There’s some pop song on the radio that repeats the question, “Is it too late to say sorry?” That question would have been a better defense than what John Stumpf, chief executive of Wells Fargo Bank, offered a Senate Committee recently.
Stumpf appeared on Capitol Hill with a heavily scripted speech to defend himself and his bank from stealing from their customers. Specifically, Wells Fargo is charged with creating 2 million fake accounts for which real customers were bilked out of $2.4 million. Stumpf apologized for “not doing more sooner to address the unacceptable behavior.” My question is rather simple: When was the definition of theft changed to “unacceptable behavior?” And, to make matters worse, Stumpf admitted that he knew of this “unacceptable behavior” as early as 2013. And in another stunner, the bank has fired more than 5,000 employees but no senior executives were fired. Stumpf, however, retired earlier last week but was not fired.
While Stumpf maintains there was no orchestrated scheme to defraud anyone, his employees have testified that they felt intense pressure to meet very unrealistic sales goals. Still, Stumpf maintains that wrongful sales practices — like bank employees earning bonuses by illegally creating accounts for customers without their knowledge — go against the Wells Fargo culture. In fact, he told Congress it’s a major priority of his to strengthen the firm’s culture. That is laughable given his role in creating the culture and given that he says he knew of the scheme since 2013 and did nothing to stop it.
Wells Fargo Bank has now been hit with the largest penalty yet imposed by the Consumer Financial Protection Bureau (CFPB). In total, Wells Fargo will pay $185 million to the CFPB and other regulators.
The bottom line, as summarized in Common Dreams, is that “Stumpf’s actions were not merely “unethical” — they were criminal. And in the current system, he’ll not only get away with it, he’ll profit handsomely.” This most recent example of fraudulent behavior resulted in Stumpf resigning from his Fed advisory post and having to return $41 million in stock awards, part of a “clawback” of the appreciation in the stock value due to manipulating information. The article summarizes the penalty this way: “If Stumpf was a car thief, it’d be like he stole six cars and had to return one, but would still be allowed to profit from selling the other five.”
If Joe the plumber tried Stumpf’s tricks, he’d be in jail. Why do bankers get carte blanche? CEOs like Stumpf give the financial services business a bad name and stand in stark contrast to the work trusted advisors do every day as fiduciaries working always in their clients’ best interests.