The Wells Fargo Scam Makes Mockery of Money

To operate in business requires a better understanding of money, especially when those about you cause loss of confidence in money—as money is only an idea.

In an article dated 27 November 1971, appropriately titled MONEY, renowned author and philosopher L. Ron Hubbard very simply pointed out the definition of money:

“Basically money is ‘an idea backed by confidence.’”

Now, how is it that money, the very lifeblood of the economy, is so misunderstood, even by those you think should know what money is—the banks. You would expect that banks, with all their trillions of dollars, would have some understanding of money. Instead of circulating the currency, they want to hoard it and do disastrous things with it—not understanding this point:

“Remember, money represents things. It is a substitute for goods and services.”

You would think that, being the guardians of the nation’s currency, they would be enlightened on what money is and how it works. Unfortunately, this does not seem to be the case. Witness the recent travesty of Wells Fargo Bank. Wells Fargo is an institution in the United States. It is a company with a huge legacy, with its modest beginnings heralding the Wild West. You would assume they, more than anyone else, would understand that the underlying strength of money is confidence: confidence in the currency, confidence in the country and, very importantly, confidence in the company (Wells Fargo).

Keep in mind, this is not any ordinary financial institution.1 From the moment in 1852 when Henry Wells and William Fargo founded Wells, Fargo & Co., the bank stood for something special. They opened for business in the gold-rush port of San Francisco, and soon Wells Fargo’s agents opened offices in the other new cities and mining camps of the West. In the boom-and-bust economy of the 1850s, Wells Fargo earned a reputation of trust by dealing rapidly and responsibly with people’s money. In the 1860s, it earned everlasting fame—and its corporate symbol—with the grand adventure of the overland stagecoach line. From the gold rush to the early twentieth century, through prosperity, depression and war, Wells Fargo had earned a reputation of trust due to its attention and loyalty to customers.

This incredibly wonderful legacy was put to risk when Senator Elizabeth Warren brought the CEO of Wells Fargo, John Stumpf, to task during a recent Senate Banking Committee hearing regarding the massive scandal currently engulfing Wells Fargo.2 The word fraud was stated repeatedly by members of the committee when they described the bank’s creation of millions of unauthorized bank and credit-card accounts for existing customers.3 The Consumer Financial Protection Bureau and other agencies had caught Wells Fargo opening more than two million fake checking and credit-card accounts. Senator Warren took Stumpf to task:

“You know, here’s what really gets me about this, Mr. Stumpf. If one of your tellers took a handful of $20 bills out of the cash drawer, they’d probably be looking at criminal charges for theft. They could end up in prison. But you squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket. And when it all blew up, you kept your job, you kept your multimillion-dollar bonuses, and you went on television to blame thousands of $12-an-hour employees who were just trying to meet cross-sell quotas that made you rich. This is about accountability. You should resign. You should give back the money that you took while this scam was going on, and you should be criminally investigated.”

You would think, lesson learned; Wells Fargo would square up and be fair to their customers. And it almost seemed they had. Mr. Stumpf suddenly retired and finally held himself accountable. However, after dozens of Wells Fargo customers sued the bank to recover fees they were charged from these fake accounts, Wells Fargo tried to boot the claims from court and into the closed-door, industry-friendly arbitration process. The outcome should be interesting, to say the least. Obviously, Wells Fargo still does not get the importance of confidence and the economic effect of their actions. Greed has jeopardized 165 years of history.

In the same article of 27 November 1971, Mr. Hubbard states:

“If you like money or want money or use money you cannot remain ignorant of ‘economics.’”

“ECONOMICS in modern language means ‘the social science that studies the production, distribution and consumption (using) of commodities (things).’

“The word originally meant ‘the science or art of managing a house or household’ and that is still its first meaning. From this grew up a study of the whole community as a connected activity.”

If the economy is in trouble, this can readily be laid at the feet of the caretakers of money, the ones who should be protecting the livelihoods of its customers. Instead they turn on them as if they were prey and not patrons.

There seems to be a huge disconnect between the caretakers of our financial fortunes and their public. Should not banks and other financial institutions be on a holy mission to safeguard our currency, following the basic laws of economics, and not simply another for-profit business? Yes, banks should be profitable; but shouldn’t there be a complete and thorough understanding of economics, for us to achieve solvency and balance?

Wells Fargo and most big banks have lost this concept, and unlike the banks of yesteryear (remember Jimmy Stewart in It’s a Wonderful Life?) they’ve forgotten the service part of their job. Even big banks should deliver a product.

By Prosperity Editor