By now, we’ve all heard about the recent trouble at Wells Fargo:
- 5300 employees fired for creating two million unauthorized customer accounts since 2011.
- The customers affected charged millions in fees against the illicit accounts opened in their names.
- John Stumpf, Chairman & CEO of Wells Fargo, fired effective immediately with no additional severance package.
- Stumpf to forfeit $41 million in unvested stock options, one of the largest bonus clawbacks in history according to the Wall Street Journal. (Note: He’s only forfeiting options that have no current value. He keeps his vested options in the amount of $134 million previously paid as bonuses.)
- Wells Fargo fined $185 million for their actions (which, incidentally, isn’t that much for a company that reported a net income of $22.9 BILLION in 2015.)
- New CEO Tim Sloan promises to reform bank practices. Whatever that means.
Pardon me if I don’t put too much faith in his promise of reforms.
Here’s the thing: I worked for Wells Fargo for 19 years, In that time I witnessed the bank, first as Norwest, later as Wells Fargo (and then as Wachovia in all but name) evolve from a bank that was…well… a bank, offering checking, savings and loan accounts to private citizens and businesses, into a retail store, selling financial products. By the end of my tenure at Wells, if you were a banker, teller, broker, financial advisor, loan officer or manager for the bank , your yearly bonus (if any), performance rating, opportunity for advancement, and salary were directly tied to how many financial products you sold each quarter.
The standard as stated by Wells Fargo was to sell eight separate financial products to each customer that walked through the door. If your customer had less than eight Wells Fargo products (things like Investment banking, securities, private, commercial and student loans, asset management, retirement products, health savings accounts, etc.) then as a good salesperson, you were expected to get them “up to speed”. In fact, your job depended on it. So much so, that many Wells Fargo “store” associates felt the need to game the system in order to meet their quarterly sales goals.
And the Wells Fargo powers-that-be have known for years that there was a problem. A problem large enough that every employee in every division in Wells had to take the same “Ethics” training course every year– a course where it was explained in detail how to game the system and how doing so would be wrong. It was an online how-to for making those sales goals, with the caveat that if you were caught, you’d be fired. If you were caught in a public manner, it would also mean loss of reputation for the bank, possible federal fines and loss of bank charter, lower stock prices, and so on. You know… all those things that the bank really cares about… Profit. Net worth. Stock price. Power. Prestige.
Thankfully, I spent the last 11 years in the Technology Division at Wells, so my desk was somewhat sheltered from the “sell, sell, sell” mentality. I helped develop the financial products that our bankers were supposed to push. “Wealth Management” is still a phrase that makes my teeth itch. I saw firsthand what the real goal of the bank was: not to help the average citizen realize his or her financial goals, but to enhance the power, prestige and net worth of those in charge, at the expense of the drones on the bottom of the heap. Because when it comes right down to it, offering up as scapegoat 5300 drones and one CEO is not too great a price to pay to ensure that the power, prestige and profit endure. That’s business, right?
Yeah, that’s business. But it’s not right.
Banking used to be a service, as in “Financial Services”. They used to offer a safe place for the individual to house their money, so that it wouldn’t be stolen. And while banks were keeping all our money “safe”, they were allowed to use it. Often times, they’d offer interest as an incentive for being allowed to use our money.
In time, the bank came to regard those deposits as the bank’s money. The bank’s profits. The bank’s success. And by extension, the officers of the bank shared in that success in very tangible ways. The bank became the entity, with people working for the bank, instead of the bank working for its people.
And so we come to now, where the dreadnought that is Wells Fargo, in pursuit of ever-increasing profits, rolls over anyone in its way: its own employees, its leadership, its investors.
Until Wells Fargo abandons its greed and returns to a Service model, nothing will change.
Banking and Retail Sales do not mix.
“The art form made its way to the Americas in the 1850s, where the most common form of coin alteration was the “potty coin”, engraved on United States Seated Liberty coinage (half dime through trade dollar) and modifying Liberty into a figure sitting on a chamber pot. This time period was also the heyday of the love token, which was made by machine-smoothing a coin (usually silver) on one or both sides, then engraving it with initials, monograms, names, scenes, etc., often with an ornate border. Hundreds of thousands of coins were altered in this manner. They were often mounted on pins or incorporated into bracelets and necklaces. ”
