If you’re a Wells Fargo customer, employee or shareholder, this headline has to be THE question on your mind. . . Given Mr. Stumpf’s recent testimony before the Senate, it may be the only question for him. What we know for sure is that the massive Wells Fargo fraud/cover-up will continue.
Attempting to respond to the rush of recent news stories, customer complaints and ultimately to his Senate testimony, John Gerard Stumpf, Wells Fargo CEO, released a minimal, dismissive, almost mindless, customer message on September 14, 2016. The email, apparently sent only to a fraction of customers, is actually an explanation of the plan to cover up the extraordinary and massive crimes against their customers and shareholders. The letter fails to admit or disclose any serious issues, provides virtually no helpful information to understand the extent of their deceit and there is no disclosure, penitential thinking or contriteness. None.
Like his earlier email, Mr. Stumpf’s incoherent, uninformed, arrogant and clueless Senate testimony demonstrated that the bank has been largely leaderless throughout the nine years of his tenure. And yet, he managed to stumble, fumble and bungle into a $185 million fine involving literally millions of bogus customer transactions.
The following is an analysis of Mr. Stump’s email. The document sums up the few known ingredients of the cover-up, and there is likely more to be uncovered if a thorough investigation is undertaken.
There is no real admission, only denials, of having knowingly caused harm to millions of customers.
He said: “Some Wells Fargo customers received products and services that they do not want or need.”
Some? We actually don’t know the number of affected customers and clearly Mr. Stumpf is shielding that information. The news accounts are piling up, documenting testimonies and data on the scope and extent of Wells Fargo’s fraudulent behaviors.
He should have said: Millions of Wells Fargo customers were cheated and exploited without their knowledge by thousands of Wells Fargo employees. They were forced to purchase unwanted and unneeded merchandise, products and services. Going forward, we will find and publicly disclose the extent of our misdeeds. We apologize for victimizing you and disrupting your lives.
Stumpf denied direct responsibility for this extraordinary cultural failure and performance disaster, shifting the blame to lowly rogue employees. If he didn’t know what was going on, how does he know that they’re rogues?
He said: “Every day we strive to get things right. In this instance we did not – and that is simply not acceptable.”
This is a most extraordinary statement for someone who, at the Senate hearing, claimed full responsibility for a situation he ignored for at least three years, and still claims to be in the dark about most of it.
This certainly resembles an enterprise-wide criminal conspiracy to deceive and defraud millions of customers. Hundreds, even thousands, of supervisors had to be aware of what was going on, yet said and did nothing. To stop the fraudulent behavior, so far, according to press accounts, more than 5,300 Wells Fargo employees have been fired. Stumpf, in his effort to cover for his leadership buddies, told (lied to) the Wall Street Journal that “there was no incentive to do bad things,” when he had known and sanctioned the “do whatever it takes” culture in the retail division. Crimes and errors were hidden, ignored and minimized rather than reported, explained, disclosed and stopped. The wrongness of what transpired is likely to expand. This attitude of “high-fiving” unethical behaviors and humiliating honorable employees is very common in the financial industry.
He should have said: We intentionally fostered and encouraged an atmosphere of insidious and crime-inspiring, unethical behaviors, including:
No believable restitution, penance or significant punitive action meted out within the organization and its upper ranks.
He said: “So we’re making it right. The first step we’ve taken is to fully reimburse any customers who were affected by these actions. We have been making some changes to how we do business over the last several years to ensure we are always aligned with our customers’ interests. To that end, the second change is to ensure Team Members in our Retail Bank are compensated on what matters most: delivering great experiences and ensuring positive outcomes – not on product sales.”
To that end, the senior level manager in charge of these fraudulent activities, Carrie Tolstedt, was allowed to retire and received a payment of nearly $125 million (the proverbial “Golden Zipper” to really zip her lips tight). What does she know that’s worth so much money to buy her silence?
He should have said: We knew about it but did nothing until we were caught. Our behavior is reprehensible and we are working with independent experts to get our culture back under control. We will apologize through generous restitution as well as restoring ethical behaviors and business practices. Going forward:
There is absolutely no indication of repentance, humility, or recognition of the unnecessary pain and suffering caused by the situation to so many millions of customers.
He said: “Your trust and confidence in us is something we hold near and dear. I know I speak for our community of 268,000 dedicated Team Members when I thank you for giving us the opportunity to continue serving…”
Let’s hope not. Let’s hope at least hundreds of these 268,000 will stand up and keep hammering, exposing and disclosing what is happening within this institution.
He should have said: I am profoundly and humbly ashamed and apologize to our community of 268,000 dedicated, ethical team members for allowing this situation to come to this point. Every single one of us has the obligation to speak up. Silence is the greatest protector and authorizer of unethical and illegal behavior. We have established a new reporting system that we hope will root out this cancer in our company. Going forward there will be:
There is no direct request for public, customer or shareholder forgiveness from those whose lives have been so grievously interrupted in exchange for restitution and honorable, future behavior.
He said: “I thank you for giving us the opportunity to continue serving you and supporting your financial future.”
Those still serving should have been terminated as a condition of the settlement and new tough supervision of the corporation should be established by the Federal Courts.
He should have said: I have offered my immediate resignation to the Board of Directors. I recognize that the needed change in culture, behavior and leadership expectations within this organization will only happen under new, more vigilant and vigorous, leadership and supervision across the Wells Fargo organization.
Question: Why is John Stumpf still Chief Executive Officer of Wells Fargo?
Answer: To cover his tracks and protect his co-conspirators, including members of the Board of Directors, who sanctioned or turned a blind eye toward this cover-up.
There needs to be an extensive criminal investigation.
In order to discover and stop crime and begin dramatically changing the behavior and culture of a company, to one of honesty, openness and integrity with accountability, transparency and disclosure, top people need to go. The current Wells Fargo settlement, however, keeps the same perpetrating executives, who created or allowed this fiasco, in charge of cleaning it up and preventing more problems from happening.
Congress needs to interrogate Wells Fargo’s Board of Directors to determine their knowledge of and participation in the fraudulent behavior. Anyone connected with this scandal should be terminated, if they haven’t’ been, forfeiting any pension benefits and other financial rewards they might have been entitled to. The major players, whether active or passive, in positions of high authority should be brought to justice.