Sunday, May 20, 2018

How to Buy a Home in the Seattle Area: A Survival Guide

What does it really take to buy a home in the Seattle area? There are the skyrocketing prices, of course.

But nowadays, to compete in this feverish market, buyers have to deal with so much more: Pay for damage the seller doesn’t disclose. Decide whether to buy a house just a couple days after it hits the market. Have a six-figure cash nest egg saved up for a down payment and nonrefundable earnest money.

Will you let the old owners continue living in your new house for months after you buy it? Can you compete with a pool of buyers where 1 in 4 people are paying with all cash? Are you ready for heartbreak if you get outbid on your dream home even when stretching to make your highest possible offer?

Our reporting found the average buyer will tour dozens of houses, lose to higher bids about three to five times, and pursue a house for six months to a year before finally getting a home. Many buyers likened the process to a full-time job.

“It was just all-consuming,” said Michael McDermott, who bought a house with his wife in North Seattle last year. “You have to always be on guard and always be ready. It’s such a rabid market that it can get out of control really fast.”

We talked to dozens of people who know the market best — buyers, sellers, brokers and lenders from around the Puget Sound region — to put together a complete homebuying survival guide. (...)

Saving Up
Getting a Loan
Picking a Lender
Picking Your Broker
Start Searching
Act Quickly
Edges are No Longer a Bargain
Look for 'Stinkers'
Off-Market Sales
Homes That Need Work
Duplicate Houses

Begin Bidding

Here, we get to the most frenzied part of the homebuying process today.

Historically, there was one big decision you had to make when putting in an offer on a home: how much you’re willing to pay. In today’s competitive market — where nine in 10 homes in Seattle provoke bidding wars — buyers must also add sweeteners that add tremendous risk and sometimes higher costs to their bid. Each one is relatively standard now in competitive markets, and becoming more common in outlying areas.

Appraisal contingency: Your mortgage doesn’t automatically cover your purchase price — it only covers what a neutral third party, known as an appraiser, decides it’s worth. In the past, it was rare for appraisals to come in with a value far below the purchase price, but recently, buyers have started to feverishly bid up homes past what the market fundamentals dictate.

This is a concern for sellers — if buyers wind up with a mortgage loan that’s lower than what they planned, they might back out of the deal or ask to lower the price. So, to win over uneasy sellers, most successful buyers now must “waive” the appraisal contingency as part of their initial bid — guaranteeing they will pay their bid price, no matter what the appraisal will be. So if a buyer agrees to buy a house for $750,000 but the appraiser says it’s only worth $700,000, the buyer is on the hook for paying the remaining $50,000 in cash.

Practically speaking, this means buyers can’t max out their down payment with all the cash they have saved up, because they might need some more if the appraisal comes in low.

Inspection contingency: Most buyers will get a pre-inspection before bidding on a house; this is a $200 to $300 walk-through with a licensed professional who will assess the home’s basic condition — and that is all you’ll have time to do since homes sell quickly. In the 30 or so days between when a seller agrees to accept your offer and the deal closes, you can have a much more thorough inspection that would reveal the full extent of problems in a house. This is particularly important for older homes.

In the past, a detailed inspection that showed the roof needed $10,000 in undisclosed work might have yielded a renegotiation to lower the sale price; now, however, to be competitive most buyers must “waive” the inspection contingency, meaning they’ll pay the full price no matter what the inspection turns up. This is can be a huge source of anxiety for buyers who may not fully know what they’re getting themselves into.

Matt van Winkle, a RE/MAX broker in Seattle, has heard stories of buyers having to pay as much as $100,000 in repairs that they didn’t find out about until after they were on the hook for the sale. Local courts have generally sided with the sellers in these cases.

“You see it all the time, where you know it’s just something waiting to happen,” van Winkle said. “There are buyers that are just being foolish, and they do win sometimes because they either don’t know what they’re doing or they’re willing to be as aggressive as necessary to get a property.”

Two items that come up a lot: The side sewer (which often needs replacement in older local homes) — crews can send a camera through the line, called a scope, to check it for about $250; and the oil tank, another common item in older homes that must have a “decommission certificate” showing it’s been buried or removed.

“Just about anything you find during inspection isn’t going to alter the sale price, which is remarkable for me,” said Singh, the Wedgwood homebuyer. The seller of his new home made a $200,000 profit over what they had paid nine months prior. “But in this market, that’s how it is. Including rats being in the property. OK, you pay a million bucks for a rat-filled house.”

Financing contingency: Typically you can back out of a home purchase if your mortgage loan falls through. But it’s standard for buyers to “waive” the financing contingency, guaranteeing they will buy the home regardless.

Title contingency: Washington law mandates that sellers must provide a title to the home, listing some vital stats on the property. If there’s a surprise in the title — like unpaid property taxes or a driveway that’s actually shared with a neighbor — a buyer can back out or renegotiate the price. Sellers do not want to deal with this uncertainty, though. Most buyers now must “waive” the title contingency, meaning they can get a title full of surprises and have no recourse. A dive into public records databases can reveal some of the things that the title would unearth, however.

“I can never advise” waiving all those contingencies, Jaime Stenwick, a RE/MAX broker in Seattle, said. “But I have to tell them their offer is probably not going to be accepted if they don’t.”

Rentbacks: You may be under the mistaken impression that once you buy a home, you can now live in it. But these days sellers are often under the gun to turn around and buy a home in the same crazy market, so they may want a few months to continue living in their home while they search for their next house. It’s common for buyers to agree to delay their move into their new home by granting 60-day or 90-day rentbacks to the sellers.

Nonrefundable earnest money: Buyers have long typically forked over a small amount, like 1 percent of the purchase price, in cash once the deal is initially agreed upon. Now buyers are offering upwards of 5 percent in earnest money. That amounts to about $40,000 on the typical Seattle house. And more buyers are giving this money away as a nonrefundable payment — another new twist — so if the deal falls through, your money is gone.

Other tips on bidding

The letter: Just about everyone now sends sellers a letter about how much they love the house — complete with cute pictures of their kids — so when you write one you’re only separating yourself from developers and investors to prove you’re a real person. The hard truth, though, is that a lot of these letters wind up in the trash. Some listing agents refuse to show them to their clients for fear that emotion will get in the way of the highest offer. Of course, some sellers do care, and want their house to go to a good family, especially for the neighbors they’re leaving behind.

Ask to be No. 2: Savvy buyers can ask to be placed second in line in case the winner’s offer falls through, or they back out of the purchase.

That way, said Laurie Way, a Coldwell Banker Bain broker in Seattle who has used that strategy, “They don’t start taking offers all over again — you just slide right in.”

by Mike Rosenberg, Seattle Times | Read more:
Image: Emily M. Eng

Alec DeCaprio

[ed. Damn. Kids! ... I hate 'em. Backing track here:]

U.S. Military Defends Controversial Decision To Test Kilauea Volcano On Hawaiian Civilians

Explaining the strategy behind the recent domestic deployment of their new geological weapon, U.S. military officials released a statement Friday defending their much-criticized decision to test the Kilauea volcano on Hawaiian civilians. “The defense of our nation is paramount, and as recently as last month, we lacked a comprehensive practical understanding of the costs, side effects, and ultimate strategic advantages of deploying the Kilauea volcano in a real-world environment,” said U.S. Air Force General and Vice Chairman of the Joint Chiefs of Staff Paul Selva, who declared the launch of the top-secret, $65 billion military project as an unequivocal success. “We anticipated that the residents of Hawaii would be frustrated with the number of homes destroyed by lava and the amount of volcanic ash particles in the air, but those who would denounce this vital military initiative need to remember that Hawaii is actually sparsely populated and far more isolated relative to other potential test areas. From a military perspective, Project Kilauea Eruption is now ready for frontline use in future conflicts, so in the long run, volcanic tests on American citizens are part of our very real commitment to protecting American lives.” Pentagon sources disclosed that the Kilauea project was fast-tracked after recent seismic activity in North Korea suggested that they were developing several volcanoes of their own.

by The Onion |  Read more:
Image: USGS via
[ed. See also: How Trump changed everything for The Onion]

Lexington Lab Band

[ed. Lynyrd Skynyrd classic (... and here's a Huey Lewis tune, too). If you play guitar, check out the lessons (and covers) on tondr's (Dale Adams') excellent YouTube channel. See also: Lexington Lab Band - The Making of a Band.]

Saturday, May 19, 2018

Abigail Heyman, Untitled, 1971

Library Signs

The U.S. Computer Industry is Dying and I’ll Tell You Exactly Who is Killing It and Why

The truth is that much (but not all) of the American technology industry is being led by what my late mother would have called “assholes.” And those assholes are needlessly destroying the very industry that made them rich. It started in the 1970s when a couple of obscure academics created a creaky logical structure for turning corporate executives from managers to rock stars, all in the name of “maximizing shareholder value.”

Lawyers arguing in court present legal theories – their ideas of how the world and the law intersect and why this should mean their client is right and the other side is wrong. Proof of one legal theory over another comes in the form of a verdict or court decision. We as a culture have many theories about institutions and behaviors that aren’t so clear-cut in their validity tests (no courtroom, no jury) yet we cling to these theories to feel better about the ways we have chosen to live our lives. In American business, especially, one key theory says that the purpose of corporate enterprise is to “maximize shareholder value.” Some take this even further and claim that such value maximization is the only reason a corporation exists. Watch CNBC or Fox Business News long enough and you’ll begin to believe this is the God’s truth, but it’s not. It’s just a theory.

It’s not even a very old theory, in fact, only dating back to 1976. That’s when Michael Jensen and William Meckling of the University of Rochester published in the Journal of Financial Economics their paper Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.

Their theory, in a nutshell, said there was an inherent conflict in business between owners (shareholders) and managers, that this conflict had to be resolved in favor of the owners, who after all owned the business, and the best way to do that was to find a way to align those interests by linking managerial compensation to owner success. Link executive compensation primarily to the stock price, the economists argued, and this terrible conflict would be resolved, making business somehow, well, better.

There are many problems with this idea, which appears to be more of a solution in search of a problem. If the CEO is driving the company into bankruptcy or spends too much money on his own perks, for example, the previous theory of business (and the company bylaws) say shareholders can vote the bum out. But that’s so mundane, so imprecise for economists who see a chance to elegantly align interests and make the system work smoothly. The only problem is the alignment of interests suggested by Jensen and Meckling works just as well – maybe even better – if management just cooks the books and lies. And so shareholder value maximization gave us companies like Enron (Jeffrey Skilling in prison), Tyco International (Dennis Kozlowski in prison), and WorldCom (Bernie Ebbers in prison).

It’s just a theory, remember.

The Jensen and Meckling paper shook the corporate world because it presented a reason to pay executives more – a lot more – if they made their stock rise. Not if they made a better product, cured a disease, or helped defeat a national enemy – just made the stock go up. Through the 1960s and 1970s, average CEO compensation in America per dollar of corporate earnings had gone down 33 percent as companies became more efficient at making money. But now there was a (dubious) reason for compensation to go up, up, up, which it has done consistently for almost 40 years until now we think this is the way the corporate world is supposed to work – even its raison d’etre. But in that same time real corporate performance has gone down. The average rate of return on invested capital for public companies in the USA is a quarter of what it was in 1965. Sure productivity has gone up, but that can be done through automation or by beating more work out of employees.

Jensen and Meckling created the very problem they purported to solve – a problem that really hadn’t existed in the first place.

Maximizing shareholder return has given us our corporate malaise of today when profits are high (but are they real?) stocks are high, but few investors, managers, or workers are really happy or secure. Maximizing shareholder return is bad policy both for public companies and for our society in general. That’s what Jack Welch told the Financial Times in 2009, once Welch was safely out of the day-to-day earnings grind at General Electric: “On the face of it,” said Welch, “shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy… your main constituencies are your employees, your customers, and your products. Managers and investors should not set share-price increases as their overarching goal. … Short-term profits should be allied with an increase in the long-term value of a company.”

Now let’s look at what this has meant for the U.S. computer industry.

First is the lemming effect where several businesses in an industry all follow the same bad management plan and collectively kill themselves. We saw it in the airline industry in the 1980s and 90s. They all wanted to blame regulation, then deregulation, then something else. The result was decimation and consolidation of America’s storied airlines and the services of those consolidated companies generally sucks today as a result. Their failings made necessary Southwest, Jet Blue, Virgin America and other lower-cost yet better-service airlines.

The IT services lemming effect has companies promising things that can not be done and still make a profit. It is more important to book business at any price than it is to deliver what they promise. In their rush to sign more business the industry is collectively jumping off a cliff.

by Robert X. Cringely, I Cringely |  Read more:
Image: uncredited
[ed. It not just the technology industry.]

Tom Petty & Eddie Vedder

Colorado Says Fishing Next to Private Land is Trespassing

If you care about fishing or boating Colorado’s rivers, this ongoing legal case should have relevance for you. Roger Hill is a 76-year-old Coloradan who likes to fish while standing on the bed of a stream. One of his favorite spots is a stretch of the Arkansas River below Salida.

A local landowner claims that Hill is trespassing when he stands on the streambed adjacent to the landowner’s property. He has responded by repeatedly throwing rocks at Hill while he is fishing and leaving threatening notes on his car. The landowner even shot at one of Hill’s fishing buddies, though he was thrown in jail for that little stunt.

Hill claims a right to fish from the streambed on the grounds that the stretch of the Arkansas River where he fishes is navigable and that the state of Colorado thereby owns the bed of the stream. So he sued the landowner.

Now, Colorado has moved to dismiss the case, arguing that it cannot go forward without the state’s participation. In a complicated argument, the state also claims that because it has not consented to being sued, the case must be dismissed. Mind you, the state could simply waive its immunity claim and support the right of people like Hill to fish. Instead, the state is actively seeking to block Hill’s claim that he has the right to access navigable streams.

The notion that states own the beds of navigable streams derives from a constitutional principle known as the “equal footing doctrine.” It provides that when states enter the union, they do so on an “equal footing” with other states. Though Colorado is home to many substantial rivers and streams, none have ever been officially declared “navigable” for purposes of determining title to the bed.

This is a much bigger problem in Colorado than in most states. In Colorado, you are deemed a trespasser if you merely float over a riverbed adjacent to private property. As a result, Colorado recreational boaters and fishers use Colorado’s waterways at the sufferance of private landowners. One good way around this problem is to have them declared “navigable” for title purposes, and that is what Roger Hill is seeking to do on the Arkansas River.

The U.S. Supreme Court considers waterways to be navigable for title purposes if they were used or could have been used at the time of statehood as highways for commerce. It is well known that fur traders used the Arkansas River to move their furs, and loggers once sent hundreds of thousands of logs downstream for use as railroad ties. That seems to be evidence that the state owns the bed of the river — not in the conventional sense of a party owning land, but as a protector of public rights.

The Supreme Court’s most eloquent expression of the state as protector of access came in the context of a decision upholding Illinois’ rights to the bed of Lake Michigan in Chicago Harbor. According to the Supreme Court, title to the bed of navigable water bodies “is a title different in character from that which the state holds in lands intended for sale. … It is a title held in trust for the people of the state, that they may enjoy the navigation of the waters, carry on commerce over them, and have liberty of fishing therein, freed from the obstruction or interference of private parties.”

If the state were properly exercising its trust responsibility to the people of Colorado, then it would have filed this case itself on behalf of Roger Hill. Short of that, it might at least have intervened on his side after the lawsuit was filed, or even just stayed out of the dispute.

Instead, it seeks to dismiss the case and thereby undermine all the boaters and fishers who merely want to exercise the rights guaranteed to them by the U.S. Constitution. Think about what this means: State leaders charged with protecting public rights in navigable waters are actively seeking to block those rights.

by Mark Squillace, High Country News | Read more:
Image: via
[ed. If true, this is a terrible abrogation of the state's responsibililty re: public trust doctrine. Navigability was a big issue in Alaska. So much so, the state maintained a special Section in the Dept. of Natural Resources specifically to document current and historical use of state waterways to preserve public use and access.] 

Forget New Robots. Keep Your Eye on the Old People.

Bloomberg asked readers a year ago: “Are you about to be replaced by a robot?” Next the question became a statement: “Robots Are Coming for Jobs of as Many as 800 Million Worldwide.”

Does the real-world experience so far back up the fears? Japan and the U.S. are two of the countries most advanced in robot deployment, and yet both are very close to full employment. To be sure, introducing more software and more robots into the workplace introduces very real problems of training and retraining, but there will always be more work to be done.

Scary as the rise of robots apparently is, perhaps it’s a fixation because it’s actually less scary than the real social issues ahead. One of those is how to integrate growing numbers of elderly into the workplace. More elderly workers will force many people to confront their biases, fears and prejudices, probably leading to a bigger cultural clash than that with the machines.

No matter how much they may disavow explicit age discrimination, many companies try to portray themselves as cool places to work for young people. And indeed these companies are especially interested in hiring younger people: The median age at the hot tech companies ranges from 27 to 31. It’s 38 at IBM and 39 at Hewlett Packard, still young by most standards, but in the tech industry those are viewed as much stodgier places to work. Overall, the median age of American workers is a little over 42.

It is not a surprise that tech companies should have so many younger workers, because younger people probably are on average more in touch with the latest developments in rapidly changing fields, such as programming and software. Younger people also seem more interested in putting in the sometimes crazy hours behind many startups, because they have a higher overall career return from doing so.

Of course, American business is becoming more like the tech sector as more companies are incorporating tech innovations. That development may not favor elderly workers.

Squeamishness about the elderly manifests itself in advertising too. Retirement products and Viagra are exceptions, but so many ads use young actors because companies are image-conscious. Collectively it amounts to a harmful form of age discrimination. These biases toward youth may be a greater problem in America, which typically has prided itself on being a young, dynamic culture, always riding the next wave of change.

There is also a practice, hard to avoid even in efficient workplaces, to reward workers to some extent on the basis of seniority alone. In the longer run that makes elderly workers a potential target for cost-cutting, even if they are doing a good job.

Of course, the age structure of America’s workforce is moving in the opposite direction of these trends. The populations of the U.S. and many other developed nations are aging, and the big surprise has been that older people want to work more than in previous generations. Against many prior expectations, the labor-force-participation rate of older Americans started rising in the 1980s and 1990s. For instance, the labor-force-participation rate for men ages 65 to 69 was 25 percent in 1985 but 37 percent in 2016. By 2020, over one-quarter of the workforce will be over 55 years of age.

I would suggest that the ability to spot, mobilize and deploy older workers is the next biggest source of competitive advantage in the U.S. The sober reality is that many companies should retool their methods to fit better with the experience and sound judgment found so often in older workers. That also will involve a retooling of the glamour notion to valorize the young less and the idea of maturity more. HR departments may have to work harder to help older workers keep up with new technologies.

That prospect doesn’t make for exciting headlines as a robot takeover does. But most of the story of economic success involves such small changes. And do you know which group of workers often understands that best? The older ones.

by Tyler Cowen, Bloomberg |  Read more:
Image: Getty
[ed. Then again, they may end up mostly in part-time and service industry jobs that pay low wages and that young people seem to be avoiding. Ageism is a problem, and needs a #metoo moment (too).]

Friday, May 18, 2018

The Entire Economy Is MoviePass Now

Enjoy it while you can

I’ve got a great idea for a start-up. Want to hear the pitch?

It’s called the 75 Cent Dollar Store. We’re going to sell dollar bills for 75 cents — no service charges, no hidden fees, just crisp $1 bills for the price of three quarters. It’ll be huge.

You’re probably thinking: Wait, won’t your store go out of business? Nope. I’ve got that part figured out, too. The plan is to get tons of people addicted to buying 75-cent dollars so that, in a year or two, we can jack up the price to $1.50 or $2 without losing any customers. Or maybe we’ll get so big that the Treasury Department will start selling us dollar bills at a discount. We could also collect data about our customers and sell it to the highest bidder. Honestly, we’ve got plenty of options.

If you’re still skeptical, I don’t blame you. It used to be that in order to survive, businesses had to sell goods or services above cost. But that model is so 20th century. The new way to make it in business is to spend big, grow fast and use Kilimanjaro-size piles of investor cash to subsidize your losses, with a plan to become profitable somewhere down the road.

Over all, 76 percent of the companies that went public last year were unprofitable on a per-share basis in the year leading up to their initial offerings, according to data compiled by Jay Ritter, a professor at the University of Florida’s Warrington College of Business. That was the largest number since the peak of the dot-com boom in 2000, when 81 percent of newly public companies were unprofitable. Of the 15 technology companies that have gone public so far in 2018, only three had positive earnings per share in the preceding year, according to Mr. Ritter.

Silicon Valley wrote the playbook for spending money in pursuit of growth, and the tech industry remains a hotbed of fast-growing yet unprofitable companies. Uber, which is expected to go public next year, reportedly lost $4.5 billion last year as it sought to expand internationally and fought price wars with competitors including Lyft. Snap lost $3.4 billion last year, its first as a public company. Airbnb just had its first profitable year after a decade of investor-backed losses. (...)

The rise in unprofitable companies is partly the result of growth in the technology and biotech sectors, where companies tend to lose money for years as they spend on customer acquisition and research and development, Mr. Ritter said. But it also reflects the willingness of shareholders and deep-pocketed private investors to keep fast-growing upstarts afloat long enough to conquer a potential “winner-take-all” market. Today’s public tech companies generally earn more revenue than their dot-com era counterparts, and could find it easier to flip the profit switch once they’ve reached a sufficient size.

“The fact that Google and Facebook were able to generate such enormous profits and growth does give hope to some companies,” Mr. Ritter said. If start-ups can figure out to convert a large user base into paying customers, he added, “it can be enormously profitable.”

Perhaps the buzziest money-loser of the year is MoviePass, which has upended the film industry by essentially giving away millions of free movie tickets. Until recently, MoviePass members could pay $9.95 for a monthly subscription that allowed them to watch up to one movie per day in theaters, with MoviePass paying the face value of the ticket on a preloaded debit card. Since the average cost of a movie ticket in the United States is around $9, going to just two movies per month resulted in a good deal for the customer, and a loss for the company. (MoviePass has started placing more restrictions on which films its customers can see, perhaps in an effort to trim costs.)

MoviePass’s business model — which Slate described as “creatively lighting money aflame in order to subsidize the movie-going habits of some 3 million customers” — has turbocharged its growth. And the company maintains that it can make money by striking revenue-sharing deals with theater chains, or charging movie studios to advertise inside its app.

But investors aren’t convinced. Shares of MoviePass’s parent company, Helios and Matheson Analytics, have fallen more than 90 percent since October, and the company recently reported that it has been burning through its cash reserves, spending an average of $21.7 million per month with just $15.5 million left in the bank at the end of April. On Tuesday, Helios reported that MoviePass lost $98.3 million in the first quarter, despite adding more than a million net subscribers. (...)

Ultimately, companies like MoviePass illustrate the perilous tightrope many growing businesses must walk. Spend too little on acquiring new customers and drawing business away from your competitors, and you won’t make it off the ground. Give too many freebies away, and you risk running out of cash before you’re big enough to cash in.

by Kevin Roose, NY Times |  Read more:
Image: Glenn Harvey

Core Values

My favorite bit in Thursday's Wall Street Journal story about Wells Fargo & Co.'s latest regulatory screw-up was this statement from the bank's public relations department:
Over the past several months we've built more robust internal processes that reinforce our values, and if we find any situations where behavior violates those values, we take swift action to correct.
To which the only proper response is: What values?

After sidestepping both the 2008 financial crisis and the subsequent Libor scandal — creating the impression that Wells Fargo actually did have values — the bank has spent the last few years cleaning up one awful mess after another. The biggest came first: Low-level bank officials had felt so pressured to meet impossible sales targets that they created fake accounts that customers didn’t ask for and didn't even know existed. (Richard Kovacevich, Wells's former chief executive, was a fervent believer in cross-selling, which created the pressure.)

The fake accounts were exposed by the Los Angeles Times in 2013. Did that scandal cause Wells Fargo to reform itself? Hardly. According to an article by Bethany McLean in Vanity Fair, Kovacevich, who retired in 2007, would later describe the problems that took place on his watch as "infinitesimal" — even though bank employees had been creating fake accounts since the 1990s. After a plaintiff's lawyer filed suit in 2015, then-CEO John Stumpf wrote an email to another Wells executive.

"I will fight this one to the finish," he wrote. "Did some do things wrong — you bet and that is called life. This is not systemic."

Alas, it was systemic, and by 2016, Stumpf had been forced into retirement, with some $41 million in stock awards clawed back. The bank, meanwhile, was fined $185 million by the federal government, and 5,300 employees were let go. In September of that year, after the bank had agreed to settle with the government, it issued a news release that said "Wells Fargo is committed to putting our customers' interests first 100 percent of the time." It added that those who had been disciplined or fired had "acted counter to our values." Naturally.

That was just the beginning. In January 2017, the bank admitted that it had found evidence that senior managers had retaliated against workers who had tried to blow the whistle on the fake accounts.

March 2017: The Office of the Comptroller of the Currency, which rarely rebukes a national bank, accused Wells Fargo of an "extensive and pervasive pattern" of violations of the Community Reinvestment Act, including selling black homebuyers more expensive mortgages than white homebuyers.

July: Wells Fargo acknowledged that 570,000 customers were charged for auto insurance they didn't need — and 20,000 of those customers may have defaulted on their cars as a result.

August: Wells Fargo admitted it had found an additional 1.4 million fake accounts.

October: Wells Fargo had to repay $3.4 million to brokerage customers because the company's brokers put them in investments that regulators said were "highly likely to lose value over time."

November: Wells Fargo agreed to pay $5.4 million in a Justice Department settlement because it illegally repossessed service members' cars.

April 2018: Wells Fargo was fined $1 billion for the auto and mortgage infractions.

Are you getting the picture?

On Thursday, Wells Fargo was accused of improperly altering information on "documents related to corporate customers." Although the bank insisted that no customer had been hurt by this sleight of hand, the behavior appears to have stemmed from the same cultural flaws that were at the heart of the original fake account scandal.

"Wells Fargo," wrote the Wall Street Journal, "was trying to meet a deadline to comply with a regulatory consent order related to the bank's anti-money-laundering controls." In other words, at Wells Fargo, when you are under pressure to meet a tough goal, you do whatever you need to do, even if it’s fraudulent. That appears to be Wells Fargo’s real core value.

by Joe Nocera, Bloomberg |  Read more:
Image: Spencer Platt/Getty Images

Thursday, May 17, 2018


[ed. Getting ready to move and feeling a little homesick already. Enjoy - Nathan Aweau of Hapa.]
Lyrics (substitute Nuuanu for Manoa)