It wasn’t either of the bruising punishments on Capital Hill that caused Wells Fargo’s embattled CEO and Chairman, John Stumpf, to tender his resignation, effective immediately, on Wednesday evening.

Last month, when we first reported on millions of fraudulent accounts opened at Wells Fargo (JRN 33:37) we posited the idea that Mr. Stumpf’s job would not be in danger …unless investors got nervous. Since then there have been:

• A $185 million settlement with regulators;
• Two Congressional hearings;
• Stumpf’s forfeiture of $41 million in unvested equity; and
• Calls for a criminal investigation.

Investors blinked. The stock price for WFC dropped 14% from $50.80 on August 31st to $43.75 on October 4th. Board members are reportedly “furious” not only over Stumpf’s handling of the affair, but also that they were kept in the dark.

The fraud goes back farther than originally thought. In fact, it’s possible it started in 1998, long before Stumpf took the reigns. Yet, after ten years leading the bank, one would be hard-pressed to believe Mr. Stumpf was unaware of the sales culture at the bank. This is what The Motley Fool had to say:

Overly aggressive sales targets from Stumpf and Kovacevich before him essentially forced employees in Wells Fargo’s branches to create untold millions of fake deposit and credit card accounts for customers. And then, when Stumpf was called before Congress to answer for the bank’s actions, he blamed its lowest-paid employees.

It was an incomprehensible response from a man who made untold tens, perhaps hundreds, of millions of dollars from the efforts of these very same people he called “teammates.” And to add insult to injury, we’ve since learned that many Wells Fargo employees who blew the whistle on the unfolding scam, some of whom emailed Stumpf directly about it years ago, were fired under pretexts in such a way that made it essentially impossible for them to ever work in the bank industry again. – Oct 12, 2016 at 7:38PM

Despicable is the word that comes to mind.

Payday Loans and the Alternative, PALs

As the comment period winds down for CFPBs Notice of Proposed Rulemaking on Payday and other high-cost installment loans, we would like to take a moment to go over the differences between these predatory loans and Payday Alternative Loans that are offered by some credit unions.

Over 12 million Americans take out payday loans totaling roughly $38 billion each year;. Fewer than 100,000 are taking advantage of the payday alternative loans (PALs) offered by the nation’s credit unions. (The 50 credit unions with the highest dollar volume as of June 30, 2016 are listed on page 7.)

Of the 530 credit unions that reported a payday alternative loan rate at June 30th, the interest rate charge ranged from 5% to 28%; over half charged 25% or greater. While that may seem high compared to a secured loan, they pale in comparison to what payday lenders are charging. With fees and compounding, a consumer could end up paying up to 400% from another lender.

National Cyber Security Awareness Month

Week 3: October 17-21 Recognizing and Combatting Cybercrime

This week’s topic encompasses what to do before a cyber intrusion occurs, how to recognize the signs of an attack, and what to do if you discover you are a victim of cybercrime, regardless of what form it takes.

The many forms of cybercrime:

• Organizational data breaches
• Identity theft
• Revenge porn
• Cyber-stalking
• Harassment and bullying
• Child sexual exploitation
• Online radicalization
• Recruitment to terrorist networks

The fact is, any internet-connected organization or individual can fall prey. To prevent and/or mitigate losses, we would urge you to read “Best Practices for Victim Response and Reporting of Cyber Incidents” published by the Cybersecurity Unit of the Department of Justice.