Eight years ago Wednesday, Lehman Brothers collapsed into bankruptcy. To stem the panic, the feds launched the biggest bailout the world has ever seen. In rewarding failure, America allowed a broken, corrupt financial system to flourish – and, yes, has invited populists like Donald Trump to take the stage.
The latest example of how greed is not good, especially when it’s backstopped by government guarantees: Last week, federal regulators revealed that Wells Fargo, the country’s third-largest bank, had opened 1.5 million bank accounts and 565,000 credit-card accounts without customers’ permission over the past five years.
How could that happen? At least 5,300 workers engaged in what the government calls ‘abusive’ acts: using a customer’s personal information from one legitimate account to open another one, and then taking money from the real account to put it into the fake one. Workers went so far as to create fake e-mail addresses and PIN numbers.
And why would this happen? Wells Fargo wanted to grow – and so it rewarded workers who opened new accounts. Employees were ‘spurred by sales targets and compensation incentives,’ the government notes.
This post was published at David Stockmans Contra Corner on September 12, 2016.
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