Juggling Dynamite

Further to the news last week that more than 5300 Wells Fargo employees engaged in massive fraud fabricating new applications for credit and customer accounts in order to reach mandated sales targets dictated from head office, we also learned that the bank negotiated a settlement with regulators and agreed to pay $185 million in fines “without admitting or denying allegations” (This must end).

And while employees are coming forward to decry their “living hell” as management doubled the product sales numbers they were to hit on a monthly basis, see Former Wells Fargo banker says pressure to sell products was a ‘living hell’, we also learn that Carrie Tolstedt the executive that was overseeing the fraudulent activities walked away with a $125 million pay package.

In fact, despite beefed-up “clawback” provisions instituted by the bank shortly after the financial crisis, and the recent revelations of massive misconduct, it does not appear that Wells Fargo is requiring Carrie Tolstedt, the Wells Fargo executive who was in charge of the unit where employees opened more than 2 million largely unauthorized customer accounts—a seemingly routine practice that employees internally referred to as “sandbagging”—to give back any of her nine-figure pay.

See this video report.

Banks need to be forced back to boring deposit takers and carved off from the financial product creation and sales business. Product sales targets are not something we can afford to allow in banking.  And claw backs of compensation and personal prosecution for executives overseeing fraud is essential.  It’s so obvious it is painful.

Matthew Parry, senior oil analyst at IEA, explains what changed the view of the IEA on the surplus in global oil markets and discusses slowing demand in China and record output from OPEC.  Here is a direct audio link.

Ryan Chilcote reports on the IEA numbers and ramifications for global markets while the young JPMorgan Global Market Strategist (sell side) offers a typical (comical) bullish view.

The surplus in global oil markets will last for longer than previously thought, persisting into late 2017, as demand growth slumps and supply proves resilient, the International Energy Agency said. World oil stockpiles will continue to accumulate through 2017, a fourth consecutive year of oversupply, according to the IEA. Consumption growth sagged to a two-year low in the third quarter as demand faltered in China and India, while record output from OPEC’s Gulf members is compounding the glut, said the agency, which just last month saw the market returning to equilibrium this year. Here is a direct video link.

Since 2007, Central banks and governments have been like reckless dam operators indiscriminately flooding good money after bad through global asset markets. All of this has been added to the debt tab and diverted capital from substantive investment in things needed to support productivity and efficiency in human life. The US national debt has nearly doubled in the past 8 years, along with staggering leaps in corporate, auto, student and all other types of debt, in pretty much every country in the world. While trillions are wasted on gimmicks, the real world weakens through an ongoing investment drought.  This is bringing an abrupt end to the most recent era of globalization as explained by Desai on Bloomberg this morning.

Meghnad Desai, emeritus professor of economics at London School of Economics, discusses the global turn against globalization and free trade agreements. Here is a direct video link.

As vapid in content as Trump generally is, on the topic of using debt for infrastructure spending, rather than financial gimmicks, he is actually quite lucid. See this clip.

Republican presidential nominee Donald Trump weighs in on the negative impact of low rates on the market, and the doubling of the nation’s debt.Here is a direct video link.