What were they thinking?

What were they thinking?
Last week, the Los Angeles Times, my local newspaper, reported that a Wells Fargo bank senior vice president had spent the Summer living in a super luxury foreclosed home in the exclusive Malibu Colony.

The Times story identified the senior vice president as Cheronda Guyton whose job it was to manage the disposition of foreclosed Wells Fargo Bank property in Southern California. As you might expect, Ms Guyton has been unavailable for comment.

Wells Fargo Bank has promised a vigorous investigation. The Times reported that it was well established bank policy that employees could not use foreclosed property for their own use. Additionally, the bank policy prohibits conduct that will create a conflict of interest.

The Times story valued the home at about USD$12 million and quoted local real estate agents who stated it was available for rent for $60,000 a month. It does have direct access to the beach and the property includes an ownership interest in sixty feet of sandy beach; how much beach depends on where the high tide line.

For those of you who are unfamiliar with Southern California real estate, Malibu is a section of the coast that is usually populated by entertainment industry celebrities and executives. The Malibu Colony is a more exclusive section of Malibu and is surrounded by a wall and has limited gated access; you need a pass to get in, even if you own property there.

Malibu is our version of the Hamptons I guess only without the New Yorkers.

Wells Fargo acquired the property as a debt settlement with one of the Madoff victims. This much is clear cut and agreed upon. I recall the transaction between the borrower and Wells Fargo as being stated to have occurred in March.

Here is where things start to get murky.

The Times reported that Wells Fargo had agreed to delay the marketing and sale of the property for several months. The newspaper stated over the weekend that Wells Fargo was getting ready to sell the property

Why?

Delaying the sale of property seems to be on the less than bright side of things. It is a prime beachfront property. Fall and the coming Winter are just not good times to show a beach front property especially if a storm is eating away at the beach. Spring time would be an excellent time to advertise the property for sale.

With a probable $12 million price tag, it doesn’t seem like the property is going to attract the average Joe and Jane. Properties in the Malibu Colony go on sale all of the time; agents know how to properly market the property to obtain maximum value.

Banks do not want to be in the property management business; it is expensive and generates no direct income. Maintaining property costs money for things like electricity, water, gas, insurance, property taxes, gardening, security, and the list goes on.

Our local television stations, apparently hot for an interesting weekend story, jumped on the newspaper report. The local television news reports featured quotes about large, lavish, and loud weekend parties at the house with one party having the guests arriving on a yacht and then being ferried to the house in the yacht’s dingy.

Wells Fargo Bank is in a major public relations disaster. While one of its employees was partying at a foreclosed luxury home in the Malibu Colony, the bank was evicting hundreds of low and moderate income renters in the San Fernando Valley so the bank could quickly sell the foreclosed properties.

If the bank wanted to quickly sell rental properties in the San Fernando Valley, why wouldn’t it want to do the same for a luxury home in the Malibu Colony?

This story is being to smell like a week old fish that has been baking on the Malibu pier.

It seems to me that Wells Fargo is going to have heads roll and one or more soon to be former employees who will be branded or identified as rogue employees who will be terminated.

As Dr. Phil might say, “What were you thinkin’?”

I would love to be an electronic listening device on the wall when the bank employee explains his or her rationale for their conduct in the face of clearly stated bank policy.

After reflecting, I like Forrest Gump’s line better; “stupid is as stupid does.”


Be well and stay happy.