{"id":5862,"date":"2016-10-13T12:19:11","date_gmt":"2016-10-13T17:19:11","guid":{"rendered":"http:\/\/huewhite.com\/umb\/?p=5862"},"modified":"2016-10-13T12:19:11","modified_gmt":"2016-10-13T17:19:11","slug":"power-prestige-and-profit-the-wells-fargo-debacle","status":"publish","type":"post","link":"https:\/\/huewhite.com\/umb\/2016\/10\/13\/power-prestige-and-profit-the-wells-fargo-debacle\/","title":{"rendered":"Power, Prestige and Profit:  The Wells Fargo Debacle"},"content":{"rendered":"<p><a href=\"https:\/\/i0.wp.com\/huewhite.com\/umb\/wp-content\/uploads\/2016\/10\/stumpf-million.jpg?ssl=1\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\" wp-image-5864 aligncenter\" src=\"https:\/\/i0.wp.com\/huewhite.com\/umb\/wp-content\/uploads\/2016\/10\/stumpf-million.jpg?resize=755%2C310&#038;ssl=1\" alt=\"stumpf-million\" width=\"755\" height=\"310\" srcset=\"https:\/\/i0.wp.com\/huewhite.com\/umb\/wp-content\/uploads\/2016\/10\/stumpf-million.jpg?resize=1024%2C420&amp;ssl=1 1024w, https:\/\/i0.wp.com\/huewhite.com\/umb\/wp-content\/uploads\/2016\/10\/stumpf-million.jpg?resize=300%2C123&amp;ssl=1 300w, https:\/\/i0.wp.com\/huewhite.com\/umb\/wp-content\/uploads\/2016\/10\/stumpf-million.jpg?resize=768%2C315&amp;ssl=1 768w, https:\/\/i0.wp.com\/huewhite.com\/umb\/wp-content\/uploads\/2016\/10\/stumpf-million.jpg?resize=250%2C102&amp;ssl=1 250w, https:\/\/i0.wp.com\/huewhite.com\/umb\/wp-content\/uploads\/2016\/10\/stumpf-million.jpg?resize=150%2C61&amp;ssl=1 150w, https:\/\/i0.wp.com\/huewhite.com\/umb\/wp-content\/uploads\/2016\/10\/stumpf-million.jpg?w=1425&amp;ssl=1 1425w\" sizes=\"auto, (max-width: 755px) 100vw, 755px\" \/><\/a><\/p>\n<p>By now, we\u2019ve all heard about the recent trouble at Wells Fargo:<\/p>\n<ul>\n<li>5300 employees fired for creating two million unauthorized customer accounts since 2011.<\/li>\n<li>The customers affected charged millions in fees against the illicit accounts opened in their names.<\/li>\n<li>John Stumpf, Chairman &amp; CEO of Wells Fargo, fired effective immediately with no additional severance package.<\/li>\n<li>Stumpf to forfeit $41 million in <strong><em>unvested<\/em><\/strong> stock options, one of the largest bonus clawbacks in history according to the Wall Street Journal. \u00a0(Note:\u00a0 He\u2019s only forfeiting options that have no current value.\u00a0 He keeps his<strong><em> vested <\/em><\/strong>options in the amount of $134 million previously paid as bonuses.)<\/li>\n<li>Wells Fargo fined $185 million for their actions (which, incidentally, isn\u2019t that much for a company that reported a net income of $22.9 BILLION in 2015.)<\/li>\n<li>New CEO Tim Sloan promises to reform bank practices.\u00a0 Whatever that means.<\/li>\n<\/ul>\n<p>Pardon me if I don\u2019t put too much faith in his promise of reforms.<\/p>\n<p>Here\u2019s the thing: I worked for Wells Fargo for 19 years,\u00a0 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\u2026well\u2026 a <strong><em>bank<\/em><\/strong>, offering checking, savings and loan accounts to private citizens and businesses, into a <strong><em>retail store<\/em><\/strong>, selling financial products.\u00a0 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.<\/p>\n<p>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 \u201cup to speed\u201d. \u00a0In fact, your job depended on it.\u00a0 So much so, that many Wells Fargo \u201cstore\u201d associates felt the need to game the system in order to meet their quarterly sales goals.<\/p>\n<p>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 \u201cEthics\u201d training course every year&#8211; a course where it was explained in detail how to game the system and how doing so would be wrong.\u00a0 It was an online how-to for making those sales goals, with the caveat that if you were caught, you\u2019d be fired.\u00a0 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.\u00a0 You know\u2026 all those things that the bank really cares about\u2026 \u00a0Profit.\u00a0 Net worth.\u00a0 Stock price. \u00a0Power.\u00a0 Prestige.<\/p>\n<p>Thankfully, I spent the last 11 years in the Technology Division at Wells, so my desk was somewhat sheltered from the \u201csell, sell, sell\u201d mentality. I helped develop the financial products that our bankers were supposed to push.\u00a0 \u201cWealth Management\u201d is still a phrase that makes my teeth itch.\u00a0 I saw firsthand what the real goal of the bank was:\u00a0 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.\u00a0 Because when it comes right down to it, offering up as scapegoat \u00a05300 drones and one CEO is not too great a price to pay to ensure that the power, prestige and profit endure.\u00a0 That\u2019s business, right?<\/p>\n<p>Yeah, that\u2019s business. But it\u2019s not right.<\/p>\n<p>Banking used to be a service, as in \u201cFinancial Services\u201d. They used to offer a safe place for the individual to house their money, so that it wouldn\u2019t be stolen.\u00a0 And while banks were keeping all our money \u201csafe\u201d, they were allowed to use it.\u00a0 Often times, they\u2019d offer interest as an incentive for being allowed to use our money.<\/p>\n<p>In time, the bank came to regard those deposits as <strong><em>the bank\u2019s<\/em><\/strong> money. <strong><em>The bank\u2019s<\/em><\/strong> profits. <strong><em>The bank\u2019s <\/em><\/strong>success.\u00a0 And by extension, the officers of the bank shared in that success in very tangible ways.\u00a0 The bank became the entity, with people working for the bank, instead of the bank working for its people.<\/p>\n<p>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.<\/p>\n<p>Until Wells Fargo abandons its greed and returns to a <strong><em>Service <\/em><\/strong>model, nothing will change.<\/p>\n<p>Banking and Retail Sales\u00a0do not mix.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By now, we\u2019ve 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 &amp; CEO of Wells Fargo, fired effective immediately \u2026 <a class=\"continue-reading-link\" href=\"https:\/\/huewhite.com\/umb\/2016\/10\/13\/power-prestige-and-profit-the-wells-fargo-debacle\/\"> Continue reading <span class=\"meta-nav\">&rarr; <\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-5862","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts\/5862","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/comments?post=5862"}],"version-history":[{"count":3,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts\/5862\/revisions"}],"predecessor-version":[{"id":5866,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/posts\/5862\/revisions\/5866"}],"wp:attachment":[{"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/media?parent=5862"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/categories?post=5862"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/huewhite.com\/umb\/wp-json\/wp\/v2\/tags?post=5862"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}