This case is more complicated than the corporate cases because the powerful person (me) was getting merely the appearance of what she wanted (a genuine relationship with a compatible person), not the real thing. And because the exploited party was either me or Connor, not a third party like bank customers. No one thinks the Wells Fargo CEO was a victim the way I arguably was.
I think you have misunderstood the Wells Fargo case. These fake accounts generally didn’t bring in any material revenue; they were just about internal ‘number of new accounts targets’. It was directly a case of bank employees being incentivised to defraud management and investors, which they then did. If ordinary Wells employees had not behaved fraudulently, all the targets would have been missed, informing management/investors about their mis-calibration, and more appropriate targets would have been set. In this case power didn’t buy distance from the crime, but only in the sense that it meant you couldn’t tell you were being cheated.
For more on this I recommend the prolific Matt Levine:
There’s a standard story in most bank scandals, in which small groups of highly paid traders gleefully and ungrammatically conspire to rip-off customers and make a lot of money for themselves and their bank. This isn’t that. This looks more like a vast uprising of low-paid and ill-treated Wells Fargo employees against their bosses.
...
So that’s about 2.1 million fake deposit and credit-card accounts, of which about 100,000 -- fewer than 5 percent—brought in any fee income to Wells Fargo. The total fee income was $2.4 million, or about $1.14 per fake account. And that overstates the profitability: Wells Fargo also enrolled people for debit cards and online banking, but the CFPB doesn’t bother to count those incidents, or suggest that any of them led to any fees. Which makes sense: You’d expect online banking and debit cards to be free, if you never use them or even know about them. Meanwhile, all this dumb stuff seems to have occupied huge amounts of employee time that could have been spent on more productive activities. If you divide the $2.4 million among the 5,300 employees fired for setting up fake accounts, you get about $450 per employee. Presumably it cost Wells Fargo way more than that just to replace them.
In the abstract, you can see why Wells Fargo would emphasize cross-selling of multiple “solutions” to customers. It is a good sales practice; it both indicates and encourages customer loyalty. If your customers have a checking account, and a savings account, and a credit card and online banking, all in one place, then they’ll probably use each of those products more than if they had only one. And when they want a new, lucrative product—a mortgage, say, or investment advice -- they’re more likely to turn to the bank where they keep the rest of their financial life.
But obviously no one in senior management wanted this. Signing customers up for online banking without telling them about it doesn’t help Wells Fargo at all. No one feels extra loyalty because they have a banking product that they don’t use or know about. Even signing them up for a credit card without telling them about it generally doesn’t help Wells Fargo, because people don’t use credit cards that they don’t know about. Cards with an annual fee are a different story—at least you can charge them the fee! -- but it seems like customers weren’t signed up for many of those. This isn’t a case of management pushing for something profitable and getting what they asked for, albeit in a regrettable and illegal way. This is a case of management pushing for something profitable but difficult, and the workers pushing back with something worthless but easy.
Hmm. I’m not sure I fully understand the Wells Fargo case but I interpreted it as a concern between four parties:
1. The people who got fake accounts signed up for them.
2. The employees doing the fake signups
3. A middle management tier, which set quotas
4. A higher level management tier that (presumaby?) wanted middle management to actually be making money.
So, the people being defrauded are not the customers, but the higher management tier, basically. (But, also, this entire thing might just be a weird game that middle management tiers play with each other for complex, mostly orthogonal reasons. Elizabeth references the book Moral Mazes, which Zvi provides an abridged version of here, which I suspect is important background here, although not 100% sure where Elizabeth was coming from)
[note: I hadn’t necessarily interpreted the original Well’s Fargo story with the subtext I outline here, but when you point out the correct subtext it doesn’t feel like it shifts much how the example relates to the overall point]
I think you have misunderstood the Wells Fargo case. These fake accounts generally didn’t bring in any material revenue; they were just about internal ‘number of new accounts targets’. It was directly a case of bank employees being incentivised to defraud management and investors, which they then did. If ordinary Wells employees had not behaved fraudulently, all the targets would have been missed, informing management/investors about their mis-calibration, and more appropriate targets would have been set. In this case power didn’t buy distance from the crime, but only in the sense that it meant you couldn’t tell you were being cheated.
For more on this I recommend the prolific Matt Levine:
Hmm. I’m not sure I fully understand the Wells Fargo case but I interpreted it as a concern between four parties:
1. The people who got fake accounts signed up for them.
2. The employees doing the fake signups
3. A middle management tier, which set quotas
4. A higher level management tier that (presumaby?) wanted middle management to actually be making money.
So, the people being defrauded are not the customers, but the higher management tier, basically. (But, also, this entire thing might just be a weird game that middle management tiers play with each other for complex, mostly orthogonal reasons. Elizabeth references the book Moral Mazes, which Zvi provides an abridged version of here, which I suspect is important background here, although not 100% sure where Elizabeth was coming from)
[note: I hadn’t necessarily interpreted the original Well’s Fargo story with the subtext I outline here, but when you point out the correct subtext it doesn’t feel like it shifts much how the example relates to the overall point]
Fixed, thank you for pointing this out.