Wells Fargo Case Explained…

So what exactly happened with Wells Fargo?  What did they do that was so wrong?  Well, it started with the banks sales culture.  I have 15 years of banking experience,  I was one of those “mid-level” managers that pushed those mandated sales goals.

It starts with CEO’s and Senior Management setting goals for the bank as a whole.  Most banks are happy with a 3 to 4 product relationship with any given household.  Wells wanted an 8 product relationship with each household, even if the household didn’t need all the products and services offered.  That means, for every household, Wells employees need to get customers to add on to the relationship by opening other accounts, credit cards, check cards, etc…get customers to use all of the bank services.  The goal of this is to build a relationship that is too tedious to break.  The more you have to move, close, change etc… makes customers more willing to stay even if you provide crappy service.  It’s just to time consuming to move to another bank, and untangle that relationship.

I know that sounds simple, but it is a well used business retention philosophy. It works incredibly well with banking.   Moving accounts involves not only moving the money in the account, but getting new debt cards, changing over direct deposits, or if you pay bills automatically from that account, those have to be switched over, and this could take at least two weeks to a month.  I can’t be without my debt card for a week. Each account outside the bank, but tied to the bank, must be switched over individually, which is very time consuming and tedious. So the answer is to live between banks for the time period of switching but most people will just put up with the crappy service.

So Wells Fargo put these large relationship quotas on low level employees, and made it a part of actually keeping their jobs.  Yes, your sales quotas count, and if you don’t meet this expectation, you are gone, no more job.  So when faced with the possibility of being unemployed, 5300 employees choose to scam the system.  What would you do if faced with impossible sales goals, the possibility of losing your job, and no other job prospects to go to?  I am not saying what they did was right, but still, those at the top have to take some responsibility for the corporate culture they created.

This scam, right or wrong, made a lot of money for Wells’ CEO’s, and investors.  In the years the scam was going on, Wells stock price went up $30.00 per share.  In raw numbers or actual money, for the CEO John Stumph alone that was a $200 million dollar personal gain.

Carrie Toldstadt, the person in charge of this culture, as Head of Community Banking, retired in July 2016 with a $128 million dollar package.  Funny her retirement came about just two months before the CFPB investigation was released.  Meaning, the investigation, the “wrong-doing” was already known to the CEO and Senior Management.  Her retirement was to shelter her from the fallout.

When Stumph appeared before the Senate Banking Committee, we leaned that Toldstadt is still working for Wells, at least until the end of this year, and she is up for a “sales award”.  Truly, you can’t make this shit up! The “woman” directly responsible for creating a culture that not only forced employees to scam consumers, but it was done on her watch.  I want to work for Wells compliance department….I could watch soaps all day while the employees run amok…. sounds like a great job, especially since I won’t get fired to for not doing my job, the $12 dollar an hour grunts will take all the blame…..

So 5300 employees have lost their job, and Carrie Toldstadt not only gets a monetary reward of about $128 million, and gets to freelance till the end of the year, but also a big pat on the back and recognition for the fucked up sales culture she created.  What a world!!!  On top of that.  Even with all of this information, Wells will not employ it’s “clawback” provision with Toldstadt.  Where they could withhold or take back some or all of the retirement package she received to pay the CFPB fine.  In essence, they are not only letting her off the hook, but compensating her for the scam.

As I mentioned the Wells Compliance Department.  If you don’t know what the Compliance department does, well the job title should tell you.  They are the department that makes sure Wells Fargo and all of it’s employees follow the law.  If a customer complains about illegal account openings, the compliance department would investigate the allegation.  They are the bank’s very own inside cops.  They would be the department making sure 5300 employees could not open millions of fraudulent accounts.

Most importantly, bank CEO’s only look at stock price, because that is the way they are compensated.  We keep waiting for somebody to fine the banks or hold somebody above mid-level management accountable.  Wells has proven again that this will not happen.  So maybe we, the consumers have to start holding them accountable.  Make it less profitable for them.

If their compensation is directly tied to stock prices and bank performance, start moving your accounts.  As I said, I know it’s a pain in the ass, but you and I are the only ones that can institute some justice. Bank CEO’s will continue shelter themselves and executives, while putting the shareholders and employees on the hook for the illegal acts, and the will be at risk until the consumer steps up.

The formula is simple.  We move our accounts because we no longer have confidence in the Wells Fargo’s ability to do honest business. The more consumers that leave, the further the stock price falls.  Investors pull out, and the bank closes or reverses course.  The way to hold people who believe they are immune from justice accountable, is to show them that they are not immune. There is only one way to stop greedy people, take away what they covet most, the incentive of money.

One day you, the consumer, will finally see your collective power. Your ability to change the system.  All you need to do is wake up.

T.

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