The Fargo Stink

Wells Fargo C.E.O. and Chairman John Stumpf once again appeared before a House Committee today concerning the ongoing scandal surrouding the company's fraudulent opening of two million additional accounts without the permission of it's customers.

The company has terminated 5,300 employees since 2011 for engaging in this behavior which was motivated by the internal mandates that every customer have at least eight accounts. The majority of those fired were low level employees, including whistleblowers. Those low level employees are in the compensation range of $12 to $15 an hour. Anyone that believes these employees created the problem on their own are deluding themselves. The people who had the most to gain from these actions were Branch Managers and above, particularly those above right up to John Stumpf.

Watching this hearing reveals a number of things wrong with the culture of banking in general but which will get lost in the news and never change. Stumpf was asked why he refers to branches as "stores"? A question he sidestepped to a large degree but the answer is simple, the days of the "bank" are dead. They are in fact in the business of selling intangible products and they have harsh sales goals set for their employees, if you don't meet the goals you're fired. The ridiculous over the top compensated C.E.O.'s like John Stumpf set the criminal standards of their company but they rarely pay a true price for their role in the wrongdoing. All of the fines that Wells Fargo has been hit with will simply be passed on to their customers in the form of fees. Stumpf will never suffer financially from this and even if in the end the Board of Directors decides for P.R. reasons he should retire, he will receive a massive settlement to go away. He will never suffer criminal charges because we just don't believe in that in our country. It is far easier to blame the defenseless low level employees who have been terminated and certainly their actions are to be condemned but what is the likelihood that 5,300 poor employees joined together in a conspiracy in one company, no matter how large, to enrich their superiors and drive up the stock so that it's executive team looks like heroes to Wall Street?

Wells Fargo is not alone in playing games and placing unattainable goals on it's employees. It is all across the banking industry, financial services and even retail. Most major retailers have a house sponsored credit card and require their employees to push it hard on customers and there is absolutely retribution taken against those employees who fail to meet their quota. A goal is an aspiration, a goal with a threat of punishment for failure to meet it is a recipe for misconduct.

Stumpf says Wells Fargo is eliminating sales goals. On paper it may be true but in practice there's no way in hell that will happen. If you believe it will, I have some good swamp land for sale, but don't worry, I have no quotas.