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What Is Wells Fargo Unethical

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Consequently, the fake account scandal had been exposed to the public in 2016. Wells Fargo committed the fraud and was agreed to pay 185 million USD, settling the penalties made by government regulators which contained 35 million USD by the Office of the Comptroller of the Currency, 100 million by the Consumer Financial Protection Bureau and 50 million by the Los Angeles City Attorney. The company also announced that 5300 low-level employees who created the new accounts without approved by customers, were fired due to the unethical behaviour. Wells Fargo changed the performance measurement on its compensation program to avoid unethical behaviour of employees.

Wells Fargo rebuilded the operational structures to regain the trust from customers …show more content…

“Dodd–Frank” was an act that created the Consumer Financial Protection Bureau (CFPB) which provided financial protection for customers. Moreover, the Office of the Comptroller of the Currency (OCC) was the one of regulatory agencies in the United State Department of the Treasury to pursue a number of main objectives, such as maintaining the safety and soundness of the national banking system; foster competition by allowing banks to offer new products and services; enforce anti-money laundering and anti-terrorism finance laws that apply to national banks, federally licensed branches and agencies of international …show more content…

Since the banking industry is very competitive, banks always provide more complex products and services to customers while not disclose enough information to them. They failed properly monitoring Wells Fargo in the highly competitive banking environment because OCC did not want to understand the root causes of the cross selling; OCC was unwilling to detect any problems in the first place. To improve the regulatory environment, those regulators should play an important role in the market and take more responsibility to the customers. Moreover, these regulators need sufficient time to upgrade the mechanism associated with those products and services. This lack of understanding and knowledge of services and products provided by the banking industries will create opportunities for banks to conduct unethical behaviour. Moreover, “The OCC did not take timely and effective supervisory actions after the bank and the OCC together identified significant issues with complaint management and sales practices,” the report said. To remediate this, the government should respond to the market as quickly as

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1. Dodd-Frank Act: The Dodd-Frank Act which is known in full-form as Dodd-Frank Wall Street Reform and Consumer Protection Act is a type of United States federal law which will define regulation of the financial industry within the perimeter of the federal agencies. The legislation that was defined way back in July 2010, which can avoid the significant financial crisis by defining new financial regulatory methodology which can insist clarity and authorization while defining rules for protecting the financial data of several users. The Dodd-Frank Act is adopted by most of the investment banking organizations across the world. 2.

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Introduction In 2010, the United States was weaping with the aftermath of the 2007-2008 financial crisis, which lead to the Dodd-Frank Wall Street Reform and Consumer Protection Act. This Act acted as a direct law that aimed to oversee the financial regulatory system in the country and was a direct initiative to the collapse

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Question 1: Dodd-Frank The Dodd- Frank refers to a very sensitive legislation that was passed in 2010 meant to address the financial crisis that hit the United States in 2008. This legislation was supposed to strengthen the economy through the elimination of risks that had made entry into the USA financial system. With this policy, various institutions were mandated to ensure they foresee the whole plan. The Orderly Liquidation and the financial stability council should do this monitoring at periodic intervals.

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The Dodd-Frank act is an important part of the financial industry over the last 10 years. The act has introduced regulation that helps to look over and monitor banks and financial companies to help protect customer’s investments following the financial crisis. The Dodd-Frank Act was introduced and passed by Congress in 2010 to help protect consumers, regulate finance, and prevent major financial disasters. (Liu) The bill was implemented to help customers and protect markets, but it has many critiques.

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193 Words | 1 Pages

The Wells Fargo scandal included the creation of fake banking accounts, savings accounts, and credit cards. People who were employed at the bank opened these accounts in order to meet goals and make profit. When the fake accounts were discovered 5,300 employees were fired. However, the problem went beyond the fired employees.

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Due to the scandal, Wells Fargo faced customer confidence issues. Trevino and Nelson suggest customer confidence issues include confidentiality, product safety and effectiveness, truth in advertising, and special fiduciary responsibilities (126). Based on the unethical behavior noted in the scandals, the organization violated the customer’s privacy and failed to perform their fiduciary responsibilities on multiple occasions. Wells Fargo and its employees broken several laws to meet quotas and make profit for the organization. In this scandal, there are legal implications to be faces noted in court documents include but not limited to fraudulently opening accounts without the consent of a customer, falsifying credit documents, identity theft

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The Wells Fargo scandal was the creation of more than 2 million fake accounts. Which were opened in customer’s names, but customers didn’t know they even had these accounts opened. The people who opened theses unauthorized bank and credit card accounts were Wells Fargo employees who created millions of accounts. The phony accounts earned the bank unwarranted fees and allowed Wells Fargo employees to boost their sales and make more money. These fake accounts led to many problems for customers who were impacted.

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As children we learn the value of good behavior, morals, integrity and honesty. Since the last recession job opportunities have decreased dramatically, people have been forced to do anything to hold down their jobs. The question is: How far are we willing to go keep our job? An example of this matter is Wells Fargo, who as a part of their tasks wanted their employees to reach unrealistic goals to keep their jobs. Employees had to violate ethical policies to achieve their target goals.

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early stages of the scandal, the San Francisco based financial institution was investigated by the local Los Angeles City’s Attorney and California state officials. Preliminary investigations revealed the extent of the fraud and malpractice predated as far back as 2011. As a result, on September 8, 2016, federal investigators followed suit and the Consumer Financial Protection Bureau Agency opened an investigation against Wells Fargo and handed a $185 million penalty to settle the dispute. This settlement would become the largest fine levied in the agency’s history. Of the $185 million, $100 million comprised of fines from the Consumer Financial Protection Bureau (CFPB), $50 million originated from the Los Angeles City Attorney’s Office, and

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It was designed to separate the banking (which provides credit for lending money to the borrowers) and non-banking activities (such as trading in money market). There were some provisions under this act such as Regulation Q, which provided the ceiling to the interest rates that could be offered to the depositors by the bank. It also established Federal deposit insurance corporation (FDIC) which provides an insurance cover to the

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However, the implementation of the Single Supervisory Mechanism (SSM) by the ECB resulted in the movement of a number of supervisory responsibilities and decision making powers to the ECB.4 The aim of the SSM is to generate high supervisory quality through absorption of the main lessons of the recent crisis by way of integrating traditional micro supervision at the hands of “national competent authorities” supervisors with a macro prudential dimension provided by ECB supervisors. These diverse teams will conduct the annual supervisory cycle and provide analysis and information to the Supervisory Board, which will in turn prepare decisions on individual banks. The SSM regulation places a lot of weight on the implementation of best practice in the areas of independence, transparency and accountability through intense scrutiny. The statutory goal of the SSM is defined as “… contributing to the safety and soundness of credit institutions and the stability of the financial system within the Union and each Member State, with full regard and duty of care for the unity and integrity of the internal market based on equal treatment of credit institutions…”.5

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Who is checking the banks? The Securities Exchange Committee was created after the Great Depression in order to regulate investment banking. During the internet stock bubble in 1990s into the 2000s, it didn’t do anything to regulate. It was noted that the SEC was so useless, it eventually went down to one single employee for awhile. Banks had so much money that they were able to manipulate the government through lobbying and campaign donations.

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When it comes to the Ethical Decision Model, it does not just pertain to the employees who opened these accounts but also leadership who either failed to realize what was going on or decided to sweep it under the rug by just covertly firing some employees. Wells Fargo did take the first step in recognizing the problem but failed to define it, which explains why these unethical behaviors continued for so many years. When the corporation was initially aware of what was going on, they should have acted immediately and strategized a solution that would dilute the possibility of it occurring again. Instead of defining the problem, which would have foster, a proper solution but company decided to just terminate

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After numerous reports to the ethics line, it is almost certain that Wells Fargo officials had some knowledge of the scandal. Additionally, the inaccurate U5 forms “...confirm that Wells Fargo had ample information about the scope of fraudulent sales practices” (Cowley). Senator Elizabeth Warren “…publicly condemned [CEO John Stumpf] for his ‘gutless leadership’” in preventing and handling corruption within his company (Egan, Wattles, and

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468 Words | 2 Pages

The management initially failed to publicly acknowledging the problem that raise concerns for the shortcoming of their inadequate controls to detect the fake

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