The chairman and CEO of Wells Fargo (NYSE:WFC), John Stumpf, is a good banker. As we've come to find out, however, he's much less adept at public relations.
Open mouth, insert foot
Since it was revealed three weeks ago that thousands of employees in Wells Fargo's branches responded to aggressive sales quotas and extreme pressure from managers by opening as many as 2 million fraudulent accounts for customers who neither knew about, nor approved, the accounts, Stumpf has proceeded to put his foot in his mouth time and again.
Most problematically, he has confirmed the long and broadly held stereotype of bankers as unjustly enriched fat cats who look out for themselves and their ilk at the expense of less privileged Americans who are defenseless in the face of financial abuse. The only thing missing, it seems, is a top hat, pocket watch, cigar, and diamond-encrusted cane.
In this instance, while customers were the primary victims of Wells Fargo's efforts to illicitly boost the number of products that each of its customers use, they weren't the only ones. The bank's employees were also victims. Based on a growing chorus of news reports, countless employees were fired by the bank after they refused to create fraudulent accounts, or in retaliation for bringing the matter to senior management's attention.
One Wells Fargo employee even went so far as to email Stumpf about the problem, Senator Robert Menendez noted last week. How was the employee rewarded for sticking her neck out? She was fired, along with 5,300 other rank-and-file employees. "If they're not going to do the thing that we ask them to do -- put customers first, honor our vision and values -- I don't want them here," Stumpf told The Wall Street Journal. "I really don't."
The problem for Stumpf is that thousands of employees across Wells Fargo's 6,000-plus branches were involved. The only reasonable conclusion that can be drawn from this is that people throughout its operations were either actively instructed by higher-ups to commit fraud, or that bank tellers and personal bankers were merely trying to keep their jobs in the face of unreasonably high sales goals and inappropriately aggressive managers.
Protecting those at the top
But Stumpf doesn't want to hear any of this. While he's offered words that seem, on the surface, to accept responsibility for the scam, most notably when he was hauled before the Senate Banking Committee last week to explain what happened, his actions demonstrate without equivocation that his primary interest is in protecting himself and, in his words, his trusted colleagues and friends at the top.
Stumpf lavished praise on the one person who was most responsible for the fraud that has so seriously tarnished one of America's greatest franchises: Carrie Tolstedt, the former head of Wells Fargo's community banking unit. When the bank announced her "retirement" in July, here's what Stumpf had to say:
A trusted colleague and dear friend, Carrie Tolstedt has been one of our most valuable Wells Fargo leaders, a standard-bearer of our culture, a champion for our customers, and a role model for responsible, principled and inclusive leadership. Because of her passion for serving our customers, wherever and however they chose to receive their banking services – online, in branches, or via mobile phones -- Carrie leaves Wells Fargo uniquely positioned to continue to be a leader in retail banking, no matter how the future of banking evolves. We share in the pride that she has for the legacy, accomplishments and talent that she will leave behind.
Mind you that Tolstedt could very well leave Wells Fargo with $100 million or more worth of Wells Fargo stock that she accumulated through her 27-year career at the bank. And if she faces criminal or civil charges, it's probably safe to assume that Wells Fargo will foot the bill for her lawyer.
Meanwhile, most of the tellers and personal bankers who were fired earned little more than minimum wage and must now face years of uncomfortable interview questions about their time at the bank. And lord help them if they find themselves in legal trouble, because I think we can rest assured that Wells Fargo won't stand behind them to provide assistance.
This is patently unjust. And it's the reason why Stumpf could very well lose his job over this. In short, sometimes the cover-up is worse than the crime.