Wells Fargo: John Stumpf's Letter to Shareholders Is a Must-Read

It’s no secret I’m an aficionado of the letters to shareholders CEOs write every year for inclusion at the beginning of their companies’ annual reports. They are a terrific opportunity for a CEO to step back from the day-to-day details of running his business to review the year just past, and to discuss the key issues and problems he sees ahead. (This doesn’t mean I think most CEO letters are actually good, by the way. Most aren’t. Still, there’s nothing like a leaden, cliché-ridden letter, full of self-serving blather explaining away a prior year’s lousy results to serve as a red flag that a given company figures to be a truly lousy investment.)

Anyway, given the disruption the banking industry went through in 2008, I’ve been particularly looking forward to reading this year’s crop of letters. There’s a lot to be discussed, obviously. I’m interested to see which CEOs are truly candid and insightful about what went on, and which take excuse-making and scapegoating to new heights.

It’s early yet, but, so far, I’ve been disappointed. Even the gold standard among CEO letters, the one Warren Buffett writes every year to holders of Berkshire Hathaway (BRK.A), didn’t get into many big issues or discuss the future the way I’d hoped. (I would have liked to read Buffett’s thoughts on the rating agencies, for instance, given Berkshire’s stake in Moody’s (MCO).) I’m definitely looking forward to reading what Jamie Dimon (JPM) has to say. And Bob Wilmers of M&T Bank (MTB), as well. The best letter so far, though, comes from John Stumpf at Wells Fargo (WFC).

I strongly encourage you to read the Wells letter, but not because Stumpf provides any blazing macro insights. That’s not Wells’s game. Rather, Stumpf’s letter is worthwhile because it explains in plain English the principles that make Wells Fargo not just a great banking organization but one of America’s great companies. (And yes, to all you corporate bashers out there, there are still a number of great companies around!) Here are some highlights:

Management keeps it simple. Wells Fargo is a huge organization, both geographically and as measured by the number of banking products it offers. Yet the company is successful largely because, despite its size, it nonetheless manages to keep things simple. If Wells doesn’t understand a product (an option ARM, say) it simply won’t offer it. Stumpf notes that the Wells Fargo vision does not require any complex mathematical models. Tell that to the guys in the financial products division of AIG!

Management is honest. Candid admission of error in CEO letters is rare, yet right up front, Stumpf concedes, “We made some mistakes but kept our credit discipline.” Nor does Stumpf sugarcoat his outlook for the future. “If you’re a pessimist, there’s a lot for you to like about 2009,” he writes. “It will be a rough year for our economy and our industry. Consumer loans will continue under stress, chargeoffs [uncollectible debt] probably will continue to rise.” Contrast that with what you’ll read in letters from banks that lost money in 2008 (which Wells Fargo did not.) You’d never guess they’re buried under problem loans! Wells Fargo is not in denial.

The company wants to build value, not an empire. In 2008, Wells Fargo doubled its assets with the acquisition of Wachovia. But in discussing the deal, Stumpf emphasizes that Wells didn’t do it simply to bulk up. “Size alone means nothing to us,” he writes. Then Stumpf repeats a mantra coined more than a decade ago by his predecessor, Dick Kovacevich: “You don’t get better by getting bigger, you get bigger by getting better”. Somebody please tell that to AIG, Bank of America, and Citigroup!

Management is truly focused on its teammates. In most shareholder letters, CEOs feel the need to buck up the rank and file with some gratuitous comment that “our employees are our greatest asset” or “our people are our greatest competitive strength.” They don’t mean a word of it, of course. Wells Fargo does. The company has long believed it can differentiate itself with superior employee performance; the record of the last 20 years shows that it can—and has. Stumpf writes, “we call them team members (an asset in which to invest), not employees (an expense to be managed).” At Wells, that investment has paid off. According to survey data gathered by Gallup, Wells Fargo’s community banking group has 8.7 team members who say they’re engaged in their work for each team member that’s actively disengaged. This compares with 2.5 engaged-to-disengaged team members five years ago, and a national average of 1.5 to 1. I believe the deep commitment of Wells’s employees is a key factor in the company’s long-term success.

Management is focused on serving costumers. If you read the letter, you can’t help but be impressed with Stumpf’s authentic emphasis on customer service. Wells’s management is proud of the customer experience the company delivered last year. At the same time, Wells knows service levels are a long way from perfect; Stumpf is honest in saying so.

Management is focused on the integration of Wachovia. You might remember that when the Wells Fargo-Norwest merger happened in 1998, management laid out an integration plan that was slated to go more slowly than most other bank-merger integrations of the era. Norwest-Wells management took some heat over the perceived delays. But in the end, Wells Fargo was the only one of the dozen big deals of the time to achieve its earnings objectives in the following two years. The other eleven, meanwhile, missed their initial earnings projections by an average of 13%! Their haste led to service glitches and revenue erosion. By contrast, Wells’s first priority was holding the franchise together and avoiding merger disruption. Stumpf makes it clear that the company is approaching the Wachovia integration the same way it went about integrating Wells Fargo with Norwest. I expect it will have similar success.

Congratulations to John Stumpf for writing an informative letter in plain English. I continue to hope (and wish) to read more that are this good.

Comments

[ArtfulDodger:]

Mr. Tom Brown:

I appreciate your pointing us to Stumpf's letter. I enjoyed it.

Thank you for your work. Please keep it up.

Mar 22 08:45 AM

[Philip Gvinter:]

I think that Mr. Stumpf should tread lightly as the statements made in the letter to shareholders dance in a gray area which can be considered securities fraud. Wells Fargo, like every other major banking institution completely compromised their credit standards. During the mortgage boom Wells Fargo was one of the largest buyers of Jumbo loans with no income or asset documentation and unsustainable debt to income ratios. Wells Fargo also compromised their credit standards by lending out staggering amounts of money on Home Equity loans and lines of credit secured by California residential properties with equally unsustainable debt to income ratios and serious questions about the sustainability of the property values. Wells also had a HUGE subprime origination operation. While WFC's credit standards were roughly on par with those of JPM and significantly better than CFC's or the residential lending units of BSC and LEH they were somewhat more loose than the credit standards of BAC and even C. The major difference between WFC, C and BAC is the fact that WFC stuck to the core business of banking, C became a financial supermarket with a ton of off balance sheet liability from SIVs and BAC took the middle ground and overpaid for CFC and ML in order to create a financial supermarket with less off balance sheet exposure but more direct consumer lending exposure than C. WFC made a tremendous error in purchasing WB. The loss estimates for WB are still too low and the lack of quality in their mortgage portfolio extends far beyond the Golden West Option ARMs and into the prime jumbo, home equity, construction, credit card and other consumer loan portfolios.

Mar 22 10:15 AM

[MLKlein:]

Customer service? Here are two recent examples of "customer service" at WFC in our family:

Daughter number one opens a checking account and gets a debit card. Thinking (incorrectly) that if she is overdrawn the bank will stop authorizing payment on the debit card if she has no money, she processes a series of small debit purchases over a weekend. While this assumption is wildly optimistic and not consistent with dad's advice, it is most probably made by many teens as they learn to manage their finances. End result; $53.07 in charges triggered $689.00 in OD fees. Wells position; close account, report to credit agencies, not budge on fees until dad gets involved and then agree to "settle" for $275 with no guarantee of clearing credit report. Extortion?

Second example: Daughter number two opens a Wells account without discussion with dad. Dad finds out that the "banker" gives daughter free checking. That's great, except that the free checking account is linked to a savings account that automatically pulls money out of the checking account every month. Looks fine until one realizes that daughter is a student with irregular income. Dad queries about what happens if the debit hits and there are insufficient funds in the checking to satisfy the automatic debit. Daughter can not explain what happens and tells dad that she never got a clear answer to this question at the bank. Dad now gets involved and closes the linked accounts.

Solution to both issues: US Bank. USB has a second chance account for daughter #1 and has an appropriate fee free account for daughter #2.

My opinion is that if we are going to support banks with deposit insurance and for the larger ones, the full faith and credit of the USA, it is time that we expect a higher standard of care when it comes to customer service. This starts with training that promotes doing right by the customer first. That requires that the banker actually understands what the customer needs and sells a solution not a product. This shift in the bank's selling paradigm is particularly relevant on the lending side of the bank's business where in most banks, lenders are let loose on customers to sell loan "products" with little or no formal training. Given the this sales attitude, we shouldn't wonder when the asset side of a bank's balance sheet blows up.

Mar 22 11:05 AM

[searcher:]

Paula Paula Paula. Your comments are pure agenda blather. All the 'facts' still don't support a conclusion much less your conclusion. An assertion preceded by a cut and paste parade is not a chain of inference.

Mar 22 12:21 PM

[Oregonrain:]

I read parts of the Wells letter. You know to me it sounded like they had had a great year. Until of course you look at those nasty numbers. I have made money darting in and out of this stock. As of now and for a long time I have been out.

They have performed better than their peers for sure...but overall I think this is just more bla bla bla...from a CEO to tell the truth.

Mar 22 06:28 PM

[Lavalson:]

"A must-read piece of garbage" is a better assessment of Stumpf's letter to the shareholders which Tom Brown's article emulates in content.

Mar 22 09:35 PM

[Mr. Ed, Jr.:]

Maybe we should hold off on congratulating Wells Fargo on their letter-writing abilities until we see how things go with all of those mortgages and a tremendous amount of HELOC's Wells wrote in Nevada and California. Especially with ARM resets coming up-- and more this time than the last big wave of them. And both of those states are over 10% unemployment now, even using suspect government numbers.

Mar 22 11:26 PM

[Stone Fox C...:]

Agree Mr. Ed. It might be premature to congratulate WFC. They are an excellent bank but the game isn't over yet. I'd bet that WFC survives and thrives, but I'm not into gambling so for now I'm just watching on the sidelines. Asset managers seem the most appealing now with the moves by the Treasury.

Mar 22 11:53 PM

[ArtfulDodger:]

Fellow Commentators:

My family has had many of the same problems you're relating about banks with phone companies, cell phone companies, cable companies, power companies, many small businesses, and especially credit card companies.

Are all the people running these businesses the same as "the evil bankers?"

It seems to me that we have a serious integrity problem across the business world.

And then there's our government—is there anybody left standing in it that has integrity?

Remember the WMD that turned out not to be?

Remember Obama's promise to spend $280b on the nation's "crumbling infrastructure," an amount which magically dropped to $28b over three years?

I liked Stumpf's letter insofar as his method of running a business is good, but I can't judge how honest he is.

But there can be no doubt that we have a serious honesty problem in business and government in the USA.

Mar 23 01:04 AM

[User 305589:]

I guess you can back all these claims up? For instance, that Well's writedowns and loss estimates for WB were 'still far too low'? I would really like to see the numbers here.
Or did you just grab them from some blogs or some media articles?

On Mar 22 10:15 AM Philip Gvinter wrote:

> I think that Mr. Stumpf should tread lightly as the statements made
> in the letter to shareholders dance in a gray area which can be considered
> securities fraud. Wells Fargo, like every other major banking institution
> completely compromised their credit standards. During the mortgage
> boom Wells Fargo was one of the largest buyers of Jumbo loans with
> no income or asset documentation and unsustainable debt to income
> ratios. Wells Fargo also compromised their credit standards by lending
> out staggering amounts of money on Home Equity loans and lines of
> credit secured by California residential properties with equally
> unsustainable debt to income ratios and serious questions about the
> sustainability of the property values. Wells also had a HUGE subprime
> origination operation. While WFC's credit standards were roughly
> on par with those of JPM and significantly better than CFC's or the
> residential lending units of BSC and LEH they were somewhat more
> loose than the credit standards of BAC and even C. The major difference
> between WFC, C and BAC is the fact that WFC stuck to the core business
> of banking, C became a financial supermarket with a ton of off balance
> sheet liability from SIVs and BAC took the middle ground and overpaid
> for CFC and ML in order to create a financial supermarket with less
> off balance sheet exposure but more direct consumer lending exposure
> than C. WFC made a tremendous error in purchasing WB. The loss estimates
> for WB are still too low and the lack of quality in their mortgage
> portfolio extends far beyond the Golden West Option ARMs and into
> the prime jumbo, home equity, construction, credit card and other
> consumer loan portfolios.

Mar 23 06:11 AM

[User 305589:]

Dear Mr or Mrs Klein, how old are your daughters? Can't they read or write and/or ask the questions? Can't you explain it to them, in addition, or go along with them to the bank? Do they need a checking account at all?
How come that it has become so common these days to blame banks and their staff for each and everything that went wrong? How about the responsibilities of the people (and your daughters and their parents, i.e. you, in that case) for their own actions?
I agree that banks (or any business) should be solution oriented, not product oriented. But what about people getting self-responsible again (as were our grandparents) instead of calling for government, regulators, lawyers etc. to help them to get rid of the consequences of their very own actions and inactions.
The point is, this crisis could never have developed into this size if the 'evil bankers' were not matched on the other side by dumb or greedy or simply careless people.


On Mar 22 11:05 AM MLKlein wrote:

> Customer service? Here are two recent examples of "customer service"
> at WFC in our family:
>
> Daughter number one opens a checking account and gets a debit card.
> Thinking (incorrectly) that if she is overdrawn the bank will stop
> authorizing payment on the debit card if she has no money, she processes
> a series of small debit purchases over a weekend. While this assumption
> is wildly optimistic and not consistent with dad's advice, it is
> most probably made by many teens as they learn to manage their finances.
> End result; $53.07 in charges triggered $689.00 in OD fees. Wells
> position; close account, report to credit agencies, not budge on
> fees until dad gets involved and then agree to "settle" for $275
> with no guarantee of clearing credit report. Extortion?
>
> Second example: Daughter number two opens a Wells account without
> discussion with dad. Dad finds out that the "banker" gives daughter
> free checking. That's great, except that the free checking account
> is linked to a savings account that automatically pulls money out
> of the checking account every month. Looks fine until one realizes
> that daughter is a student with irregular income. Dad queries about
> what happens if the debit hits and there are insufficient funds in
> the checking to satisfy the automatic debit. Daughter can not explain
> what happens and tells dad that she never got a clear answer to this
> question at the bank. Dad now gets involved and closes the linked
> accounts.
>
> Solution to both issues: US Bank. USB has a second chance account
> for daughter #1 and has an appropriate fee free account for daughter
> #2.
>
> My opinion is that if we are going to support banks with deposit
> insurance and for the larger ones, the full faith and credit of the
> USA, it is time that we expect a higher standard of care when it
> comes to customer service. This starts with training that promotes
> doing right by the customer first. That requires that the banker
> actually understands what the customer needs and sells a solution
> not a product. This shift in the bank's selling paradigm is particularly
> relevant on the lending side of the bank's business where in most
> banks, lenders are let loose on customers to sell loan "products"
> with little or no formal training. Given the this sales attitude,
> we shouldn't wonder when the asset side of a bank's balance sheet
> blows up.

Mar 23 06:24 AM

[Did U Think...:]

Why is there even any discussion? WFC is insolvent. Nouriel Roubini said so of the largest US banks, and Meredith Whitney called WFC the best short on Wall St. The con man CEO of WFC continues to keep the con game going.

Let's chart 12-14 months from now. WFC will be on its knees just like C and BAC.

Mar 23 06:24 AM

[User 305589:]

Ok, roubini had to backpedal and state that he cannot talk about individual banks - only about the banking sector as a whole. Whitney - hm. She has made some great calls, but does it mean she will get it right every time? Certainly not. wells the greates short among the banks? please! perhaps, because it is one of the last which hasn't become a near-penny stock yet?
I'd be much more concerned about JPM and GS. But of course their friends in high places shoveled a couple dozen billion dollars into them via AIG's 'bailout', which, in essence was a GS bailout engineered by a former GS-CEO (hank paulson).
I certainly would not make a high bet on wells, but to bet against them? not so smart imho.

btw, Tom, how is it that you are so positive about wells, yet your fund has no position in it?


On Mar 23 06:24 AM Did U Think The Ponzi Scheme Would Last? wrote:

> Why is there even any discussion? WFC is insolvent. Nouriel Roubini
> said so of the largest US banks, and Meredith Whitney called WFC
> the best short on Wall St. The con man CEO of WFC continues to keep
> the con game going.
>
> Let's chart 12-14 months from now. WFC will be on its knees just
> like C and BAC.

Mar 23 06:47 AM

[Iwantmymoney:]

More blah to me. If they are so great at customer service how come I still can't get back my $10G from them after numerous correspondence for almost a year. I am now going to sue. They are crappy!

Mar 23 06:47 AM

[RevRico:]

Wow... now THIS was valuable information. THanks for sharing

On Mar 22 11:05 AM MLKlein wrote:

> Customer service? Here are two recent examples of "customer service"
> at WFC in our family:
>
> Daughter number one opens a checking account and gets a debit card.
> Thinking (incorrectly) that if she is overdrawn the bank will stop
> authorizing payment on the debit card if she has no money, she processes
> a series of small debit purchases over a weekend. While this assumption
> is wildly optimistic and not consistent with dad's advice, it is
> most probably made by many teens as they learn to manage their finances.
> End result; $53.07 in charges triggered $689.00 in OD fees. Wells
> position; close account, report to credit agencies, not budge on
> fees until dad gets involved and then agree to "settle" for $275
> with no guarantee of clearing credit report. Extortion?
>
> Second example: Daughter number two opens a Wells account without
> discussion with dad. Dad finds out that the "banker" gives daughter
> free checking. That's great, except that the free checking account
> is linked to a savings account that automatically pulls money out
> of the checking account every month. Looks fine until one realizes
> that daughter is a student with irregular income. Dad queries about
> what happens if the debit hits and there are insufficient funds in
> the checking to satisfy the automatic debit. Daughter can not explain
> what happens and tells dad that she never got a clear answer to this
> question at the bank. Dad now gets involved and closes the linked
> accounts.
>
> Solution to both issues: US Bank. USB has a second chance account
> for daughter #1 and has an appropriate fee free account for daughter
> #2.
>
> My opinion is that if we are going to support banks with deposit
> insurance and for the larger ones, the full faith and credit of the
> USA, it is time that we expect a higher standard of care when it
> comes to customer service. This starts with training that promotes
> doing right by the customer first. That requires that the banker
> actually understands what the customer needs and sells a solution
> not a product. This shift in the bank's selling paradigm is particularly
> relevant on the lending side of the bank's business where in most
> banks, lenders are let loose on customers to sell loan "products"
> with little or no formal training. Given the this sales attitude,
> we shouldn't wonder when the asset side of a bank's balance sheet
> blows up.

Mar 23 10:27 AM

[biomedlives:]

"I believe the deep commitment of Wells’s employees is a key factor in the company’s long-term success." I believe that statement is true for any corporation. Thus it amazes me that executives can argue that high compensation and bonuses are necessary to retain the best high-level people while cutting the salaries and benefits of the rank-and-file people in R&D, customer service, sales, marketing, manufacturing... On the whole, the latter group has more impact on the success or failure of the company than the high-level people.

Mar 23 11:55 AM

[Bar Lock:]

I was a fan of WF up until they aquired Wachovia. Anything the CEO says about keeping things simple and not handling products they don't understand is negated by the toxic World Savings paper that was lurking on the Wachovia balance sheet.

Mar 23 12:19 PM

[wobatus:]

While the bank's behavior may be egregious, I think the real way to dealo with this problem is a better educated, more vigilant consumers.


On Mar 22 11:05 AM MLKlein wrote:

> Customer service? Here are two recent examples of "customer service"
> at WFC in our family:
>
> Daughter number one opens a checking account and gets a debit card.
> Thinking (incorrectly) that if she is overdrawn the bank will stop
> authorizing payment on the debit card if she has no money, she processes
> a series of small debit purchases over a weekend. While this assumption
> is wildly optimistic and not consistent with dad's advice, it is
> most probably made by many teens as they learn to manage their finances.
> End result; $53.07 in charges triggered $689.00 in OD fees. Wells
> position; close account, report to credit agencies, not budge on
> fees until dad gets involved and then agree to "settle" for $275
> with no guarantee of clearing credit report. Extortion?
>
> Second example: Daughter number two opens a Wells account without
> discussion with dad. Dad finds out that the "banker" gives daughter
> free checking. That's great, except that the free checking account
> is linked to a savings account that automatically pulls money out
> of the checking account every month. Looks fine until one realizes
> that daughter is a student with irregular income. Dad queries about
> what happens if the debit hits and there are insufficient funds in
> the checking to satisfy the automatic debit. Daughter can not explain
> what happens and tells dad that she never got a clear answer to this
> question at the bank. Dad now gets involved and closes the linked
> accounts.
>
> Solution to both issues: US Bank. USB has a second chance account
> for daughter #1 and has an appropriate fee free account for daughter
> #2.
>
> My opinion is that if we are going to support banks with deposit
> insurance and for the larger ones, the full faith and credit of the
> USA, it is time that we expect a higher standard of care when it
> comes to customer service. This starts with training that promotes
> doing right by the customer first. That requires that the banker
> actually understands what the customer needs and sells a solution
> not a product. This shift in the bank's selling paradigm is particularly
> relevant on the lending side of the bank's business where in most
> banks, lenders are let loose on customers to sell loan "products"
> with little or no formal training. Given the this sales attitude,
> we shouldn't wonder when the asset side of a bank's balance sheet
> blows up.

Mar 23 01:12 PM

[Ransome:]

People must understand that the bank bailout and recovery from bad assets must be paid by the customers. Most banks have learned that the credit card model with high fees for mistakes is the key to success. As a defensive measure, never have automatic debit from any account. You might consider a smaller bank that has not so many expensive troubles. You will see the abuse of credit scores become more prevalent as this is the hammer (extortion) to resolve issues. Unfortunately, selling products is the norm and these products need to be considered carefully with respect to fees and your behavior. The less you are like a computer, the more expensive life becomes.

Mar 23 02:56 PM

[horrid:]

I have not seen the Annual Report- can you separate out Wachovia's messes (pick a pay mortgages and a Big Wall St style division) from Wells Fargo's?
Wells does manage very differently internally- looks for profits not revenues, bases performance bonuses on attaining of yearly plan profits, little tolerance for losses even in cyclical businesses, tends to stay away from tech and very cyclical corp clients as well.
Wells had been flirting with Wachovia for years- attracted by the geographic complementarity of their basic banking businesses. Unfortunately, by Sept 2008, Wachovia included World bank and a sizeable Wall St investment banking division.
My hope is that the Wells old-fashioned banking style can prevail over the messes they have acquired- it will take patience and discipline to mold the bank back into the type of company it was before the merger, that is for sure.
I also hope that they improve their customer service at the "stores".

Mar 23 03:33 PM

[Mr. Fusion,:]

# User 305589

You said:

<i>The point is, this crisis could never have developed into this size if the 'evil bankers' were not matched on the other side by dumb or greedy or simply careless people.</i>

Wrong.

Bankers are specialists. The same as a car mechanic, accountant, dentist, and plumber. As well as a whole host of other specialties. I don't expect anyone to be an expert in any field outside their regular one and I don't expect anyone to be an expert in every field.

There comes a time when PERSONAL RESPONSIBILITY is just a code word for "someone took advantage of your in-expertise". When a person needs some of that PERSONAL RESPONSIBILITY then great!!! But when a company or an "expert" screw up, well, mistakes happen. Have you been counting the number of people who lost money to Bernie Maddoff saying, "Oh well, my fault for investing in an uninsured, unregulated fund".

What happened to these girls happens every day. No, they aren't stupid girls. They just don't know the nuances and vocabulary used by the bank.

Mar 23 04:47 PM

[twitee:]

Wells Fargo is nothing but a big fraudulent institution that takes advantage of the low-income. They are also notorious on charging monthly fees on saving accounts........

Mar 23 05:34 PM

[twitee:]

I mean't to say checking accounts...they also have very poor customer serveice

Mar 23 05:37 PM

[Gardener:]

Enough with the Buffett nonsense. It doesn't deliver you any credibility to let us know what Buffett is doing or thinks. Do your own work and stop riding coattails, you sound like an idiot. This is one reason we got into this mess, everyone looking around at what the other guy is doing. Lemmings.


On Mar 23 07:22 AM dividendgrowthinvestor wrote:

> Wells Fargo is grossly undervalued. Buffett told everyone last summer
> at 20 it was cheap. Great stock for long term investor

Mar 23 07:28 PM

[chasejames:]

As someone who has spent 25+ years in the financial services industry including banking, investment banking and real estate, there is plenty of blame that can be shared by all parties involved. The financial services industry is one that does not produce a tangible product, is commodity based and differentiates itself based on cost, resulting in income being made based on slim margins. Unfortunately, this results in customer service levels that are unacceptable at best. Because margins are slim, employee performance is measured based on cross selling additional products so that the cumulative margins make the "visit" of the customer a profitable activity for the fiancial institution. The financial institution states that they cross sell products as a service to the customer, but that is the public relations message, not the real reason.

With regards to whether young ladies are at fault for taking out the deposit transactions, if we take a deep reevaluation/self evaluation of the situation, there is plenty of fault to be shared. Of course the bank is wrong, as they did not fully explain the transaction, and probably did not ask the young ladies if they understood the transaction. Similar to mortgage lending, the bank has an obligation to the young ladies to insure they understand the transaction. With regards to the young ladies, they have an obligation too. They should have asked as many questions as they though were necessary to insure they left the branch with comfort, since they are giving the bank their money. And finally, as a father of three children myself, we as parents have an obligation to make sure our children understand the positives and negatives of what goes on outside the walls of our house. Similar to how we take careful effort to make sure they understand how to drive a car before we give them the keys unsupervised, we need to make sure that they understand the financial system, since we want them to feel comfortable with where they place their hard earned money, and the responsibility that goes with taking out a loan, including overdrafts on checking accounts.

I understand Artfuldodgers frustration with what is occuring in the financial services industry, and Washington, and I agree that integrity, greed and the lack of acceptable ethic behavior is underlying many of the challenges we have today. However, as I point about, there is plenty of blame to be handed out......unfortunately.

Mar 23 09:30 PM

[Freedoms Truth:]

"There comes a time when PERSONAL RESPONSIBILITY is just a code word for "someone took advantage of your in-expertise". When a person needs some of that PERSONAL RESPONSIBILITY then great!!! But when a company or an "expert" screw up, well, mistakes happen. Have you been counting the number of people who lost money to Bernie Maddoff saying, "Oh well, my fault for investing in an uninsured, unregulated fund". "

Actually, in many cases, yes it is the investors fault. "Inexpertise" meet "Caveat emptor". It was a 'too good to be true' return, and many investors who should know better figured that even if Madoff was doing something illegal/wrong, they'd be okay. As it was with the loans. Most people who got loans they could not afford to pay back KNEW that but didnt care. they were not victims of fraud, but participants in it. Deadbeat borrowers are as much to blame for the crisis as anyone.

Mar 23 09:50 PM

[Mark Bern:]

I am a father of two children, 16 & 12. When they opened their first bank accounts, I went with them. I asked them questions to make sure they understood what they needed to understand. I then encouraged them to ask the bank representative about what they did not understand. I used it as an educational experience. As a parent, I feel that it is my role to assist my children in each "new" experience of relating in the business world whenever it is feasible.

I just assume that there will be frequent attempts to take advantage of the under- or misinformed whenever there is a profit to be made. I used a similar process with each child in the purchase of cell phones. The 2nd experience have only a periferal involvement. After that they will be on their own unless they get themselve in deep. I had a father that helped me fill out my first Income Tax Return when I was just 12 years old. I do the same with my kids.

I agree that the banks and other institutions have responsibilities. I just feel better if I teach my children to not trust blindly. Sometimes I think we want others (like the schools) to teach our children values and life experiences. I disagree. I actual like being a parent. And I love my kids. I couldn't imagine sending them out into the world without the kind of guidance they need.

Mar 23 10:11 PM

[Jason Rines...:]

I am a CEO. Here is my letter to my employees:

"Hi. Now that the depression arrived that was explained to you as to when, why and how it would occur in 2007, I would like to make some points.

1) We overcame all odds when we started in 2001 together. Our sector was non-financial and we were ignored. Raising money was nigh impossible if you weren't Google II or Too-Big-To-Fail.

2) Instead, we bootstrapped, conducted reams of market research the down and dirty way. We stayed late hours. We watched one another's backs. We all viewed the numbers of the company together in one set of books. We adapted, we innovated and were had the cash and contracts available to survive the worst quarters of this depression.

3) My forecast calls for an exit strategy in 2010. The U.S. taxpayer as a consumer that pays into our business will not be likely to sustain our growth after that point, having to begin to choose between exhorbitant health care costs of our sector or exhorbitent energy costs/food by 2011 or 2012.

4) We shall double our efforts and have a liquidation event in 2010. I encourage all of you beyond this point to continue joining me in the second part of our dual mandate which was to accelerate the education online to the American public we began doing in 2008.

5) I will continue to stay with the business through the liquidation event process and for one year afterwards as I myself push for economic reforms in Washington and co-collaborate with you online to educate and organize the masses. I am proud of each and every one of you. Tomorrow we will go out for lunch as a team and discuss the final chapters of our first mandate with excitement and beging discussing the most prudent and effective way to connect the masses and replicate our problem solving for the public in an online environment on mandate two.

Mar 24 02:22 PM

[Mark M:]

Sorry to hear that your daughter's were never taught how to manage their accounts.........


On Mar 22 11:05 AM MLKlein wrote:

> Customer service? Here are two recent examples of "customer service"
> at WFC in our family:
>
> Daughter number one opens a checking account and gets a debit card.
> Thinking (incorrectly) that if she is overdrawn the bank will stop
> authorizing payment on the debit card if she has no money, she processes
> a series of small debit purchases over a weekend. While this assumption
> is wildly optimistic and not consistent with dad's advice, it is
> most probably made by many teens as they learn to manage their finances.
> End result; $53.07 in charges triggered $689.00 in OD fees. Wells
> position; close account, report to credit agencies, not budge on
> fees until dad gets involved and then agree to "settle" for $275
> with no guarantee of clearing credit report. Extortion?
>
> Second example: Daughter number two opens a Wells account without
> discussion with dad. Dad finds out that the "banker" gives daughter
> free checking. That's great, except that the free checking account
> is linked to a savings account that automatically pulls money out
> of the checking account every month. Looks fine until one realizes
> that daughter is a student with irregular income. Dad queries about
> what happens if the debit hits and there are insufficient funds in
> the checking to satisfy the automatic debit. Daughter can not explain
> what happens and tells dad that she never got a clear answer to this
> question at the bank. Dad now gets involved and closes the linked
> accounts.
>
> Solution to both issues: US Bank. USB has a second chance account
> for daughter #1 and has an appropriate fee free account for daughter
> #2.
>
> My opinion is that if we are going to support banks with deposit
> insurance and for the larger ones, the full faith and credit of the
> USA, it is time that we expect a higher standard of care when it
> comes to customer service. This starts with training that promotes
> doing right by the customer first. That requires that the banker
> actually understands what the customer needs and sells a solution
> not a product. This shift in the bank's selling paradigm is particularly
> relevant on the lending side of the bank's business where in most
> banks, lenders are let loose on customers to sell loan "products"
> with little or no formal training. Given the this sales attitude,
> we shouldn't wonder when the asset side of a bank's balance sheet
> blows up.

Mar 24 07:05 PM

[nova:]

Another garbage from Tom Brown.

Mar 24 09:05 PM

[Chicky401:]

That's exactly what I am looking to do. In the process of looking for the perfect lawyer right now! People have no idea how shady they are unless they have dealt with them. There are thousands of people who had the same issues as I but I am not going into the severity of the stress they caused me at this time. Horrible company will never deal with them again even if they were last bank on planet!!!


On Mar 23 06:47 AM Iwantmymoney wrote:

> More blah to me. If they are so great at customer service how come
> I still can't get back my $10G from them after numerous correspondence
> for almost a year. I am now going to sue. They are crappy!

Mar 24 09:39 PM

[hksche2000:]

I completely agree with your "opinion" piece.
By their reckless greed, the financial institutions, but for the grace of the taxpayers, destroyed themselves. Unfortunately, they took millions of us down with them. Now that we've resuscitated the villains, instead of thanking and rewarding their samaritans, all those banks know is to resume their predatory practices on the very people who saved them.
Your daughters should have rec'd care/advise to safeguard them against the risks from banking inexperience, instead of getting exploited for it. Shame on the banks! We should have allowed those rascels to pass away. Who needs bad actors?
My experience with WFC has been brief: no customer service, no customer.

On Mar 22 11:05 AM MLKlein wrote:

> Customer service? Here are two recent examples of "customer service"
> at WFC in our family:
>
> Daughter number one opens a checking account and gets a debit card.
> Thinking (incorrectly) that if she is overdrawn the bank will stop
> authorizing payment on the debit card if she has no money, she processes
> a series of small debit purchases over a weekend. While this assumption
> is wildly optimistic and not consistent with dad's advice, it is
> most probably made by many teens as they learn to manage their finances.
> End result; $53.07 in charges triggered $689.00 in OD fees. Wells
> position; close account, report to credit agencies, not budge on
> fees until dad gets involved and then agree to "settle" for $275
> with no guarantee of clearing credit report. Extortion?
>
> Second example: Daughter number two opens a Wells account without
> discussion with dad. Dad finds out that the "banker" gives daughter
> free checking. That's great, except that the free checking account
> is linked to a savings account that automatically pulls money out
> of the checking account every month. Looks fine until one realizes
> that daughter is a student with irregular income. Dad queries about
> what happens if the debit hits and there are insufficient funds in
> the checking to satisfy the automatic debit. Daughter can not explain
> what happens and tells dad that she never got a clear answer to this
> question at the bank. Dad now gets involved and closes the linked
> accounts.
>
> Solution to both issues: US Bank. USB has a second chance account
> for daughter #1 and has an appropriate fee free account for daughter
> #2.
>
> My opinion is that if we are going to support banks with deposit
> insurance and for the larger ones, the full faith and credit of the
> USA, it is time that we expect a higher standard of care when it
> comes to customer service. This starts with training that promotes
> doing right by the customer first. That requires that the banker
> actually understands what the customer needs and sells a solution
> not a product. This shift in the bank's selling paradigm is particularly
> relevant on the lending side of the bank's business where in most
> banks, lenders are let loose on customers to sell loan "products"
> with little or no formal training. Given the this sales attitude,
> we shouldn't wonder when the asset side of a bank's balance sheet
> blows up.

Mar 25 03:11 PM

[hksche2000:]

Companies in which Warren Buffet is invested, generally are no good for customers but very good for WB! Think: Wells Fargo, Geico (despite the funny frog), Dairy Queen, Sherwin Williams..., all providing no value. Hence, Warren would never buy there himself, though he likes the returns. What I like about WB, tax benefits or not, is his charitable giving to the less fortunate. Not nearly enough of the superrich do!


On Mar 23 07:28 PM Gardener wrote:

> Enough with the Buffett nonsense. It doesn't deliver you any credibility
> to let us know what Buffett is doing or thinks. Do your own work
> and stop riding coattails, you sound like an idiot. This is one reason
> we got into this mess, everyone looking around at what the other
> guy is doing. Lemmings.

Mar 25 03:42 PM

[Paula Rush:]

WHY WAS MY COMMENT REMOVED! FREEDOM OF SPEECH IS DEAD!

Mar 26 10:23 AM