Stacy Cowley writing about Wells Fargo:

“Everybody knew there was fraud going on, and the people trying to flag it were the ones who got in trouble,” said Ricky M. Hansen Jr., a former branch manager in Scottsdale, Ariz., who was fired after contacting both human resources and the ethics hotline about illegal accounts he had seen being opened.

This, along with her other compilation of personal accounts from Wells Fargo employees, is telling. Wells Fargo’s crimes (why is the word crime still not used more in the context of banks?) are some of the most significantly exposed since the financial crisis.

I can’t help but wonder if all the time spent on massive pieces of bank regulation like Dodd-Frank was misguided. Regulation focuses on metrics, audit procedures, and corporate governance policies that are no match for real human behavior in an environment that rewards deception.

I really feel like regulation needs to focus more on human behavior and group psychology. After all, the greatest systemic risks arise once the herd’s mentality shifts so that ethical behavior becomes the exception to fraudulent behavior.

Though in a different context, this is exactly what brought the financial system to its knees in 2008. The few people that understood and acted in accordance with the truth became the fools.