Coach Gets Quirky With Kate Spade; Warren Buffett’s Latest Thoughts; It’s Kumbaya for Comcast and Charter Communications

Luxury quirk…

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Coach is about to get a whole lot more accessorized now that it announced it will be buying Kate Spade. The $2.4 billion price tag on the deal means Coach will be plunking down $18.50 per share, which ends up being a 9% premium over Kate Spade’s Friday closing price. Analysts are digging the merger, thinking it’s a good fit and news of the deal set Wall Street tongues wagging, subsequently sending shares of both companies up.  In fact, ever since Kate Spade brass decided on a sale back in December, the stock has been on the rise. Which is weird because before that the stock was flagging over increased competition and decreased traffic and sales. Much of the enthusiasm over the sale is because people think Coach will have an opportunity to up its street cred with millennials. After all, Kate Spade’s quirky merchandise tends to resonate with that finicky demographic. And when something actually resonates with millennials, companies want in and are quick to figure out how to make a lot of money in that arena.  In fact, 60% of Kate Spade sales come from millennials while only 15% come from outside the U.S. Go figure.

It’s all about the tapeworm…

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It was that time of year again where one of the wealthiest men in the world imparted his financial wisdom onto his shareholders, and also regular people. Sort of. At the annual Berkshire Hathaway meeting held in Omaha this past weekend, Warren Buffett and his partner, Charlie Munger, shared their isights on several topics including Wells Fargo, Amazon and even the Republican healthcare bill.  On Wells Fargo, Buffett said there were three huge mistakes, but the biggest one was not acting on the problem when they first heard about it. On the Republican healthcare bill, he shared this pearl: “Medical costs are the tapeworm of economic competitiveness.” Got it? Tapeworm. Also,  he messed up royally by not ever owning shares of Amazon.  He admits he never anticipated Jeff Bezos going as far as he did. Apparently Buffett’s oracle skills failed him on that one. On a different note, he said that if he dies tonight, he’s convinced shares of Berkshire Hathaway would go up tomorrow. Warms the heart now, doesn’t it.

Well isn’t this precious…

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Comcast and Charter Communications are joining hands in the spirit of fighting against the dreaded and unflagging power of wireless carriers. Apparently when it comes to fighting wireless carriers, there is an inherent safety in numbers. So together the two companies will join hands and tackle such things as customer billing and device ordering systems. Also, they made a deal with each other that neither one would attempt to buy any other wireless companies and to consult one another before either one would make related deals,. They want to avoid increasing competition between the two companies. A move like this allows them to develop wireless services for their own companies without worrying over competition from each other. So its’s a little kumbaya and a little self-preservation.  And bonus: The two companies have said the plan could have the potential of lowering costs for its customers. However, that remains to be seen so don’t hold your breath.

 

It’s Equal Pay Day! Just Not For Everyone; JP Morgan Chase Chief Urges…Confidence; Wells Fargo Whistleblower Gets Last Laugh. Sort of.

100% Wrong!

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It might be 2017, but in a lot of ways it may as well be 1917. For some inexplicable reason a pay gap still exists between men, women and people of color. So weird, right? Hard to believe, but on average women still make 80 cents for every dollar a man gets. That’s assuming we’re taking about white, straight women. It all goes precipitously downhill from there. It’s a good thing women have an advocate in the form of Facebook COO Sheryl Sandberg.  Her nonprofit LeanIn.org has just whipped out its latest campaign, with a little help from Funny or Die, called #20percentcounts.  Because it absolutely does. One of the more startling facts of data from the Institute for Women’s Policy Research shows how closing that offensive 20% pay gap would actually lift over three million working women out of poverty. Out. Of. Poverty. In honor of Equal Pay Day, look for 20% discounts from several businesses to draw attention to this issue. For the full list, stop on by at LeanIn.Org.

Sauce-d…

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Well, if Jamie Dimon is saying it then it must be so. The JP Morgan Chase & Co. CEO just regaled us with his annual letter and started by saying just how friggin’ awesome the United States is and how it is “stronger than ever before.” But. It’s a big but. More like a BUT. He then goes on to discuss how “…something is wrong” with our country. He does, after all, sit on the President’s business forum, so I guess he would notice a few things that are…amiss.  For instance, he’s not digging the labor market, or rather there aren’t enough laborers in it. Of course, inner-city schools made a brief appearance in the letter, along with destructive anti-trade policies, infrastructure spending, corporate taxation, and those ever-pesky excessive regulatory rules. Dimon really took a lot of issue with all those banking regulations that are apparently marring the business landscape of the country. In all fairness, he would know a thing or two about that. Dimon feels the public should start showing a little more (un)conditional love towards our great big, fiscally-motivated financial institutions. The takeaway, according to Dimon’s letter? “Confidence is the ‘secret sauce’ that, without spending any money, helps the economy grow.” Got that? Confidence = Secret sauce=economic growth .Who knew?

Awkward…

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In all the talk about Wells Fargo’s illegal activities and all-around bad behavior, it seems a very important figure got lost – that being the very brave whistleblower who called out the bank over its fraudulent account opening activities. Said whistle-blower lost his job in 2010 after calling to complain to the bank’s very own ethics hotline, in addition to his supervisors,  about his suspicions that Wells Fargo was engaging in some problematic business practices. Now, not only was the bank ordered to hire him back, but it also has to pay him…wait for it…$5.4 million. Of course, that number pales in comparison to the $185 million worth of settlements that Wells Fargo has had to cough up already. But still, it’s gotta hurt for Wells Fargo. Well, cry me a river. Because after all, that $5.4 million is meant to cover back pay, damages, compensation and, of course, legal fees. This payout also has the dubious distinction of being the largest award ever ordered by OSHA. Naturally, Wells Fargo is not happy with the ruling and plans to fight it. As for the employee’s plans to return to Wells Fargo, well, that remains to be seen.

 

Trump Tweet-Targets Nordstrom; Under Armour CEO Says It All Wrong; Wells Fargo Continues to Anger

Oh no you didn’t…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

 

Just one week after pulling Ivanka Trump’s fashion line from its stores, Nordstrom has managed to incur some serious Presidential social-media wrath, via Twitter of course. The Tweeter-In-Chief wrote that his daughter was “treated so unfairly” by the department store and “She is a great person — always pushing me to do the right thing! Terrible!” Nordstrom argued that the merchandise’s performance wasn’t up to snuff, and that it regularly evaluates the thousands of brands that it carries to decide which ones get the boot and which ones don’t. And Ivanka’s line got it, though the chain had been carrying the line since 2009. Back in November, Nordstrom co-president Pete Nordstrom sent out a company memo explaining that the turmoil surrounding the election is putting the retailer in a “tight spot.” It risks offending Trump-haters for keeping the line, but also risks alienating shoppers who support him. Nordstrom tried to explain that it makes a “sincere effort not to make business decisions based on politics but on performance and results,” but found itself “in a very difficult position.”  That difficult position probably had to do with calls for boycotts of the merchandise, and even the store.  And it’s not like Nordstrom was the only one who took this sort of action. Neiman Marcus Group also stopped selling her jewelry online and in one of its stores in the northeast. Shares of Nordstrom had dropped a smudge 1% following Trump’s tweet. But they quickly bounced back. So maybe the effect of Trump’s fury only goes so far.

That’s gonna come back to haunt you…

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Speaking of which…Under Armour CEO Kevin Plank played nice with Trump so of course, it’s now going to cost him. Literally. During an interview on CNBC’s “Fast Money Halftime Report,” host Scott Wapner asked the athletic apparel chief executive about his involvement in Trump’s initiative to create manufacturing jobs in the United States. Some of the pearls that escaped Plank’s mouth included, “To have such a pro-business president is something that is a real asset for the country…People can really grab that opportunity.” [cue crickets chirping]. Naturally, Under Armour had to issue a statement to clarify Kevin Plank’s remarks – lest anyone think that he really meant what he said, which would lead to a boycott. Except that sort of already happened as “Boycott Under Armour” hashtag made its way into the Twitter-sphere in no time. In the meantime, UA insisted that it engages in “policy, not politics” and Plank’s statements had to do with job creation.  I shall spare you the details of official company statement – you’re welcome! – but rest assured it included all the usual themes about the beauty of unity, diversity, welcoming immigrants etc. The fact is, UA can’t afford any boycotts, whether Plank meant what he said or not. Its shares have been falling lately and in its most recent earnings report, the company missed expectations and forecasted slower growth for 2017.

And here’s one more reason to hate Wells Fargo…

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In case you weren’t incensed enough by Wells Fargo’s fraudulent account scandal, CEO Tim Sloan said that the bank is committed to helping the Dakota Pipeline project. While it would be nice to focus all rage on Wells Fargo, who loaned $120 million toward this project, the fact is the bank is just one of 17 that gave loans to help fund the $3.8 billion project. Obama had initially halted the project, but President Trump swiftly reversed that action and is looking forward to its completion. Come June, the pipeline is expected to ship half a million barrels of crude every day from North Dakota to Illinois. Unfortunately the 1,200 mile pipeline cuts through an Indian reservation with deep cultural significance, and it’s likely the pipeline will incur damage on the site. The pipeline also poses major environmental hazards where it crosses the Missouri River. The Standing Rock Sioux reservation is downstream from the crossing and the pipeline could end up polluting the Tribe’s drinking water. The Seattle Council is doing its part to combat Wells Fargo’s involvement by pulling about $3 billion in city funds.  Seattle has a contract with the bank that expires in 2018, and it most definitely will not be renewed. In the meantime, the council is on the hunt for a more “socially responsible bank.” Good luck with that one.

Trump’s Been Dealing it to Himself; Volkwagen Wants Your Love Back; Excuses, Excuses: Barnes & Nobles Whips One Out

Even more Trump’d up…

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President-elect Donald Trump’s foundation admitted it “self-dealt.” Self-dealing is when  leaders of non-profit organizations take money from the charities they lead, for themselves, their businesses and/or their families. It’s a big no-no and in case you were wondering where and why Donald Trump admitted such things, then look no further than his 2015 IRS tax filings, available on GuideStar, a website that tracks non-profits. But rest assured an investigation has been opened, brought to us by Attorney General Eric Schneiderman, who declined to comment due to the fact that the investigation is ongoing.  And in case you were wondering about this as well, Team Trump thinks Schneiderman’s investigation is politically motivated. In other Trump news, stocks were rallying and the Dow went above 19,000 points. Plenty of people on Wall Street are crediting Trump for all of this fiscally joyful news – whether they voted for him or not. After all, he did promise to slash taxes, ease regulations and go big on infrastructure spending. Experts see these initiatives as excellent means to boost the economy in a ways that have been lacking for years. Unfortunately, not every economic idea coming from Camp Trump is leaving investors and economists all warm and fuzzy. Take for instance NAFTA, which Trump refers to as “the worst trade deal in history.” Major havoc could be wreaked on the economy if Trump decides to scrap it. Millions of Americans rely on free trade with Mexico and slapping tariffs on it could spell fiscal doom.

You’re gonna love me, I just know it…

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Volkswagen, the Wells Fargo of the auto industry,  is betting – and hoping – that it can reclaim its former fahrvergnügen glory and make you love them all over again. Following its epic diesel-emissions scandal, Volkswagen chief Herbert Diess announced he wants to “fundamentally change Volkswagen” by focusing on on major tech advancements, developing battery operated vehicles and adding some some self-driving cars into the mix. Diess has got big eyes on the year 2025, by which time he hopes to sell a million electric cars. He wants to “massively step up” Volkswagen’s car tech and also introduce a greater variety of SUV’s to the North american market because, after all, Americans apparently love their SUV’s. But with those lofty goals comes a plan to eliminate 23,000 jobs in the more traditional areas of the auto-manufacturing industry. Instead, Volkswagen will take on 9,000 new employees to work on tech, while wisely offering those 23,000 employees the option of early retirement over a certain amount of time, perhaps in an attempt to soften the blow. In the meantime, Volkswagen already coughed up a hefty $15 billion settlement with both U.S. regulatory agencies and Volkswagen owners.

Uh, if you say so…

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Barnes & Noble reported yet another dismal quarter of declining revenue, except this time the bookseller is blaming the election for its poor fiscal performance. How convenient. Sales fell 3.2% and probably would have fallen even more were it not for sales of “Harry Potter and the Cursed Child.” Barnes & Noble also reported that their online sales improved 12.5%, however, that figure might be a bit more convincing if it provided an actual dollar amount in its report. Nook devices, digital content and accessories were down close to 20%. But can all of that really be blamed on the election? Hmmm. On the bright side, operating losses for the Nook this quarter were only $8.2 million. Hey, don’t laugh. Last year at this time that figure was $30 million. All in all, Barnes & Noble still has cause to celebrate as it only lost just over $20 million and 29 cents a share when last year it lost $39 million and 52 cents per share. B&N is hoping the holiday season will help its reverse course and give it a fresh dose of fiscal mojo. CEO Leonard Riggio is hoping the company’s new $50 Nook device, debuting on Black Friday, will be a big hit. In the meantime, he’s banking on some concept stores, including one that just opened in Eastchester, New York, boasting a full-service restaurant.

 

Wells Fargo Banking on More Headaches; Tonka Christmas Present Sparked – But it Wasn’t Joy; Tyson’s Not Feeding Enough of You Like Family

Leash tightening…

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Wells Fargo’s spanking seems to be far from over. Regulators are looking to make life utterly miserable for the bank by placing on it all kinds of restrictions that weren’t initially required as part of September’s $190 million settlement. For instance, if Wells Fargo wants to hire or make changes to senior level management and executives, the Office of the Comptroller of Currency is requiring a 90 day heads up and ultimately gets the final say. If the OCC doesn’t care for a person’s “competence, experience, character or integrity” then they’re out. As for those illustrious “golden parachutes” afforded managers who leave the company, the OCC gets to ban them if it sees fit. And unlike so many other banks, the OCC will no longer grant Wells Fargo expedited treatment for branch openings, and instead any new application for a branch opening will be subject to careful review. It’s not clear why the OCC changed its mind about the additional restrictions and a lot of experts thinks it’s nothing short of weird. Some speculate that the OCC is worried that they appeared soft on Wells Fargo and therefore imposed the restrictions. But others suspect this has more to do with the fact that the OCC didn’t handle the scandal well. The fact that former employers insist the over two million fake account openings occurred well before the 2011 point that regulators suggest, is just one reason. Then there’s the glaring issue of all those whistleblowers who were terminated after calling the Wells Fargo ethics hotline. Over 5,000 low-level employees were fired, yet mysteriously, higher-level execs went unscathed.

Dreaming of a fiery Christmas…

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Black Friday is still a few days away, yet there will be one less toy crowding the shelves this holiday season: The Tonka Truck 12v Ride On Dump Truck. The battery powered mini-vehicle seats two and the Harden family of Washington thought it wold make a great present for their grandson. Only problem is, driving home from Toys “R” Us, the ride-on toy caught fire in the back of Mr. Harden’s truck. Mr. Harden quickly pulled over to extinguish the flames and proceeded to drive back to Toys “R” Us to return the darn thing. Except the toy truck reignited, only this time it also set the grown up’s truck on fire as well. A Toys “R” Us spokesperson said that the incident appeared to be an isolated one and decided against issuing a full recall. Yet the toy company still went ahead and yanked the item from the shelves and its website as it attempts to investigate with the manufacturer, Dynacraft, what exactly went wrong. Incidentally, the toy received mostly bad reviews on Amazon and the Toys “R” Us website, with most people citing battery problems as the reason. As for the Hardens they got a full refund and a horrifying start to their holiday season.

Hard to swallow…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Investor appetites were not whetted today by Tyson’s earnings. The announcement that it would be changing CEO’s sent shares tumbling a very unappetizing 15%. But that’s not all. Profit came in at $391 million with $1.03 added per share, earning the company a 52% increase over last year at this time. To me that sounds like a respectable number, however, to Wall Street it was nothing short of a disappointment as expectations were for a $462 million profit. Tyson, purveyor of Jimmy Deans Sausages and Ball Park Hot Dogs, also reported a 13% drop in sales. Sales fell from $10.5 billion last year to a meager $9.2 billion, all while estimates called for $9.4 billion. To be fair, food prices had fallen, giving the company sales figures that were hard to digest. Tyson is looking to make between $4.70 and $4.85 per share for the year, but that’ll do little to cheer up investors who were initially expecting to see full-year earnings of $4.98 per share. Tyson’s troubles don’t seem to be going away anytime soon either with animal-right activists hounding the company because they take issue with Tyson’s supply chain practices. Throw in a class-action suit accusing the company of collusion and price-fixing and you’ve got yourself a company that spooks investors more than it feeds them.

Pharmaceutical Phraud; Yellen for a Hike; Wells Fargo-away

There’s a fungus among us…

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There’s another pharmaceutical company today that’s in big trouble today and this time it has nothing to do with EpiPens. Today’s alleged fraudulent crimes are brought to us by former Valeant Pharmaceutical Inc. executive Gary Tanner and defunct Philidor Pharmaceutical Services LLC chief executive Andrew Davenport. Tanner and Davenport allegedly participated in a fraud and kick-back scheme that netted the two tens of millions of dollars. Gosh who knew the pharmaceutical industry could be such a hot bed for illicit activity? The two execs apparently didn’t disclose to insurers that the two companies were connected. Valeant played the part of the big fancy drug company and Philidor played the supporting role of the mail-order pharmacy that conveniently helped boost sales of Valeant’s drug offerings by making sure they filled Valeant prescriptions. Philidor graciously assisted patients in getting insurance coverage for considerably pricier Valeant drugs instead of cheaper alternatives. In the meantime, Philidor would then request to be reimbursed by the insurance companies. Davenport apparently scored over $40 million from the scheme while Davenport only walked away with a paltry $10 million worth of kickbacks. Clearly he needs to hone his fraud “A” game. The scheme ran from December 2012 until September 2015 with the criminal complaint being filed in Manhattan Federal Court. Back in August of 2015, Valeant’s stock hit an all-time closing high of $262.52. But it should come as no surprise that the stock has since lost more than 80% of its value for a number of reasons, each worse than the next. The stock was trading under $18 today.

1-2-3 hike!

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Janet Yellen (thankfully) stole the Wall Street spotlight from Donald Trump today announcing that a rate hike “could well become appropriate relatively soon.” Loosely translated, it means it could and most likely will happen soon so feel free to hold your breath. The decision not to raise the rate at the last meeting was because the labor market still wasn’t quite where the Fed wanted to see it.  But now things are looking up…fiscally speaking, that is, and with steady job growth, wage gains and signs that point to firming inflation, that rate hike is looking like a done deal. But I guess we’ll have to wait until December 13-14, the date of the Fed’s next meeting, to see when that move might officially happen. As for Janet Yellen herself, she stayed mum on the presidential election but said she plans to stay on in her post until January of 2018, when her term officially ends. Many assumed that Yellen would resign once Trump was elected considering he’s not exactly a fan of her monetary policies.  But the Dove of Wall Street let ’em know that she’s staying put, Trump or not.

Cry me a river…

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Wells Fargo is getting some heavy doses of fiscal karma as it reported today that there were 44% fewer new account openings in October of 2016, compared to October 2015. That’s in addition to a 27% drop just from last month. As for credit card applications, those dropped by half to just 200,00 in October. There was a 3% increase in customer initiated closings over previous months as well. Because after all, why wouldn’t you choose to close an  account that you didn’t choose to open in the first place? However, Wells Fargo was at least savvy enough to make such predictions as October marked a full month since the lid was blown off the bank’s unauthorized accounts scandal as the settlement was disclosed on September 8 to the whopping tune of $185 million. But at least the bank finally and wisely decided to chuck sales goals for consumer bankers which were the primary culprit that ultimately led to the scandal. As for former CEO John Stumpf, he’s a free agent now, not that anyone’s going to be checking out his LinkedIn profile anytime soon.

EpiPen Getting Dose of Competition; Gaping Gender Gap; Wells Fargo So Very Sorry Indeed

Shot to the heart…

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EpiPen, which currently controls 95% of the auto-injector epinephrine market, now has to scoot its greedy butt over to make way for a much-needed competitor. Privately-held Kaleo Pharma is bringing back Auvi-Q, the auto-injector device that was taken off the market back in 2015 because of dosage delivery problems. Apparently the problems have been fixed and you can expect to see Auvi-Q back on the shelves in the first half of 2017. However, before you breathe a sigh of relief, experts have said that the price for Auvi-Q might not be all that competitive. In fact, between 2013 – 2015, Kaleo’s price hikes matched Mylan’s and the cost for the auto-injector might go for $500, just $100 less than EpiPen’s highly-criticized $600 2-pack. Make no mistake. Kaleo’s no more an angel in the pharmaceutical industry than Mylan is. The company is also known for making Evzio injectors which use naloxone to treat opioid-overdoses. Once upon a very short time ago – like a few years – the devices cost $690. But not anymore, as the devices go for $4,500 per two-pack. Kaleo has promised that its Auvi-Q device will be affordable and expects insurance companies to help see that promise through. In the meantime, as Mylan’s generic version of its EpiPen is expected to go for $300, the FDA nixed Teva Pharmaceuticals application for a generic version of the EpiPen citing “major deficiencies.” Yikes.

Rock on, Rwanda!

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Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Just when you thought the gender pay gap couldn’t get any worse, along comes the World Economic Forum to tell us otherwise in its Global Gender Gap Report. The study examined 144 countries and took into account all kinds of factors like economic opportunities, political empowerment and education. The study disconcertingly found that if we wait 170 years, that pesky gender gap might actually close. But who wants to stick around until the year 2186? Sadly, last year’s projection had us holding our collective breath until 2133 but in all fairness, if we actually start to do things correctly, the gender gap could “could be reduced to parity within the next 10 years.” That’s got to be somewhat reassuring, right? One of the more unpleasant nuggets in the report illustrated that average female salaries were half those of men and disturbingly enough, education gains didn’t necessarily help women increase their salaries. Iceland, Finland, Norway, Sweden and Rwanda took the top five spots in that order. (Yes, Rwanda).  I’m thinking maybe it’s time to start poaching our political leaders from those countries. Just a thought. The United Kingdom ranked twentieth, even with a female Prime Minister. Go figure. And even though the U.S. ranked twenty-eighth last year, this year the Land of the Free fell to spot number 45, apparently due to a decline of women in the labor force. At least the U.S.’s ranking wasn’t as bad as Yemen, which ranked dead last. Saudi Arabia, Syria and Pakistan also claimed the loser spots which I suppose makes sense considering those countries tend to treat women as property instead of human beings.

 

It still hurts…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

After just 13 days into his tenure, Wells Fargo already has its latest CEO, Tim Sloan, apologizing. Of course, that apology is over the account scandal that already cost the bank $185 million in fines from the Consumer Financial Protection Bureau. But what’s different about this apology is that Sloan was actually addressing the bank’s 260,000 employees. Which is a step up from last month when former Wells Fargo CEO John Stumpf took to blaming 5,300 lower-level employees instead. However, karma is not done with the bank just yet as Wells Fargo could end up eating $8 billion in lost business in the next 12-18 months since approximately 14% of its current customers are looking to switch to more trust-worthy competitors.  As Sloan noted in his apology,“many felt we blamed our team members. That one still hurts, and I am committed to rectifying it.” And so the bank is hiring culture experts to fix the weaknesses that led to this ugly episode. Of course, cultural weaknesses aside, the bank can look forward to both criminal investigations and class-actions suits. Which is only fair considering that the wrongfully blamed lower-level employees – many whom made less than $15 per hour – were met with retaliation after they dared to call in to the bank’s internal ethics hotline.