Wells Fargo in Trouble
Wells Fargo’s top executives are currently laying out strategies for moving past the recent sales-tactics scandal. Unfortunately, it seems as though things will get worse for the company before they get better.
Wells Fargo has fired at least 5,300 employees for ethics violations like setting up illicit accounts without customers’ knowledge in order to meet sales targets. There are two groups of Wells Fargo employees: those that were fired or demoted for staying honest and falling short of sales goals they say were unrealistic and those that played by the rules and were punished for it.
In a suit filed in September in California Superior Court in Los Angeles County, two former employees said they were among those wrongfully terminated because they “did not meet their impossible quotas”. They accused the bank of demoting or ousting workers who failed to meet “unrealistic quotas”. The quotas were driving the unethical behaviors such as pressuring workers to open 10 accounts daily and then punishing those who fell short. The suit is the latest fallout of the bank after it was caught opening millions of fake bank and credit card accounts for customers over the past five years, for which Regulators have fined Wells Fargo $185 million.
Since the ethics scandal erupted in public last month, Wells Fargo CEO, John G. Stumpf, testified twice in front of Congress that he and other senior managers only realized in 2013 that they had a big problem. There are, however, employees such as Julie Tishkoff, Yesenia Guitron and Christopher Johnson who reported ethics violations as early as 2005.
In 2005, the same year that Stumpf became President of Wells Fargo, Ms. Julie Tishkoff, an administrative assistant at the bank, wrote the company’s human resources department about what she had seen: employees opening sham accounts, forging customer signatures and sending out unsolicited credit cards. She was fired in 2009. Her complaints were ignored. In 2009, Yesenia Guitron, a banker in Northern California, filed reports to her branch manager and up the chain of command, about the opening and closing of accounts without customer permission. She was fired in 2010. Christopher Johnson was fired in 2008 after 5 months of employment with Wells Fargo. His manager began pressuring him to open accounts for his friends and family – with or without their knowledge. When he refused, he was criticized for not being a team player. Mr. Johnson also witnessed his colleagues routinely opening unauthorized accounts for customers who they thought wouldn’t notice, like elderly clients or those who didn’t speak English well. He did as instructed during training and he called the company’s ethics hotline. Three days later he was fired.
Regulators, lawmakers and others are asking how the complaints did not set off loud alarm bells for the bank executives sooner. Also, why have most of the firings fallen on low- level workers instead of the managers and executives who shaped the company’s aggressive and toxic sales culture? Surprisingly, many of the managers and executives who heard the complaints and ignored them are still there.