“An Infestation of Problems” at Wells Fargo

Bankers have occasionally been called locusts, but this is the first cockroach meme I’ve encountered.

John Chiang, California’s treasurer, imposed sanctions on Wells Fargo last year, taking away much of the state’s extremely valuable business from the disgraced bank. (Remember, ousted CEO Stumpf and his team were the same clowns that were so arrogant they wouldn’t conduct live earnings calls…)  In an October 16 letter, Chiang notes some improvements, but extends the sanctions due to the bank’s growing “infestation of problems”. Per the letter (HT Wolf Street):

An Infestation of Problems
In 2016, when federal and local regulatory agencies flipped the light switch to
expose the millions of unauthorized deposit, credit card, debit card, and online banking
accounts, few would have suspected that this one cockroach portended a much more
aggressive and maleficent infestation. Yet, over the past 12 months the following have
come scurrying out of dark corners within Wells Fargo:
• The number of phony accounts has ballooned from an initial 2 million to now
3.5 million.
• This past July, news broke that as many as 800,000 consumers were forced by
the bank to buy “lender-based” car insurance they did not need, tipping a
quarter of a million Wells Fargo customers into delinquency and triggering
25,000 vehicle repossessions.
• In August, a new and different auto insurance fraud scandal broke in which
the bank is being accused of failing to make refunds to consumers who paid
off their loans early.
• Also in August, Wells Fargo agreed to pay $108 million to settle a lawsuit
claiming it overcharged military veterans under a federal mortgage
refinancing program.
• Recently, a federal judge in San Francisco refused to throw out a lawsuit
accusing Wells Fargo of systematically denying loans to immigrants who
came to the United States as children and who have been allowed to stay here.
The bad news has come with such regularity, I fear more Americans will become
de-sensitized to the bank’s pervasive exploitation of the public’s trust.

Bravo Chiang.

The problem with cockroaches, of course, is the constant vigilance needed to ensure their long-term eradication.




Financial Explosive Devices Throughout the Warp and Woof of the Global Financial System – David Stockman

Interesting piece by Reagan OMB Director turned econoclast (bit awkward but I like it) David Stockman, on the failure of the Fed’s effort to boost the real economy beyond where it was before the financial crisis, while embedding risks throughout it.

The mad scramble for yield among money managers induced by nine years of massive financial repression has implanted financial explosive devices (FEDs) throughout the warp and woof of the global financial system. The systematic falsification of financial asset prices has literally touched off a chain reaction of speculation and irrational exuberance that is plenary and embedded in nooks and crannies everywhere.

via Contra Corner » Good Job, Fed! Monetary Stimulus And The 0.0001%

Even Philip Marlowe’s Anterior Insula Was Hard Boiled

“She hung up and I set out the chess board. I filled a pipe, paraded the chessmen and inspected them for French shaves and loose buttons, and played a championship tournament game between Gortchakoff and Meninkin, seventy-two moves to a draw, a prize specimen of the irresistible force meeting the immovable object, a battle without armor, a war without blood, and as elaborate a waste of human intelligence as you could find anywhere outside an advertising agency.”

– Raymond Chandler, The Long Goodbye


The Key to Keynes (Or, Applying Kahneman to Markets)

The CFA Institute’s Enterprising Investor publication has a good piece on applying behavioral finance, per Kahneman, to investment decision-making: “The Active Equity Renaissance: Behavioral Financial Markets,” by C. Thomas Howard and Jason Voss.

In effect, it explains why Keynes was right when he wrote, “Successful investing is anticipating the anticipations of others.”

Financial markets are populated by human investors burdened with emotional baggage and associated cognitive errors. In a market context, these errors are amplified because, in the aggregate, they create herding, which leads to wild price swings. Rampaging emotional crowds cause extreme volatility of returns in financial markets. Look no further than equity market price bubbles for evidence of these rampaging emotions.

The article is one in a series that address, for a lay audience, important financial topics (e.g., whether volatility is an appropriate measure of risk) from a behavioral finance point of view. Good conversation starters.


via The Active Equity Renaissance: Behavioral Financial Markets | CFA Institute Enterprising Investor

Evidence mounts that smartphones kill. Literally.

Absinthe_LargePrint tweetTwo acquaintances and one guy I know in passing have overdosed on fentanyl- laced heroin in the past four months. They were acquaintances, not friends, despite our spending a fair bit of time together because 1) like Acheson said, when asked why he stuck with Hiss, I like to think my friendship is not easily gained or withdrawn, and 2) they spent at least 25 percent of our time together staring at their fucking smartphones. Boring.

One guy’s dead, the other was narcanned back to life by his dealer and is back at the scag.

These guys got me thinking that the correlation between increasing social isolation – exacerbated by the machinations of smartphones and social media succubi – and the opioid crisis might be, in part, causal. Here’s a new data point from Scientific American – The Social Life of Opioids. Juxtapose that with Has the Smartphone Destroyed a Generation from the Atlantic and mull it over.

If you can spare the attention.