Let’s recap. Wells Fargo has experienced the following events in the past 12 months:
In September 2016, it uncovered 2.1 fake or unauthorized account set up by employees pursuant to a sales goal program (account reps were using fictitious names, opening accounts for relatives and then having them closed once the sales goals were met, and, in an old fashioned twist, just opening accounts up in customers’ names without the customers knowing
Shortly thereafter, Wells fired 5,300 employees, all whilst proclaiming that the sacked employees simply did not follow the bank’s motto of putting the customer first.
Some months later, mortgage repayment terms were changed without authorization in bankruptcies of Wells loan customers.
Two months ago, Wells disclosed that 800,000 loan customers had auto insurance they had not authorized.
Last week Wells announced that it was wrong on that number of unauthorized accounts, and added another 1.4 million to the original 2.1 figure.
The third-party investigation that uncovered the problems was an important step for Wells. And the voluntary disclosure was a big step as well. However, there comes a point when credibility, trust, and competency are in doubt. The steady drip, drip, drip leaves the impression that the bank still does not have its arm around one thing: What kind of culture do we have that these behaviors keep cropping up? And one important question has to be answered: Why would our employees believe that what they have done is acceptable behavior at Wells Fargo? Until the bank’s leadership and board know the answer to that question, its full-page apologies, its promises to do better, and its assurances that things are under control begin to look comical. The bank that can’t shoot straight. Wells stock has remained flat for a year. Chase, Bank of America, and Citigroup have an average gain of 40%. And let’s not even mention what has happened to new business at Wells. That is one ugly set of figures.
Wells is not there yet. A culture study, a strategic revamp, and different incentive plans are needed. Until the board comes to grips with the stories about employee actions and what they were doing (and apparently still doing) they cannot get the bank back on track. Answer that question, and you move forward. Ignore it, and the drips will continue.
About mmjdiary
Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD.
The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards.
Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio.
She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News.
In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles.
Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
