Wells Fargo says there was ‘clearly something wrong’ with its culture
In the wake of its phony-bank-account scandal, Wells Fargo placed the blame squarely on low-level workers and ended up firing more than 5,000 of them. But after the departure of CEO John Stumpf earlier this week, the embattled bank seems to be changing its tune.
Incoming CEO Tim Sloan, a 28-year veteran of the company, who took the reins from Stumpf, indicated Friday that low-level workers got a raw deal. “I think saying that we put our team members through the ringer is an understatement. I really do,” he said on the bank’s quarterly earnings call.
Last month, Wells Fargo announced it would pay $185 million in fines after investigations into whether the bank had improperly opened more than 2 million bank and credit card accounts without customers’ knowledge or consent. The bank said it had fired roughly 5,300 employees for such practices over the course of five years.
When the news of the scandal first broke in early September, the bank seemed to put most of the blame on the relatively small share of employees that it fired.
“I wish it would be zero, but if they’re not going to do the thing that we ask them to do — put customers first, honor our vision and values — I don’t want them here,” Stumpf told the Wall Street Journal in an interview at the time. “I really don’t.”
In the same interview, Stumpf minimized the prospect that there was something wrong with the management structure of the company.
“There was no incentive to do bad things,” he told the Journal.
While testifying before both House and Senate committees, Stumpf got serious flak for taking that approach.
“You haven’t fired a single senior executive. Instead evidently your definition of accountable is to push the blame to your low-level employees, who don’t have the money for a fancy PR firm to defend themselves,” said Sen. Elizabeth Warren, D-Mass., adding, “It’s gutless leadership.”
Since then a number of stories have emerged highlighting the intense pressure Wells Fargo employees faced at the bank, which had burnished its reputation on Wall Street by touting its ability to cross-sell, or get customers to have more than one account. (If you want to get your blood pressure up, I’d recommend listening to Planet Money’s piece about the Wells Fargo branch on the ground floor of the building that houses the company’s headquarters in San Francisco.)
What’s more, VICE News and others have reported that some employees had tried — to no avail — to report unethical practices to company management as early as 2006.
“It’s been disturbing to hear claims of retaliations against team members who contacted the ethics line. We are investigating these claims,” Wells Fargo’s new CEO said on the Friday call. “We are also assisting former team members who left retail banking due to sales performance and who remain eligible for rehire and applying for available positions at the company.”
In recognition of something amiss with its incentive structure, the company eliminated all product sales goals for its retail banking employees on Oct. 1.
“There was clearly something wrong, and we will make the necessary changes to fix it,” Sloan said.