Wow, the bad behavior from Wells Fargo is just astonishing.
This is why we need the Consumer Financial Protection Bureau. This is why we need the Dodd Frank Act. The lure of money is too great for the Wall Street types to resist. And yet, some members of Congress wants to get rid of the Bureau and abolish the Act. Maybe, if a hundred years went by without further unethical lapses from the financial folks, we could safely do away with the Act and Bureau, but not now. We are still heavily influence by the current model of capitalism with its emphasis on unbridled free market and shareholder value.
The CEO, John Stumpf, says he is accountable. But when Elizabeth Warren asked if he gave up his stock options, bonuses, and salary (which stands at $19 million) or if he was planning on resigning, he said "no". Instead, he let go 5,300 frontline employees. That's his definition of accountability.
By the way, he knew about this for at least 2 years, and in all that time, I don't think he apprised the financial authorities such as the SEC or his shareholders about the situation. Oh yes, he really is accountable.
Usually, when there is an ethical lapse, such lapse involves one or two people, but when there are 5,300 employees, something else is going on. And that something else is called culture which starts at the top. Their slogan "Eight is great" says it all and typifies the mindset of pushing products at consumers. However, if you push too hard and threaten to fire if goals are not met, then people will start to cheat. This is not rocket science and all senior executives know this.
I used to work for a company where the focus on financial forecasting was intense. It was supposed to be a quarterly activity but it ended up being a monthly ordeal. One time, the senior financial manager even told me what my forecast number was going to be after I had submitted my numbers and I told him that it was not contractually possible to meet his numbers. And sure enough, at month end, the forecasted revenue and income had to be lower. Every once in a great while I had to do some research and I would see signs that the revenue accounting was questionable. One time I saw revenue booked but no invoices to match the revenue. There might have been invoices but I just didn't see them. Another time I saw revenue booked that matched the forecasted expenses provided by my boss. When I asked to make sure I understood the numbers, he said that he used the forecasted numbers because that was what was given to him...during the forecast. The problem was, the actual accounting done by my boss when the month was over gave expenses that were less than forecasted. He ended up booking more revenue than he should have? And during our email conversation on this question, he cc'd the senior financial manager? Fortunately, the US division of this company imploded and no longer exists.
So I'm sure Wells Fargo was trying to meet the ever present pressure to increase revenue and income for the shareholder. That pressure is constant and unrelenting. This is the dark side of capitalism. And I'm sure other banks are doing something similar if not worse. The shareholder pressure is just too great. As a matter of fact, this morning I found an article that other banks may be doing the same.
So this is yet another example of bad behavior from the finance industry.