Dear Mr. Berko: In August of 2014 you told me not to buy Wells Fargo. And in April of 2015 you said that the company would increase its earnings and dividend but that you didn’t care for the stock. This is a huge bank with a great growth record. I’d like to sell my 50 shares of Costco that I bought at $108 and buy 200 Wells Fargo at $56. Please tell me why you wouldn’t buy Wells Fargo stock.
— SB: Oklahoma City
Dear SB: I don’t trust its executive personnel; I don’t trust branch management; and I don’t trust its board of directors. Even though Wells Fargo (WFC) now trades at $48 and is expected to increase its revenues, income and dividends again this year, and even though six brokerages rate WFC as a “strong buy,” my sense of probity won’t allow me to recommend it. Recommending WFC suggests that I approve of its crooked and unacceptable business practices.
Wells Fargo is headquartered on Montgomery Street in San Francisco, a couple thousand miles west of Wall Street. Because of its distance from Wall Street, I believed WFC wasn’t infected by the cupidity, the insatiate venality, and the foul, extortionist and larcenist conduct that defined Bank of America, J.P. Morgan, Citigroup, Morgan Stanley, Goldman Sachs, etc. Wow, was I wrong.
An ex-WFC Florida employee, and others, have described to me the incredible pressure that devolved upon WFC employees to order credit cards for customers without permission, sell overdraft protection to customers who don’t need it and forge account holder’s signatures. Then WFC management had employees open ghost checking and savings accounts with forged applications for customers. These accounts were never used nor authorized but resulted in monthly service fees. Reportedly, WFC employees opened accounts for homeless people and sold them identity and theft protection to generate monthly fees. Other employees assigned a second PIN number to customers’ debit cards then opened online banking accounts (without permission) that automatically debited account fees from authorized accounts. Then WFC took money from authorized accounts to pay fees for unauthorized accounts. And when the unauthorized fees were not paid, WFC forced those customers’ accounts into collection.
