The scandal that hit Wells Fargo has revealed a number of things still wrong with our financial system and reminds Main Street participants that Wall Street continues to not play by the rules. Wells Fargo Chairman and CEO John Stumpf testified before the U.S. Senate Banking Committee this month, skirting around the fraud committed by his employees for opening fictitious bank accounts to boost sales quotas.
Mr. Stumpf repeatedly offered his apologies for the behavior of some 5,300 employees opening over two million bogus consumer accounts, but refused to accept accountability for any personal, corporate misconduct. With federal prosecutors having initiated a criminal investigation into the matter, the increasing scrutiny the bank and its management faces suggests that Congress wants to hold Wells Fargo to the fire for the neglect of its management in acknowledging the risks posed by demanding unreasonable quotas from its branch employees.
Sen. Elizabeth Warren (D-MA) perhaps summed it best during the Senate Banking Committee’s hearing over the Wells Fargo scandal when she addressed the Wells Fargo CEO:
“Here’s what really gets me about this, Mr. Stumpf. If one of your tellers took a handful of $20 bills out of the crash drawer, they’d probably be looking at criminal charges for theft. They could end up in prison. But you squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket.”
So how did Wells Fargo reach the point where thousands of its employees came to engage in improper sales practices by selling bank products that were not authorized by consumers, and where the senior executive in charge of Wells Fargo’s retail banking operation did not address the large number of wrongdoings, including the forging of customer signatures by some employees?