Wells Fargo has long been known within the banking industry for its high-pressure sales culture. Over the course of four years, that pressure led Wells workers to create 2 million credit-card and bank accounts for customers without their knowledge or consent in order to meet bruising sales quotas.
Some 5,300 bank employees lost their jobs as a consequence, and on Wednesday so did the man at the top: Chairman and CEO John G. Stumpf, who stepped down from his positions in the hope of dispelling the cloud of taint. He had already given up $41 million in future stock benefits that had not yet vested, and will receive no severance payments upon his departure. Nevertheless, according to Fortune magazine, he will still depart with more than $130 million worth of pension, stock and deferred salary.
So where is the accountability when the reward for presiding over Wells' rapid growth is huge but the penalty for tarnishing its reputation is insignificant? That's a puzzle for policymakers and enforcement agencies to solve. Stumpf defended himself and his company by noting that only a small percentage of Wells' employees engaged in the fraud. But the fact that it went on for years, continuing long after The Times exposed the practice in 2013, speaks to the same kind of failure of internal monitoring that caused the near-collapse of the financial system after the housing bubble burst.
The company says it has changed its incentives, elevated an independent director to chairman of the board, and promoted an executive with roots outside Wells' retail banking division to be its new chief. But the proof will be whether the new leaders, with their long tenure at Wells, can change more than just its incentives and procedures (and some low-level personnel). Wells needs to change the culture that put the company's hunt for revenue ahead of the customers' interest in a service provider they could trust.