Rink Rats:
Weekend Edition
I
have banked at Wells Fargo Bank for over thirty years, they have served me
well, I have served them better.
Investors
are pushing proposals to rein in Wells Fargo (WFC), and activists are
organizing protests slamming the bank for countless consumer abuses.
They
have a lot to complain about. Over the past two years, the bank has admitted to
creating fake accounts, hitting customers with unfair mortgage fees and
charging people for car insurance they didn't need.
The
scandals have prompted changes in leadership and hefty fines.
Here's
how it happened.
It
started in September 2016, when Wells Fargo shocked the nation and announced it
had fired 5,300 workers over several years for creating millions of fake
accounts.
Wells
Fargo (WFC) has since replaced longtime CEO John Stumpf, discarded the wildly
unrealistic sales goals that led to the bad behavior and apologized for
mistreating workers.
The
bank hired the respected Elizabeth Duke to lead its board, installed fresh
directors and pledged in a splashy marketing campaign to clean up its act. New
CEO Tim Sloan vowed to uncover mistakes of the past.
Yet
America's third-largest bank remains in turmoil from the fake-account
controversy — and other scandals keep emerging. It paints the picture of a bank
that has repeatedly abused its customers.
The
nightmare is hurting Wells Fargo's business, not just its reputation. Bottom-line
growth has stalled, and the bank remains in the penalty box with regulators.
"Wells
Fargo is still trying to sweep up broken glass — but they're finding it all
over the place," said William Klepper, a management professor at Columbia
Business School.
"The
problems are far more pervasive than in just retail banking," said
Klepper, who conducted a case study on the crisis at Wells Fargo.
More
abuses uncovered.
Beyond
opening as many as 3.5 million unauthorized bank and credit card accounts,
Wells Fargo has admitted to charging customers for mortgage fees they didn't
deserve and forcing them into car insurance they didn't need. Some people even
had their cars repossessed as a result.
More
recently, Wells Fargo started refunding customers who were charged for pet
insurance and other products they didn't fully understand. It set aside $285
million to refund foreign-exchange and wealth-management clients for incorrect
pricing and fees.
And
the bank discovered that some workers altered documents about business customers
— a finding that reportedly sparked a Justice Department investigation. (The
department declined to comment.)
Worse,
in early August, Wells Fargo said it was "very sorry" for a computer
glitch that caused hundreds of people to have their homes foreclosed on.
Not
surprisingly, the Federal Reserve has yet to remove the bruising penalties it
imposed on Wells Fargo in February for "widespread consumer abuses."
The unprecedented sanctions handcuff Wells Fargo by preventing the bank from
growing.
"It
was incredibly tough and a shock, but the scale and scope of the misdeeds
warranted it," said Isaac Boltansky, senior policy analyst at Compass
Point Research & Trading.
The
Fed has said it won't lift the asset cap until it's satisfied Wells Fargo has
cleaned up its act. Wells Fargo remains in legal hot water beyond the Federal
Reserve. Federal government agencies, including the Justice Department, SEC and
Labor Department, and state attorneys general have launched inquiries into
Wells Fargo's sales tactics, according to recent SEC filings that described the
probes as at "varying stages."
Wells
Fargo also faces lawsuits and other legal actions from former and current
employees who alleged they were retaliated against after raising sales practice
misconduct issues. Almost half a dozen Wells Fargo workers told CNNMoney in
2016 they were fired after calling the bank's ethics hotline.
Wells
Fargo stock left in the dust.
Wells
Fargo said it's "focused on closely examining our company, fixing issues
we find and making things right for all our stakeholders." Wells Fargo
highlighted the progress it's made by completing an exhaustive third-party
review, revamping its sales goals and reaching an $142 million class-action
settlement with customers.
"While
there's more work to do, rebuilding trust with our team members, customers,
communities, shareholders and regulators remains our top priority," Wells
Fargo said.
Wells
Fargo's stumbles have left its stock price badly behind rivals. Although Wells
Fargo is up 16% since the scandal erupted two years ago, that's far behind the
47% rally for Citigroup (C) and 70% spike for JPMorgan Chase (JPM). Bank of
America (BAC) has nearly doubled over that span.
Simply
put, it is the culture of Wells Fargo – time to think about a Credit Union.
Because
of these fine ethics Wells Fargo is Rink Rats Jack Ass of the Month.
TOP THREE - Three
things about 2018 Baby Boomers would never have thought possible:
1).
You can order a pizza and track its progression in the oven from your phone
2).
Marijuana is legal in some U.S. states
3).
Sears filed for Chapter 11 bankruptcy
The
125-year retailer filed bankruptcy this week. As part of the plan, Sears will
be able to keep the lights on at hundreds of stores for the holiday season. And
don't forget, Sears has a $134 million debt payment due today.
We're
getting nostalgic: As a catalog business to start, Sears leveraged postwar
technological innovations in transportation & communications to build up a
fiercely loyal customer base. That's the Civil War, by the way...
And
you thought Amazon was the "everything store"? At one point, Sears
sold cocaine and opium in its catalogs. Here's how The Atlantic's Derek
Thompson captured Sears's mystique: "The company's feel for consumer
demand was so uncanny, and its operations so efficient, that it became, for
many of its diehard customers, not just the best retail option, but the only
one worth considering."
So
where did it all go wrong?
Beaten
by the competition: By the 1990s, Sears was being outgunned by big-boxers Home
Depot and Walmart...and when Amazon changed the game entirely, Sears couldn't
keep pace.
Experts
chalk that up to under investment: "Sears invested just $4 billion in
capital expenditures between 2006 and 2017...that represents less than 1% of
revenue during that time, compared to Target and Macy's spending 4% of
revenues.”
And
finally, mismanagement: Recently, CEO Eddie Lampert sold off many of Sears's
assets (like Lands' End) to bring in cash. But critics say without those
assets...Sears offered no value to customers. Fun fact: Lands' End's market cap
is ~$487 million. Sears's is less than $50 million.
Bottom
line: In the changing retail/e-commerce landscape, Sears was already swimming
against the current (Exhibit A: bankruptcies from plenty other brick-and-mortar
retailers). But with constant misfires from the c-suite, it didn't do itself
any favors.
GOLDEN YEARS - Social
Security benefits will increase 2.8 percent in 2019, the largest cost-of-living
adjustment (COLA) in seven years.
The
COLA, announced Thursday, Oct. 11, will increase the average Social Security
retirement benefit by $39 a month or roughly $468 a year. The average single
retired Social Security recipient is expected to receive $1,422 in December
2018 before increasing to $1,461 a month later. The COLA affects household
budgets for about 1 in 5 Americans, including Social Security beneficiaries,
disabled veterans and federal retirees.
AARP
Chief Executive Officer Jo Ann Jenkins said, “The 2.8 percent COLA announced
today brings needed income security to those Social Security beneficiaries and
their families who depend on their earned, modest benefits. The COLA is
particularly important for the tens of millions of families who depend on
Social Security for all or most of their income, many of whom may have lost
ground during the Great Recession. Unfortunately, the cost of living increase
may not adequately cover their expenses that rise faster than inflation
including health, prescription drug, utility and housing costs.”
On
Friday, Oct. 12, the government announced a slight rise in monthly premium
costs for Medicare Part B will go up in 2019. This increase could affect actual
individual benefits because the premium is deducted from Social Security
payments. Part B Medicare covers physician and diagnostic services, outpatient
hospital services, certain home health services and durable medical equipment.
Those
65 and older could see their Social Security COLA swallowed up by health care
costs, including the Medicare monthly premium increase, said Nancy Altman,
president of Social Security Works, a nonprofit advocacy group. The Medicare
monthly premium could be announced as early as next week. Medicare open
enrollment begins Monday and ends Dec. 7.
Social
Security is financed by a tax on workers’ wages. Next year, the maximum amount
of earnings subject to the Social Security tax will increase from $128,400 to
$132,900.
SIGN OF THE
TIMES - A
coffee shop near Brown University asks students to pay not with money, but with
their personal data?
Days
until the 2018 election: 18
A FEAST OF
REFERENDUMS - Every election year brings a slew of tax-related referendums to
state ballots. This year, the National Conference of State Legislatures tallies
more than 40, ranging from property tax exemptions to major revisions of income
tax codes — and some have national implications. Perhaps the most closely
watched is an initiative in Washington state, I-1631, that would create the
country's first carbon tax: a sliding fee on fossil fuel emissions, starting at
$15 per metric ton in 2020. The fee would increase by $2 each year, until
emissions reduction goals are met. Other states would no doubt be emboldened to
act on the issue if the initiative passes.
The
high stakes are underlined by the money pouring into campaigns for and against
the tax. The Associated Press reported that opponents, including major oil
companies, have raised $22 million and proponents, $11 million, including a $1
million donation by Bill and Melinda Gates.
In
California, the epicenter of ballot initiatives, Republicans are trying to gin
up conservative turnout by pushing a measure that would repeal a 2017 increase
in the gas tax and vehicle licensing fees. It would also require future gas tax
and licensing fee increases to win voter approval before taking effect. The GOP
is hoping Proposition 6 will boost its candidates, particularly at-risk U.S.
House incumbents. GOP funding has dried up in recent months — a stretch in
which polls have shown Prop 6 struggling to attract enough support. Elected
Republicans and party committees went months without pumping in cash, though
the California Republican Party has recently put money towards slate
mailers." On the other side, a coalition of businesses, unions and
California Democratic leaders "has filled a hefty war chest to defend the
tax increase, which [Gov. Jerry] Brown and other supporters call a desperately
needed source of funding for transit improvements.
Initiatives
in several states aim to make it harder to increase taxes, including Arizona's
Proposition 126, which would prohibit new or higher taxes on services not in
effect on or before Dec. 31, 2017; Florida Amendment 5, which would increase to
two-thirds the majority vote in the legislature needed to increase taxes; and a
North Carolina proposal to lower the state's income tax cap to 7 percent from
10 percent. Voters in other states are being asked to boost a variety of taxes,
including creating a graduated tax system and a corporate tax hike in Colorado
for education; enacting a payroll and non-wage income tax in Maine to fund
universal home care; and increasing the gas tax in Missouri.
HAPPY SPORTS
EQUINOX - All
four major sports leagues (MLB, NBA, NFL, NHL) were in action on Thursday
(October 18) for just the 18th time ever.
Fun
fact: There was a 16-year period (1985-2001) without a single sports equinox.
But now that Thursday Night Football is a fixture, the World Series starts
later, and the NBA season starts earlier, they're much more frequent.
Heck,
if the World Series goes five games, we'll have another one of these on Sunday,
Oct. 28.
Oh,
and get this...
If
the World Series goes five games and the Dodgers are in it, Los Angeles will
become just the second city to have all four major sports teams play on the
same day: Rams (Chargers have a bye), Clippers, Kings, and Dodgers. PS: LAFC
and LA Galaxy have games, too. Just for good measure.
The
first city to have this happen? Phoenix in 2001. On the same day the
Diamondbacks won the World Series (on this hit), the Suns lost to Cuttino
Mobley and the Rockets (box score), the Cardinals lost to Donovan McNabb and
the Eagles (box score), and the Coyotes lost to the Hurricanes, who made it all
the way to the Stanley Cup Final that year.
$900
MILLIONAIRE - That's a lot of hands. But your chances of winning tomorrow
night's gigantic Mega Millions jackpot? Just 1 in 302 million...and shrinking.
The
Mega Millions jackpot ballooned to $900 million after no one claimed a winning
ticket for Tuesday night's drawing (which was a measly $667 million). That payout's
been growing since a Mega Millions jackpot was last won on July 24.
And
if someone wins when it's drawn tomorrow night...it would mark the
second-largest lottery grand prize in U.S. history.
The
record prize? A $1.6 billion Powerball win in Jan. 2016.
So
in the spirit of the big drawing...how about a look at the country's love
affair with the lottery?
The
average American spends $223.04 on the lottery each year. Massachusetts
residents spend the most per capita at $763/year. And you North Dakotans play
the least with just $45/year spent on the lottery.
CANADIAN
BAKIN' - This
(after 95 years of prohibition), Canada will be the first G7 nation to legalize
recreational marijuana.
And
since we know you've been eyeing flights to Montreal for some time, let's dive
in.
The
new federal law will offer a broad regulatory framework, but Canada's 13
provinces and territories will set some of their own rules. Some specs...
The
legal age for marijuana use will be 19 in most provinces.
Recreational
users can possess 30 grams of marijuana. Medical users can carry 150 grams.
Some
terminology: Canada's not only decriminalizing weed, but also taxing,
regulating, and monitoring the industry's growth, distribution, and sale. That
means Canadian pot firms can use traditional banks, trade stocks, and even
sponsor medical studies.
More
than 100 legal marijuana stores are expected to open this week, supplied by
around 120 licensed growers. Hundreds more stores will likely open in the
coming years. Nine states in the US allow recreational marijuana, but our
neighbor to the north is the first wealthy country to take the policy
nationwide.
Valued
at more than $10 billion, Canopy is worth even more than Bombardier, the
Canadian manufacturer that is one of the world's largest makers of planes and
trains, offering a stark example of this nation's new get-rich-quick hope — the
marijuana industry. Investors have already established themselves as the first
Canucks to get high on their own supply. From the NYT: Marijuana Legalization in
Canada Has Companies Chasing a Green Rush.
BIRTHDAYS
THIS WEEK
– Birthday wishes and thoughts this week Scott Graham ….a good man; Erin Gratz …a
good friend; Katy Perry (34) Miami, FL; Dianne
Reeves (62) Santa Monica, CA.
RINK RATS IN
THE KITCHEN -
Classic
fall soup: Italian Dinner Soup
Makes:
6 servings Yield: 11 cups Start to Finish 30 mins
Ingredients
1
pound uncooked Italian sausage links, casings removed (about 4)
3
cups chicken stock or broth
3
cups beef stock or broth
1
14 1/2 - ounce can diced tomatoes with basil, garlic and oregano
1
9 - ounce package refrigerated ravioli or tortellini
2
cups baby spinach leaves, coarsely chopped
1/4
cup fresh basil leaves, coarsely chopped
2
ounces Parmesan cheese, grated
Directions
In
a large skillet, cook sausage over medium heat, stirring occasionally, until no
pink remains. Drain and set aside.
Meanwhile,
in a Dutch oven combine chicken and beef stock and undrained tomatoes; bring to
boiling. Add ravioli and cook 7 minutes. Add sausage and return to boiling.
Stir in spinach to wilt, then add basil. Divide among soup plates and top with
cheese.
May
I suggest a nice bottle of Oso Libre 2013 Carnal would go nicely with this
soup.
THE SWAMI’s
NBA PICKS 2018-19 –
Eastern Conference –
1).
Boston Celtics
2).
Toronto Raptors:
3).
Philadelphia 76ers:
4-10
(playoff contenders): Milwaukee Bucks, Washington Wizards, Indiana Pacers,
Miami Heat, Detroit Pistons, Orlando Magic, Brooklyn Nets.
11-15
(cellar): Charlotte Hornets, New York Knicks, Chicago Bulls, Cleveland
Cavaliers, Atlanta Hawks.
Champs –
Celtics
Western Conference –
1).
Golden State Warriors: Pretty good basketball team.
2).
Houston Rockets:
3-5
(on their heels): Utah Jazz, Denver Nuggets, Oklahoma City Thunder. (I'm not
sure we realize how deep Utah and Denver are, and I refuse to sleep on OKC,
especially now that Melo's gone.)
6-11
(playoff contenders): Los Angeles Lakers, New Orleans Pelicans, Minnesota
Timberwolves, Dallas Mavericks, Dallas Mavericks, Portland Trail Blazers.
12-15
(cellar): Los Angeles Clippers, Memphis Grizzlies, Phoenix Suns, Sacramento
Kings.
Champs –
Warriors
NBA
Champions – Warriors
SPORTS MEDIA - ECAC
Hockey last week announced a multi-year deal with ESPN to showcase nearly 180
additional men's and women's games on ESPN+, a premium direct-to-consumer video
service, beginning in the 2018-19 season. The agreement features all regular
and post-season home games for ECAC Hockey members Clarkson, Colgate,
Quinnipiac, St. Lawrence, and Union. Fans who subscribe to ESPN+ will also have
the opportunity to watch home games of six other ECAC Hockey members, per
ESPN's previously announced deal with the Ivy League, resulting in more than
350 games each season.
Established
in 1961-62, ECAC Hockey is home to Division I student-athletes from 12 of the
nation's most prestigious institutions: Brown University, Clarkson University,
Colgate University, Cornell University, Dartmouth College, Harvard University,
Princeton University, Quinnipiac University, Rensselaer Polytechnic Institute,
St. Lawrence University, Union College and Yale University.
ESPN+
is the premium multi-sport, direct-to-consumer video service from The Walt
Disney Company's Direct-to-Consumer and International (DTCI) segment and ESPN.
Programming on ESPN+ includes thousands of college sports events (including
football, basketball and multiple other sports from more than 15 conferences),
hundreds of MLB, NHL and MLS games,
exclusive Top Rank boxing, UFC (beginning in 2019), Grand Slam tennis,
international and domestic soccer, rugby, cricket, new and exclusive
documentary films and series, acclaimed studio shows and the full library of
ESPN's award-winning 30 for 30 films. Fans can subscribe to ESPN+ for just
$4.99 a month (or $49.99 per year) and cancel at any time.
SWAMI’S WEEK
TOP PICKS
–
NFL Football Pick of the Week – Sunday 10/21 1:05 PM ET, Fox: New Orleans
Saints (4-1) vs. Baltimore Ravens (4-2). Drew Brees faces the number 1 NFL
defense, he loses 24 – 17. (Season
to date 3-3)
College Football Pick of the Week – Saturday 10/20,
12:00 PM ET, Fox: #6 University of Michigan (6-1) vs. #24 Michigan State
University (4-2). The difference this year is Coach Harbaugh has a QB, Blue
over Sparty 35 – 28. (Season
to date 4-3)
D-III Football Pick of the Week – Saturday 10/20, 1:00 PM ET, HGTV: Hobart
Statesmen (4-2) visit #19 RPI Engineers (5-0), the slide rulers have a ball
club this year, undefeated in Troy, N.Y. RPI wins 40 – 20. (Season
to date 5-2)
SCIAC Game of the Week (men soccer) – Saturday 10/20, 7:00 PM PT: Redlands
Bulldogs (11-3, 9-2) at University of La Verne Leopards (7-7, 5-7). A must win
for the Leos to maintain playoff contention, they do 2 – 1. (Season
to date 4-3)
NHL Game of the Week – Saturday 10/20: Anaheim Ducks (5-1-1)
visit Vegas Clarkson Golden Knights (3-4-0). The Ducks are off to a great
start, the Golden Knights have a hangover, Ducks win 4 – 3. (Season to date 0-1)
Season to
Date (49 – 33)
WEEKEND BETS
- What we're
binging: The second season of Netflix's Making a Murderer premieres today.
After the first season became a smash hit profiling the criminal cases of
Steven Avery and his nephew Brendan Dassey, the sophomore season will examine
what's happened since the show aired.
And
if that's not heart-pounding enough, check out Netflix's latest success, The
Haunting of Hill House. It's seasonally appropriate and 100% Stephen King approved.
For
the first time in more than a decade, Michigan's two most heated in-state
rivalries are going down on the same day.
Noon
ET: No. 6 Michigan vs. No. 24 Michigan State in the Battle for the Paul Bunyan
Trophy. A Michigan win would increase their chances of making the playoffs from
15.5 to 20.6 percent, while a loss would drop them to 5.4 percent — and elevate
Michigan State (who would have back-to-back wins over top 10 teams) to 7.4
percent.
3
ET: About an hour north in Mount Pleasant, the Central Michigan Chippewas
(notable alumni: Antonio Brown) will play host to the Western Michigan Broncos
(notable alumni: former Packers WR Greg Jennings). The Michigan MAC Trophy is
on the line. This is serious stuff.
Next Blog: October 29 – Top Five
Until
next time, Adios
Claremont,
California
October
19, 2018
#IX-13-381
CARTOON OF
THE WEEK – The New
Yorker
RINK RATS
POLL –
Favorite Hotel on the Las Vegas Strip?
_____ Mirage
_____ Wynn
_____ MGM Grand
_____ Bellagio
_____ Caesars
_____ Other
