Wells Fargo Bank made a big deal today of firing the senior vice president who allegedly moved into a $12 million Malibu beach house that was handed back to the bank by a family caught in the Bernie Madoff investment scam. Execs seemed ready to brush their hands of it and move on. Get real. It's like the army jailing a few enlisted soldiers for the Abu Ghraib prison torture scandal, while the command structure goes free. Wells Fargo's command structure has the same problem.
The bank said: "A single team member was responsible for violating our company
policies. As a result, employment of this individual has been
Wells Fargo execs denied that they knew that the vice president was using the house and throwing parties. If true, that's a complete failure of oversight. If they weren't keeping an eye on one of the most luxurious estates in Malibu, what's going on with the rest of their foreclosed homes? And did the vice president's colleagues know? Really, who was going to the parties she threw, including one where, according to neighbors, guests arrived by yacht and were ferried to shore?
Wells Fargo also needs to apologize all of its customers. The mayor of Malibu has said the property would rent for $150,000 as a summer rental. How many $35 overdraft fees does it take to cover $150,000? By my calculation, nearly 4,300.
A local real estate agents said she tried to contact Wells Fargo's foreclosure unit with a potential cash buyer wanting to look at the place, and and was told the bank was "considering offers from other agents," she said, "and then someone moved in."
Wells Fargo has a corporate culture problem, just like every major bank that teetered at the edge of failure and took billions in taxpayer bailout funds (in Wells Fargo's case, $25 billion). Merrill Lynch didn't see a problem in handing out billions of dollars in bonuses as the company cratered into the arms of Bank of America--then tried to foist the cost on shareholders. But in the end, it's the banks' customers, large and small, who pay for this corporate excess and self-indulgence.
It's something to think about the next time you pay a $2.50 ATM fee (it would take 60,000 such fees to make up for a summers' lost rent in Malibu). The beach house case was not just individual misbehavior, and firing one vice president is about as much remedy as sacrificing virgins to the volcano.