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PR Newswire
23-09-2016, 04:43 PM
Elizabeth Warren's take on this scandal is powerful, and resonated with me personally as a long time liberal.
That said, putting things into perspective, I feel that there is an over-reaction in general.
Net Financial Impact:
http://www.bloomberg.com/news/articles/2...50-million
Fees collected illegally from customers: $2.6 million (2 million illegal accounts created, net damage is $1.3 per account)
Fees to be reimbursed to affected customers: less than $50 million (worst case scenario, taking into account affected credit rating etc.)
Fines paid: $185 million
Note that WFC's annualized income is about $20 billion.
The illegal fees over 5 years accounted for 0.013% of their 1 year profit.
Total material financial impact: (50+185)/20,000*100% = 1.2% of their annual net profit.
This scandal seems like a blip in history.
Personally, even in Singapore, I have experienced aggressive sales tactic for credit cards I don't need, so this is actually far from uncommon. I believe some of the perpetrators would have thought it is a victim-less crime as we can cancel the card any time. Of course this is not an excuse, and I am glad this is exposed for regulators to be more vigilant.
(Vested, non-core)
That said, putting things into perspective, I feel that there is an over-reaction in general.
Net Financial Impact:
http://www.bloomberg.com/news/articles/2...50-million
Fees collected illegally from customers: $2.6 million (2 million illegal accounts created, net damage is $1.3 per account)
Fees to be reimbursed to affected customers: less than $50 million (worst case scenario, taking into account affected credit rating etc.)
Fines paid: $185 million
Note that WFC's annualized income is about $20 billion.
The illegal fees over 5 years accounted for 0.013% of their 1 year profit.
Total material financial impact: (50+185)/20,000*100% = 1.2% of their annual net profit.
This scandal seems like a blip in history.
Personally, even in Singapore, I have experienced aggressive sales tactic for credit cards I don't need, so this is actually far from uncommon. I believe some of the perpetrators would have thought it is a victim-less crime as we can cancel the card any time. Of course this is not an excuse, and I am glad this is exposed for regulators to be more vigilant.
(Vested, non-core)