office in Duval County had a strong reputation, with a respected unit for death-penalty cases and other homicides.Shirk campaigned eight years ago on a promise to slash the budget. He also stressed his support from Angela Corey, and said he worked under her “direct tutelage” during a law-school internship. Corey referred to him as her “darling.” (In 2012 she helped host a fund-raiser for him; she later apologized for it.) After Shirk won the race, he fired 10 senior lawyers. “Angela Corey supported Matt Shirk and got exactly what she wanted,” says Finnell, who lost her job. “She saw the demise of the public defender’s office as it was. It made her life a whole lot easier.”As his second-in-command, Shirk quickly installed Refik Eler, a defense lawyer with a private practice built on taking court appointments to represent poor defendants charged with felonies. Eler has 15 death sentences on his record, one of the highest totals in Florida, according to the Fair Punishment Project.
Advocates see the shrinking geography of capital punishment as the most promising path to ending executions in the country for good. It’s a self-reinforcing strategy: Once a county loses the habit of meting out death sentences, it’s probably less likely to do so in the future, Garrett’s research suggests. And the more unusual the death penalty becomes, the more emboldened the Supreme Court could be to decide that it is also cruel, as justices including Kennedy and Breyer have come to understand that word. To receive a death sentence remains as random as being “struck by lightning,” Justice Breyer wrote last year, echoing Justice Potter Stewart’s words from half a century ago. “How then,” Breyer asked, “can we reconcile the death penalty with the demands of a Constitution that first and foremost insists upon a rule of law?”
UPDATE: Angela Corey, the prosecutor referenced above, was defeated today 8/31/16 in her primary bid for re-election.
Gosh, Florida...way to go and be all NOT Florida for once.
Friday, August 26, 2016
The boundaries of the A.D.H.D. diagnosis have been fluid and fraught since its inception, in part because its allegedly telltale signs (including “has trouble organizing tasks and activities,” “runs about or climbs in situations where it is not appropriate” and “fidgets with or taps hands or feet,” according to the current edition of the DSM) are exhibited by nearly every human being on earth at various points in their development. No blood test or CT scan can tell you if you have the condition — the diagnosis is made by subjective clinical evaluation and screening questionnaires. This lack of any bright line between pathology and eccentricity, Schwarz argues, has allowed Big Pharma to get away with relentless expansion of the franchise.In my review of the review here, let me just correct one minor quibble in the headline: Alan Schwarz's book isn't "exposing Big Pharma's role" in the manufacturing and selling of ADHD to the unwitting public the past 20-25 years. Some of us have been actively banging the drum on this since the late 90's, and have written about it elsewhere (including umpteen posts on this blog alone).
So exposure? No. Concise summary of the history of the drugging of American children (viz. the posts on this blog for almost a decade)? Sounds like it.
While other books have probed the historical roots of America’s love affair with amphetamines — notably Nicolas Rasmussen’s “On Speed,” published in 2008 — “ADHD Nation” focuses on an unholy alliance between drugmakers, academic psychiatrists, policy makers and celebrity shills like Glenn Beck that Schwarz brands the “A.D.H.D. industrial complex.” The insidious genius of this alliance, he points out, was selling the disorder rather than the drugs, in the guise of promoting A.D.H.D. “awareness.” By bankrolling studies, cultivating mutually beneficial relationships with psychopharmacologists at prestigious universities like Harvard and laundering its marketing messages through trusted agencies like the World Health Organization, the pharmaceutical industry created what Schwarz aptly terms “a self-affirming circle of science, one that quashed all dissent.”In a narrative that unfolds with the momentum of a thriller, he depicts pediatricians’ waiting rooms snowed under with pharma-funded brochures, parents clamoring to turn their allegedly underachieving children into academic superstars and kids showered with pills whose long-term effects on the developing brain (particularly when taken in combination) are still barely understood. In one especially harrowing section of the book, Schwarz traces the Icarus-like trajectory of Richard Fee, an aspiring medical student who fakes the symptoms of A.D.H.D. to get access to drugs that will help him cope with academic pressure. When he eventually descends into amphetamine psychosis, his father tells his doctor that if he doesn’t stop furnishing his son with Adderall, he’ll die. Two weeks after burning through his supply, Fee hanged himself in a closet.“ADHD Nation” should be required reading for those who seek to understand how a field that once aimed to ameliorate the behavioral problems of children in a broad therapeutic context abdicated its mission to the stockholders of corporations like Shire and Lilly. Schwarz is sounding an alarm for a fire that looks nowhere near abating.
Thursday, August 18, 2016
The Justice Department plans to end its use of private prisons after officials concluded the facilities are both less safe and less effective at providing correctional services than those run by the government.Of course, this isn't new information. While the inspector general's report is a damning indictment of the use of privatization, the findings merely echo what the GAO found on privatization more than 25 years ago, and continued to update regularly and with equal derision for the past quarter century: "private prisons are ineffective, not cost-saving, more violent" and so forth. More drugs, more tobacco, more cellphones, more assault, rape, violence...you name it, it's worse in a private facility, and has been so, since the move towards privatization began back in the late 80's.
Deputy Attorney General Sally Yates announced the decision on Thursday in a memo that instructs officials to either decline to renew the contracts for private prison operators when they expire or “substantially reduce” the contracts’ scope. The goal, Yates wrote, is “reducing — and ultimately ending — our use of privately operated prisons.”
“They simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the Department’s Office of Inspector General, they do not maintain the same level of safety and security,” Yates wrote.
The Justice Department’s inspector general last week released a critical report concluding that privately operated facilities incurred more safety and security incidents than those run by the federal Bureau of Prisons. The private facilities, for example, had higher rates of assaults — both by inmates on other inmates and by inmates on staff — and had eight times as many contraband cellphones confiscated each year on average, according to the report.
Sidebar: want to read a harrowing account of what it's like to work in a private dungeon? Read this now.
And if I can also note: almost all of my mentors in penology, especially people like Michael Welch, Christian Parenti, Jeffrey Reiman and others, have been trumpeting these GAO reports and leading the charge against privatization for years, but usually falling on deaf ears. It's great that we now have a justice department (on its back nine) willing to listen and implement. It's not so great that this justice department will be out of existence in 5 months and who knows what the next administration may do.
Also, the move really isn't as sweeping as it sounds. While it addresses the federal inmates who have been convicted and sentenced in the federal system, it does not address the vast network of private detention facilities used to hold illegal immigrant and non-citizen detainees throughout the country.
The feds utilize detention facilities (viz. concentration camps) to hold detainees when they are swept up in raids, but before they can be deported, and the vast majority of these facilities are subcontracted to private companies. On any given day, they are holding more than 30,000 detainees, and in a calendar year will process roughly 400,000 persons. This is big business and, from my read of the DOJ order, is not covered or addressed (why would it? non-citizen detainees don't count anyway).
The role of the congress should also be noted in this. Private dungeons, er companies, deploy a vast army of lobbyists to push for inclusion in criminal justice policy. The congress could easily order the justice department to renew or expand private prison company contracts, via the budgetary process. So while the deputy AG's words are noteworthy and laudatory, they are also limited and fixed in duration.
And finally, let's remember too: the private dungeons make most of their money running state facilities (110,000 of the 130,000 private inmates are state inmates), which would be completely unaffected by today's order.
Nevertheless, I'll try not to be too skeptical and join the ranks of others who are celebrating the release of this report. For me personally, it's a head-nodding moment 15+ years in the making.