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The Story Behind Wells Fargo's Troubles

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Though the fun of the World Cup soccer tournament is over, the summer of 2018 continues — with some issues heating up. Federal Reserve Chairman Jerome Powell recently told Congress that protectionism and trade tensions, being advocated by President Donald Trump and others, can hurt economic growth and even undermine wages.

For a Timeline of Wells Fargo’s Troubles, click here.

Interest rates have been rising, quantitative tightening has started, the yield curve is sending signals, and the budget deficit is growing. According to DoubleLine Capital CEO Jeffrey Gundlach, such developments point to the economy “getting closer to a recession,” he said in a recent Barron’s interview, adding that it is 2019 (not 2018) that has become “more problematic.”

On the editorial front, Investment Advisor proudly hosted its Broker-Dealers of the Year 2018 roundtable of executives in July. Expect a full discussion of market issues, technology, regulatory and compliance topics, and more in our September issue.

As Washington Bureau Chief Melanie Waddell explains in Washington Watch, the Securities and Exchange Commission planned to wrap up its comment period for the advice standards package on Aug. 7. We hope to share more on this process with you in the months ahead. Waddell also highlights the career of Eszylfie Taylor, an advisor to the stars, in her Playing Field column. Taylor has taken on the cause of financial literacy, a challenge for many individuals across the wealth spectrum.

Meanwhile, Jamie Green highlights the career of Megan Gorman, an attorney and tax specialist. Gorman works with a diverse staff team that, she says, reflects who her clients are. She also shares stories about her celebrity clients online, so others can learn from these financial lessons.

Speaking of lessons, this month’s cover story aims to shed light on the scandals that have rocked Wells Fargo for the past two years and what these issues mean for Wells Fargo Advisors. Researching and reviewing the timeline proved to be a highly educational exercise for me, as did asking industry experts about the impact bad news can have on a business.

Interestingly enough, much of the mainstream press decided not to feature the Wells Fargo mess on its magazine covers. When I asked some media-watchers about why that might have happened, they hypothesized that it had to do with the many details and complexity of the situation — which meant the coverage often appeared further back in some publications.

Is it also possible that after the Financial Crisis, editors, writers and readers alike had become numb to such scandals? Or that we now take it for granted that large institutions will cause trouble over and over and over?

Needless to say, with millions of bank clients affected, the Wells Fargo scandals stand out as reminders that regulators, advisors, investors, reporters and others must be vigilant in scrutinizing what goes on with our accounts and our money. We also have to be on guard about what happens to our data and privacy, as the Facebook fiascos have shown.

The devil’s in the details, so it always pays to read (and sometimes to re-read) the fine print. And if documents aren’t shared with us, we can ask questions and probe what institutions are up to. That’s a key role of the media. Sadly, in today’s 24/7 web-based news cycle (and the related social-media circus), it seems to go astray.


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