If I understand the suits at Wells Fargo Bank correctly, it was 5 years ago that they first noticed that they had a problem with employees who were stealing bonuses from the company, by gaming and fabricating sales of various Wells Fargo financial services.
The bank’s solution? Every year, they say, they fired about 1% of their workforce, about 2500 people.
Since just a fraction of the Wells Fargo workforce is actually involved in marketing or selling accounts and services, firing 2500 employees a year from that department because they were corrupt should have signaled that the bank services department had a big, deep problem. But Wells Fargo didn’t seem to notice. Burning through whole forests of bad-apple trees was, to them, just a cost of doing business.
And business was great, in part because of the cheaters. Every phony account or service sale they registered, coerced or not, real or not, paid off in much bigger bonuses to bank executives, bonuses that made what the cheaters were stealing into chump change. And the sheer numbers of these new accounts, whether they were utilized or not, helped make Wells Fargo the hottest bank stock on Wall Street.
Wall Street loves cheaters, loves to bid up their value, at least until they’re found out. Take the drug marketer Valeant. It figured out a system that yielded super-premium profits for fast-tracking often overprescribed as well as over-priced medications, some of them both addictive and dangerous, from doctors to patients.
Who cared, until some patients died and some Federal and Congressional investigators, and a dogged reporter named Roderick Boyd broke the story and some investors’ greedy hearts.
The Los Angeles Times told its readers and Wells Fargo executives everything they needed to know about the account sales fraud problem back in 2013. For 3 years the bank did nothing.
The man in charge over this period, Wells Fargo’s Chief Executive John G. Stumpf told a panel of angry US Senators that he held himself accountable.
But accountable in what way? Listen to his answers to Senators’ questions as collected by columnist Dana Milbank of the Washington Post.
Can’t Wells Fargo “claw back” some of the money paid to executives during the period the fraud flourished?
“I’m not an expert in compensation,” Stumpf said.
Would you commit to investigate when and how the fraud began?
“I can’t tell you that today.”
Did you learn about the fraud before the Los Angeles Times?
“I don’t remember the exact time frame.”
Did the bogus (unused) accounts hurt customers’ credit scores?
“I don’t know the algorithms.”
The man who says he’s accountable also says he didn’t know the score.
Lee Ellis is a retired United States Air Force Colonel, award-winning author, speaker, and consultant. Ellis spent 5 ½ years as a prisoner of war in Hanoi with, among others, the future Senator John McCain.
His books include Leading with Honor: Leadership Lessons from the Hanoi Hilton, and Leading Talents, Leading Teams,