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Carl’s Blog

Wells Fargo Scandal Just The Beginning…

Posted 10/7/2016

“Well, how far will they go?  Wells Fargo went too far.  They took advantage of local, home town folks for the sake of filling their own pockets and did it right there in the local home town bank branch.  It was done by the folks who live and work down the street in your local community.  We all know that Wall Street has long been wrought with scandals, but those scandals were most often perpetrated on the wealthy in the big cities or the large institutional investors.  This recent Wells Fargo scandal happened to the hard working, long saving folks across middle America; right in their trusted home town bank.

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Where does a scandal like this come from? A problem like that doesn’t just surface over a few years and only effect the front line workers and only be discovered by the regulators.  I believe it had to go much deeper than the 5,300 front line folks that were fired over the last several years.  It has to have been a part of the culture of the bank and that means it has to be something from the top down.  Because I think the corruption likely starts all the way at the top, I believe the CEO, John Stumpf, along with some other upper level executives (especially in the Retail Banking division), must step down. This needs to happen in order to try and keep some level of respect for the banking and financial industry, although I am sure it’s already left an indelible mark. That is why I am so grateful to have learned about establishing a positive bank culture from the start.

When I was growing up, my father and his business partner owned about a dozen community banks.  My father set the culture in those banks and engrained in me that trustworthiness was the most important pillar of the community bank.  He taught me that the community bank was there to help the customer and not the other way around.  He taught me to put the customer first even when it might mean a little less money for me or for the bank. He taught me that if I operated in that way, it would be the best for everyone long term.

Unfortunately, I have a feeling that in the next couple of years we are going to find out that more than just one bank is operating similarly to Wells Fargo, but hopefully none quite as badly. Perhaps one of the issues is their use of an incentive based sales program, which I find to be unnecessary. The employees should be internally motivated to do the best possible job they can do for the customer and as a result, the business should be able to not just survive, but thrive.  When everyone in the organization is doing what is best for the customer, from the board Chairman to the bank tellers, it will be best for the customer, best for the employee and best for the stockholders. Everyone in the organization constantly needs to be asking themselves, “what’s best for the customer and how can we continue to make it even better?”

This whole Wells Fargo scandal is just another reason why I prefer to do my banking with locally owned community banks who still know what it means to put the customer, not the executives and the stockholders, first!”


I am beginning a blog to share with all of you some thoughts from time to time on the current landscape I see in the markets.  The thoughts are reflective of the current state at which I write them. I hope you all enjoy.

~ Carl

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Posted: 9/19/2016

Chicken Little or Yellen Little

How many times can the Fed continue to say “the sky is falling”.  Over and over and over again we hear the Fed saying “rates may be rising”.  But time and time again it doesn’t happen.  Janet Yellen and many other government financial experts from around the world meet this week at Jackson Hole, Wyoming.  An annual event hosted by the Kansas City Fed since 1981.  I am sure that when they get together, the raising of interest rates will be on the top of the list.  But will it happen, who Knows.  But, that shouldn’t stop astute investors from getting bonds and bond funds out of their portfolios.  The time to liquidate bonds and reallocate the money to other investments is when the bonds are high.  Remember, buy low and sell high.  So, if appropriate for your individual situation and you haven’t already liquidated the bonds, don’t sit around waiting because you’ve been lulled to sleep by Yellen “Little” saying “rates are rising”.