Regulations
In Wells Fargo Case, News Really Did Happen To An Editor

Several years after I returned to New York from Oregon, I made a strange discovery. Bank accounts I was certain I had closed were inexplicably racking up service charges. It seemed bizarre, particularly because I had gone in person to a newly opened local branch of my West Coast bank to make sure the accounts were shut down.

 

The failure to pay these charges (bills were sent to my old address and never caught up with me) resulted in penalties and a report to a credit agency. After an increasingly frustrating series of exchanges at the local branch, the bank agreed to wipe out the charges but said I would have to deal with the credit agencies on my own.

 

It seemed outrageous, and as the editor in chief of an investigative news operation, I thought about asking Paul Kiel, ProPublica's crack reporter on bank shenanigans, to take a look.

 

But then I stopped myself.

 

There's an old saying in the journalism business for this sort of thinking: News is what happens to an editor.

 

As with so many newsroom aphorisms, it's meant to be proclaimed with an eye roll and a tone of deep sarcasm. Reporters view editor-generated stories as the bane of their existence, and not without reason. Random events and pet peeves are not often a great starting point for serious stories.

 

Early in my career, I worked for a newspaper chain whose leadership was obsessed with the weather. Virtually every summer day, editors assigned stories on the heat or thunderstorms to some hapless reporter unfortunate to be sitting in direct sight of the city desk. (To be fair, Landmark Communications ended up creating the Weather Channel, an asset that eventually sold for $3.5 billion. Maybe they weren't as dumb as we thought.)

 

Determined not to be the editor whose life events turn into assignments, I did not ask for a story on the refusal of Wells Fargo to set things right with the credit bureaus they had notified.

 

This month, I was more than a little chagrined when news broke that Wells Fargo was paying federal and California authorities $185 million in fines for opening accounts without customers' permission. The bank said it had fired 5300 employees for improper actions that involved as many as 1.5 million bank accounts and 565,000 credit card accounts. The employees, for their part, said they were responding to crushing pressure from managers to generate new fees.

 

I became even more annoyed with myself when I looked back and discovered a Dec. 1, 2013 story by E. Scott Reckard of the Los Angeles Times describing how Wells Fargo had pressured its employees to "cross-sell" accounts. One former employee was quoted by name as saying he had opened accounts for customers without their permission. Somehow, in the late-year blizzard of great stories, I had missed one.

 

As has become increasingly clear, Reckard had an enormous scoop.

 

Last week, John Stumpf, the CEO of Wells Fargo, was hauled before the Senate Banking Committee for a hearing in which he was excoriated for his handling of the scandal. Jon Tester, the Montana Democrat, specifically raised the question of whether the fake accounts and improper fees harmed customers' credit ratings.

 

"There must have been instances where that negative information was sent to credit bureaus," Tester said.

 

Stumpf acknowledged that the very act of opening a credit card can lower a person's credit score and that this undoubtedly had an effect on customers' ability to borrow.

 

"This is a big deal — if information was sent into the credit bureaus because of these falsely opened accounts, the impacts of this are far more than the fees and fines that could be associated with that," Tester said at the hearing.

 

Wells Fargo's board announced on Tuesday that it would claw back $41 million of compensation due to Stumpf. The board also announced that Carrie Tolstedt, the head of the community banking division at the time it opened fraudulent accounts, had agreed to return stock grants worth about $19 million. The bank has said it will try to help customers harmed by improper reports to credit bureaus.

 

As a career investigative journalist with decades of experience, I'm not quite sure what to make of all this. In this case, news had actually happened to an editor. The clue was wispy 2013 it's hard to believe that a couple of bank overcharges were the tip of an iceberg that involved 2 million illegally opened bank and credit card accounts.

 

Still, it is a reminder that stories can be lurking everywhere.

 

One of my all-time favorite examples arose in Chicago in 2004. Tim Novak, the Chicago Sun-Times' great investigative reporter, spotted a single red dump truck parked overnight at an abandoned gas station near his home. Novak noticed that there was a metal sign bolted to the truck which said it was being leased to the Chicago Department of Sewers.

 

Why, Novak wondered, would Chicago need to lease trucks?

 

The trail led to one of the most classic investigative stories of recent years. Stories by Novak and Steve Warmbir exposed a literal sewer of bribery, corruption and mob ties to, among others, Nick (The Stick) LoCoco.

 

It turned out that most of the $40 million a year Chicago was spending on leased trucks went to companies that did little or nothing. When it was over, the program was disbanded, dozens of city employees were convicted on federal corruption charges that included accepting bribes to steer business to favored companies.

 

Novak's experiences don't disprove the skepticism about news happening to editors; he is, after all, one of the best reporters in Chicago.

 

But it does show that news is all around us, if only we can see it.

 

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

 

 

 

 

 

 

 

 

 

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RBI unlikely to cut rates in policy review on Tuesday: Experts
Ahead of RBI's monetary policy review on Tuesday, that will be the first by the newly-set up Monetary Policy Committee as well as by new Governor Urjit Patel, experts said it is unlikely to lower rates at its maiden review as it awaits more data on inflation.
 
"RBI may choose to wait for some more time before wielding the knife as inflationary trends may accelerate going forward," Indian rating agency Crisil said in a recent research note.
 
"Risks to inflation could emanate from high protein inflation, which has recorded double-digit growth for 14 consecutive months, services inflation, especially in rural areas, which is keeping core inflation high and sticky and surprise pick up in oil prices," it said.
 
American agency Fitch group company India Rating (Ind-Ra) said the sharp fall in retail inflation in August has accentuated the rate cut proposition in the next quarter itself, although it has made achievable the RBI's target of bringing retail price inflation down to 5 per cent by March 2017.
 
"But it may be early to rejoice given the baffling behaviour of retail inflation in the past. The cyclical components either aggravate or soften it as is evident from the movement in wholesale prices," Ind-Ra said. 
 
Wholesale food price inflation was 5.3 per cent during financial years 1996 to 2005 but increased to 9.2 per cent between financial years 2006 and 2016, it said.
 
"Clearly, the fight on the inflation front, particularly food inflation, is far from over," it added.
 
India's annual rate of inflation based on wholesale prices touched a two-year high in August at 3.74 per cent from 3.55 per cent in the month before, official data showed in September.
 
After rising for the first time in April following 17 straight months of contraction, the WPI has cumulatively risen by 4.45 per cent in the current fiscal up to August, as against 0.23 per cent for the corresponding period in 2015.
 
Food articles inflation in August increased by 8.23 per cent on year-on-year basis.
 
Earlier data on the consumer price index had showed that the annual retail inflation had eased by 100 basis points to 5.05 per cent in August.
 
Japanese brokerage Nomura expects a 25 basis points cut in repo, or the RBI's short term lending, rate in December, followed by an extended pause in 2017, given upside risks to inflation and sticky underlying factors.
 
The six-member MPC, headed by Patel, has three members nominated by the union government. If it is divided on its decision, the Governor can use his veto.
 
The MPC will meet on Monday and Tuesday for the review, the RBI said.
 
"The Monetary Policy Committee will meet on October 3 and 4, 2016, for the fourth bi-monthly monetary policy review for 2016-17," a statement here said. 
 
The government last week named three academics from the country's top institutions as its nominees. They are Chetan Ghate, Professor at the Indian Statistical Institute; Pami Dua, Director at Delhi School of Economics; and Ravindra Dholakia, Professor at the Indian Institute of Management, Ahmedabad.
 
The elevation of Patel has raised expectations among those who were critical of Rajan for not easing enough the monetary policy by cutting rates, though his moorings are as monetarist as his predecessor and he is considered to attach the same importance to inflation control.
 
His views on monetary policy were expressed at the time Rajan held rates in the February 2015 review after making an unexpected rate cut a month earlier -- the first in nearly two years -- as he elaborated on the "important backdrop" to the move, citing the trend of accommodative monetary policies being adopted by developed economies.
 
Under Rajan, RBI has reduced interest rate by 150 basis points since January 2015.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  

 

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Indian GDP to grow 7.9% this fiscal, agriculture at 4%: Crisil
With agriculture income growth "at an above-trend 4 per cent", India's real gross domestic product (GDP) is expected to grow this fiscal at 7.9 per cent, while annual retail inflation would remain contained at 5 per cent, Indian rating agency Crisil said on Sunday.
 
"Net-net, Crisil expects real GDP to grow 7.9 per cent this fiscal and agriculture GDP at an above-trend 4 per cent, while CPI inflation would remain contained at 5 per cent (10 basis points) up year-on-year," Crisil said in a research note here ahead of the Reserve Bank of India's RBI) maiden monteray review on Tuesday under a newly constituted Monetary Policy Committee
 
"As for the road ahead, copious reservoirs augur well for the rabi season that starts this month," it added. 
 
Noting that the distribution of monsoon this season has been the best in the last three years, with only a third of the districts seeing deficiency compared with almost half in fiscal 2015 and 46 per cent in 2014, Crisil said it expects nominal agricultural GDP to rise by Rs 1.49 trillion this fiscal, compared with Rs 978 billion in fiscal 2016. 
 
"So this time around, India'sconsumption story will have two legs instead of just the urban engine on which it has duked out the past two years," the report said.
 
"We see private consumption rising 90 basis points to 8.3 per cent this fiscal compared with 7.4 per cent in fiscal 2016," it said. 
 
"Crisil's state-wise Deficient Rainfall Impact Parameter, or DRIP, scores show all states barring Gujarat, Tamil Nadu and Odisha are above-trend," it added.
 
With ample rainfall this monsoon, the reservoir storage situation has improved. 
 
"Data till September 22 indicates reservoir storage was 17 per cent higher on-year. This should support agricultural production this season and the next," Crisil said.
 
The agency expects good agricultural output help ease pressure on food prices. 
 
"On the inflation front, we expect ample kharif production to boost supply and bring down food inflation, especially for pulses where inflation has remained in double digits for 14 months on the trot now," it said 
 
On the other hand, recent data shows global food prices are skyrocketing. Where inflation settles will depend on the interplay of good monsoons, tending to lower domestic food inflation, and rising global prices exerting an upward pressure," the report said. 
 
"Sugar and confectionary prices have risen 17.7 per cent on-year since the beginning of fiscal 2017 and this continues to be a stress point for food inflation in the months ahead," it added. 
 
India's annual rate of inflation based on wholesale prices touched a two-year high in August at 3.74 per cent from 3.55 per cent in the month before, official data showed in September.
 
After rising for the first time in April following 17 straight months of contraction, the WPI has cumulatively risen by 4.45 per cent in the current fiscal up to August, as against 0.23 per cent for the corresponding period in 2015.
 
Food articles inflation in August increased by 8.23 per cent on year-on-year basis.
 
Earlier data on the consumer price index had showed that the annual retail inflation had eased by 100 basis points to 5.05 per cent in August.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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