Wells Fargo to Pay $185 Million Fine Over Illegal Account Openings

Even Homer Nods

Wells Fargo is generally considered one of the best run banks. It has a strong commercial banking franchise and its risk management and more limited exposure to investment banking caused it to come out on top in market value after the financial crisis.  It's chief risk officer is higher in its corporate hierarchy than any major bank's going into the financial crisis.  According to Tammy Norman of Emporia State University and Kurt Reding of Wichita State, this is a good indicator of how seriously an organization takes internal controls and risk management and has a long background in internal audit with Spirit aerospace and Boeing.  Tammy recently did a study of the relationship between organizational structure and internal controls.  Kurt is the author of the leading international textbook in the field.  So it is a surprise that Wells Fargo has had an  internal lapse in its commercial bank of all places.  The bank faces a $185 million fine illegal sales practices.  It found hundreds of employees tried to meet ambitious cross-selling goals by opening accounts without customers' permission or even their knowledge. following widespread  including opening accounts for customers without their knowledge. 

In this video, WSJ reporter Emily Glazer joins Lunch Break to discuss the story.  Photo: Getty