By Stephen Engelberg/ProPublica
Several years after I returned to New York from Oregon, I made a strange discovery. Bank accounts I was certain I had closed were inexplicably racking up service charges.
It seemed bizarre, particularly because I had gone in person to a newly opened local branch of my West Coast bank to make sure the accounts were shut down.
The failure to pay these charges (bills were sent to my old address and never caught up with me) resulted in penalties and a report to a credit agency.
After an increasingly frustrating series of exchanges at the local branch, the bank agreed to wipe out the charges but said I would have to deal with the credit agencies on my own.
It seemed outrageous, and as the editor-in-chief of an investigative news operation, I thought about asking Paul Kiel, ProPublica’s crack reporter on bank shenanigans, to take a look.
But I stopped myself. There’s an old saying in the journalism business for this sort of thinking: News is what happens to an editor. As with so many newsroom aphorisms, it’s meant to be proclaimed with an eyeroll and a tone of deep sarcasm. Reporters view editor-generated stories as the bane of their existence, and not without reason. Random events and pet peeves are not often a great starting point for serious stories.
Early in my career, I worked for a newspaper chain whose leadership was obsessed with the weather. Virtually every summer day, editors assigned stories on the heat or thunderstorms to some hapless reporter unfortunate to be sitting in direct sight of the city desk. (To be fair, Landmark Communications ended up creating the Weather Channel, an asset that eventually sold for $3.5 billion. Maybe they weren’t as dumb as we thought.)
Determined to not be the editor whose life events turn into assignments, I did not ask for a story on the refusal of Wells Fargo to set things right with the credit bureaus they had notified.
So this month I was more than a little chagrined when news broke that Wells Fargo was paying federal and California authorities $185 million in fines for opening accounts without customers’ permission. The bank said it had fired 5,300 employees for improper actions that involved as many as 1.5 million bank accounts and 565,000 credit card accounts.
The employees, for their part, said they were responding to crushing pressure from managers to generate new fees.
I became even more annoyed with myself when I looked back and discovered a Dec. 1, 2013 Los Angeles Times story by E. Scott Reckard describing how Wells Fargo had pressured its employees to “cross-sell” accounts.
One former employee was quoted by name as saying he had opened accounts for customers without their permission. Somehow, in the late-year blizzard of great stories, I had missed this one.
As has become increasingly clear, Reckard had an enormous scoop. Last week, Wells Fargo CEO John Stumpf was hauled before the Senate Banking Committee for a hearing in which he was excoriated for his handling of the scandal. Sen. Jon Tester (D-Montana) specifically raised the question of whether the fake accounts and improper fees harmed customers’ credit ratings.
“There must have been instances where that negative information was sent to credit bureaus,” Tester said.
Stumpf acknowledged that the very act of opening a credit card can lower a person’s credit score and that this undoubtedly had an effect on customers’ ability to borrow.
“This is a big deal – if information was sent into the credit bureaus because of these falsely opened accounts, the impacts of this are far more than the fees and fines that could be associated with that,” Tester said at the hearing.
Wells Fargo’s board announced on Tuesday that it would claw back $41 million of compensation due to Stumpf. The board also announced that Carrie Tolstedt, the head of the community banking division at the time it opened fraudulent accounts, had agreed to return stock grants worth about $19 million. The bank has said it will try to help customers harmed by improper reports to credit bureaus.
As a career investigative journalist with decades of experience, I’m not quite sure what to make of all this. In this case, news had actually happened to an editor. The clue was wispy – it’s hard to believe that a couple of bank overcharges were the tip of an iceberg that involved two million illegally opened bank and credit card accounts.
Still, it is a reminder that stories can be lurking everywhere. One of my all-time favorite examples arose in Chicago in 2004. Tim Novak, the Chicago Sun-Times’ great investigative reporter, spotted a single red dump truck parked overnight at an abandoned gas station near his home. Novak noticed that there was a metal sign bolted to the truck which said it was being leased to the Chicago Department of Sewers. Why, Novak wondered, would Chicago need to lease trucks?
The trail led to one of the most classic investigative stories of recent years. Stories by Novak and Steve Warmbir exposed a literal sewer of bribery, corruption and mob ties to, among others, Nick (The Stick) LoCoco.
It turned out that most of the $40 million a year Chicago was spending on leased trucks went to companies that did little or nothing.
When it was over, the program was disbanded and dozens of city employees were convicted on federal corruption charges that included accepting bribes to steer business to favored companies.
Novak’s experience doesn’t disprove the skepticism about news happening to editors; he is, after all, one of the best reporters in Chicago. (He’s also not an editor.)
But it does show that news is all around us, if only we can see it.
–
ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.
–
Previously in Wells Fargo:
* “Wells Fargo paid no federal income taxes in 2008, 2009, and 2010, despite being profitable all three years, largely due to its use of 58 offshore tax haven subsidiaries.”
* “For the stress test, the Fed assumed that banks’ profits would suffer a prolonged hit in an economic downturn, reducing or wiping out the value of these assets. But there was an issue with Wells Fargo. Since it hadn’t lost money even at the depths of the 2008 crisis, should it be able to get some credit for its deferred tax assets?”
* Whining.
* What John Stumpf Earns.
* Secret Documents Show Weak Oversight Of Key Foreclosure Program.
* “A new lawsuit has been filed against Wells Fargo & Co. over its home equity line practices, adding to a growing list of litigation against the mortgage lender for which class action status is being sought.”
* Illinois Attorney General Lisa Madigan has also filed suit against Wells Fargo for allegedly discriminating against black and Latino borrowers.
* Wells Fargo Won’t Claw Back $125 Million Retirement Bonus From Exec Who Oversaw 2 Million Frauds.
* “[T]he language used in the Fifth Third, Wells Fargo and Advanced Micro Devices settlements is designed to discourage whistleblowers from reporting corporate misbehavior.”
* Should Wells Fargo Execs Responsible For Bilking Customers Be Forced To Return Their Pay? (Hint: Yes).
–
Comments welcome.
Posted on October 3, 2016