Wells Fargo CEO Defends Bank Culture, Lays Blame With Bad Employees – WSJ

This really is an outrage. CEOs assure us that the reason they are worth hundreds of millions of dollars is the rare qualities of leadership, vision, and strategy they bring to the company and its employees and shareholders. And yet, when there is a massive widespread fraud leading to the firing of 5000 workers, somehow it is the fault of the employees?

As public and congressional pressure mounted on Wells Fargo & Co. executives, its top two bankers had an explanation Tuesday for allegedly illegal sales practices across the company: It was employees’ fault.

Chief Executive John Stumpf defended the firm and the efforts it had taken to stop the behavior, which included opening accounts for customers without permission. “There was no incentive to do bad things,” Mr. Stumpf said in an interview with The Wall Street Journal. He called the conduct that led to last week’s settlement with federal and local authorities “not acceptable,” adding that the bank doesn’t “want one dime of income that’s not earned properly.

Immediate red flag: the use of the passive voice. “There was no incentive to do bad things.” Not true. The incentive was money. What other possible reason was there for employees to open fake accounts other than the fact that they got paid extra for each one? The sentence should read: “We created an incentive plan that told employees to do the wrong thing more powerfully than the ethics policies and risk management system told them to do the right thing.”

At the same time, the San Francisco bank said it would soon eliminate the practices at the center of the controversy: branch-level sales goals that encouraged employees to cross-sell products to customers. Last week, Wells Fargo paid a $185 million fine to regulators, including the U.S. Consumer Financial Protection Bureau, after findings that many accounts were falsified or forced on unsuspecting customers.

How about acknowledging that these policies that need to be eliminated were in fact designed and implemented by the current management and directors. And remind us again, what is the plan for clawing back the bonuses paid based on these fraudulent numbers, including the reported $142 million paid to the executive in charge?

Source: Wells Fargo CEO Defends Bank Culture, Lays Blame With Bad Employees – WSJ

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