Wells Fargo is involved in a huge scandal. At the beginning of September, the bank employees of Wells Fargo were accused of opening accounts without customers’ authorization. The Wells Fargo scandal not only reveals the hidden problem within the named bank, but also underpins the problem within whole banking system.
On September 8, 2016, the row blew out. The employees opened over 2 million unauthorized accounts and credit cards to meet sales goals and earn financial rewards. It appears that the management of the bank encouraged the employees to be involved in fraud and implemented it into the system of incentives. The misconduct was tracked between May 2011 and July 2015 and revealed by several authorities, which resulted in a $185-million fine for the bank. The bank’s responds were controversial. First of all, the bank officials closed the sales goals program named to be the reason behind the misbehavior and fired 5,300 employees involved.
However, no high-rank managers were punished in a relevant scale. They resigned with the right to have bonuses, unlike the thousands of employees having been marionettes who were fired with all the range of consequences. Carrie Tolstedt, the executive in charge of the unit where the scandal initially took place, only retired with $124.6 million in bonus. Wells Fargo CEO John Stumpf and CFO John Shrewsberry, who signed annual reports, will have no losses either (Watson, 2016).
A former branch manager, Susan Fischer, revealed the details about the wrongdoing of Wells Fargo. She refused to be involved in such activities and consequently lost her jobs shortly after. She stated, “These practices were going on way before 2011” (Egan, 2016). The trial and numerous levels of investigation forced Wells Fargo to extend the review of accounts and cards to include 2009 and 2010.
The whole banking system is full of generous offers that may lead to crisis. Banks take more risks in a similar way as they did in 2007, just before the 2008 bank crisis began. Constant revisions of banks as well as their products and activities by protection and security institutions will restrict deviations that could lead to dramatic eventualities. However, Wells Fargo scandal highlights that the bank system is not the object of scrutiny.
- Egan, M. (2016, September 26). Wells Fargo workers: Fake accounts began years ago. Retrieved September 27, 2016, from http://money.cnn.com/2016/09/26/investing/wells-fargo-fake-accounts-before-2011/
- Watson, P. W. (2016, September 15). Wells Fargo Scandal Shows Next Bank Crisis Coming. Retrieved September 27, 2016, from http://www.forbes.com/sites/patrickwwatson/2016/09/15/wells-fargo-scandal-shows-next-bank-crisis-coming/#1eca2ffd69ec