The following article was written by ravey, a Wells Fargo employee who wishes to remain anonymous for fear of repercussions from the company.
Meet the new boss, same as the old boss.
Those of us who work at Wells Fargo were not at all unhappy to see CEO John Stumpf go last month. But the way he left — with the Wells Fargo board allowing him to resign, rather than firing him — showed that the corporation has no interest in real accountability, and will only do the minimum to safeguard its public reputation. They are doing pretty badly at that too. This week they announced that Timothy Sloan, previously the bank’s Chief Financial Officer and Chief Operating Officer, would be the new CEO. Given his positions, it is simply inconceivable that Sloan would somehow have been ignorant of, and not directly implicated in, the culture of high-pressure sales that pervaded branch operations, causing such massive fraud and massive profits for the bank’s leadership and top investors.
Stumpf would likely still be the CEO today if not for the uproar caused by his testimony in front of Congress, which brought a new round of furor against Wells Fargo. Legislators accused him of personally benefiting from this scandal, urging him to resign, and even threatened him with the possibility of jail time. All the while, Stumpf stuck to the company line, repeated ever since the scandal emerged, that “bad employees” working for low wages at the bottom of the company, were primarily responsible for opening the millions of phony and unauthorized accounts.
Stumpf even claimed that no bank executive, himself included, personally benefited from this massive fraud, and that these practices contradicted the culture of the bank and in fact were not financially beneficial to the company.
But, as Senator Elizabeth Warren pointed out, top executives had promoted the Wells Fargo brand to investors for its unique ability to “cross-sell” additional products to its customers better than any other bank. This churned out additional profit, which in turn pumped up the value of Wells Fargo stock over the years, and produced massive returns for its major shareholders. Despite the innocent game he played, Stumpf was indeed “making bank” from it all — bringing in a ridiculous $200 million plus in returns from his stock holdings in the company.
Sen. Warren accused Stumpf of squeezing his employees “to the breaking point,” leaving them with no choice but to lie to customers in order to meet their outrageous sales quotas. While social media generally celebrated the senator’s firm remarks, it was the brave testimony of former employees and management that shined a light on the fraud. Beyond Stumpf, the whole bank leadership played a role in squeezing employees, and that hierarchy remains firmly in place to this day.
Watching the scandal from inside Walls Fargo
At the branch level, almost every “surviving” team member where I work was closely watching the developments in Congress. Stumpf’s testimony was a slap in the face to all of us. Many of our co-workers have already been laid off here, as part of 5,300 firings nationwide, and those who are left are going to pay the heaviest price for the corporation’s crimes.
We have witnessed the bank go into damage control mode by sending out daily memos of confusing instructions on how to address customers and other employees.
When Wells Fargo was fined $185 million by the Consumer Financial Protection Bureau — a historic amount, but nothing huge for the bank — my coworkers and I received an official memo directly from CEO Stumpf. The memo told us how to respond to customers, the press, family, friends, and whoever asked about the scandal. We were simply forced to put aside our feelings about the matter and follow the official line of the company; “Our bank’s culture is one of always caring for our customers and only talking to them about beneficial products and services that will help them succeed financially.” That was the line. The memo indicated that the people responsible for these wrongful practices had already been terminated and the company had created a program to retrain all of its employees on matters of ethics to stop these awful practices.
In the following days, we were bombarded with questions from all angles. Customers came in angry to demand compensation since they claimed they had also been affected; some closed their accounts. While we handled customer’s concerns as instructed, out of fear of being fired, the thoughts and opinions of the workers in my branch were completely different.
Unlike most people, we were not completely surprised by the news of the fine. We had seen it up close and been playing close attention to the direction and strategic planning of the company. There were indications over the last year and a half that the company had been anticipating this day. First there was a definite change of focus from sales to service, the gradual but significant reduction of product sales goals, which slightly eased the pressure, then there were the mandatory weekly meetings to discuss sales ethics, and then finally the creation of a specialized ethics department designed to observe sales tactics and conversations by bank employees with customers — both with their permission and covertly. At the time, most workers saw the changes as a positive thing. Many joked around saying things like “It’s about time Wells Fargo cleaned up their act” and “great — maybe now I will be able to go home without thinking my job’s always on the line.” The company was not straightforward about why the changes were happening, but they were welcomed nonetheless.
What actually sent shockwaves of fear among our team was the immediate termination of so many of our co-workers. In the past, employees who were accused of any wrongdoing would undergo an investigation process and often given some type of warning followed by a corrective action. However, now employees began to be terminated immediately and without warning. This was, in fact, the real substance of the company’s “reform” effort — an advanced and premeditated attack on the workers so they could later claim to have held “bad employees” responsible. They hoped that with enough firings they would not draw attention to themselves and release themselves from blame — even though they were the very people who created the incentives, sales goals and culture that promoted fraud.
A cutthroat sales job
We were stunned when in an early interview with Jim Cramer of Mad Money for CNBC, Stumpf completely washed his hands of any wrongdoing, denied any problems with the aggressive sales goals and structure of the company. He said, “There is nothing in our culture, nothing in our vision and values that would support that. It’s just the opposite.” We laughed and looked at each other in disbelief. Anyone that has ever worked at a Wells Fargo branch knows the real deal — while the bank might not explicitly state their aggressive sales culture in their mission and values statement, it is well known for its cutthroat and aggressive sales environment.
From the first day I was hired, my manager told me “this is a sales job.” From daily morning sales huddles to almost hourly inventory of the number of sales each team member had throughout the day, almost every aspect of our workday was geared towards sales. For most busy stores, there typically is a daily sales goal for the entire store between 65-80 products or services sold. Every team member was responsible for pushing his or her own weight to ensure the branch meets the daily goal. If towards the end of the day it looked as though the branch was not going to meet the goal, the manager typically would call a last minute sales meeting and each of us would have to commit to closing the day strong in order to ensure the goal is met: “no one is going home until we meet the goal.”
It was intense: Those team members who were not pulling their own weight would often be ridiculed and given verbally abusive performance reviews by management, which could lead to termination if the team member continued to fall short. More often than not, I saw many of my co-workers and friends come out of those meetings in tears or fearful of possibly losing their jobs. After enduring this type of abuse and anxiety, we would each call our family members to inform them that once again we will be getting home late because we didn’t meet an outrageous store goal.
At its worst and perhaps most invasive and unethical, some managers would tell their team to “start calling family members and friends to open accounts.” My co-workers and I often still can’t believe that Stumpf had the audacity to claim this was not part of the culture of the branches.
Many of us have been working long enough to remember the famous “Jump into January” campaign. This was a well-documented company-wide effort to meet most of the entire first quarter sales goal (three months) in the first two weeks of January alone. It was obscene. There would be constant sales meetings in preparation for this blitz. In the beginning of the preceding December, team members were told to “sandbag” or save and put aside their new sales for January. We would convince a customer to open an account or a credit card, get their signatures, but we would hold off until January to process the transaction.
As lawsuits started to come in 2012, this campaign name was changed to “Accelerate into January,” which basically meant doing the same thing but perhaps half the goal. Finally the practice was done away with altogether in 2014.
Wells Fargo’s hostile sales culture went beyond the constant tormenting of their employees to meet their goals. At times Wells Fargo Management would often violate employee rights and benefits. If a team member wanted to take some time off, whether it was for vacation or either a personal or medical-parental leave, management would discourage them from taking too long of a leave. If it was a personal leave, they were told to not take the leave at all. They often cited their reasons being that a leave could hurt your career path or next promotion, or — my personal favorite — “we still have a business to run, so we need you here.”
All these practices have been well documented in previous lawsuits against Wells Fargo from former managers and employees. There are several cases of active employees going to the Consumer Financial Protection Bureau as whistle-blowers to shed light to regulators, yet they were reported to be threatened with termination by the bank when it was revealed that they came forward.
While executives move on, workers face job losses
Stumpf told the Senate hearing that Wells Fargo was getting rid of their product sales goals starting on January 1, 2017. After suffering such a public embarrassment at the hands of Senator Warren, the company then sent out another memo and announced that the change was being moved up; Well Fargo was getting rid of all product sales goals starting October 1, the following week! The timing and change of the day of the decision are both indications that the bank is in panic mode, and trying everything possible to weather the storm and ease investors.
For years now, Wells Fargo workers got tired of seeing so many of our friends fall victim to a vicious cycle of cheating customers for survival as a last resort to keep their jobs. We all felt that it was extremely unfair for so many low-pay employees to lose their jobs while the executives that created the conditions that ultimately paved the way for these dishonest activities to take place not only got to keep their jobs but made a fortune from it.
Wells Fargo continues on a daily basis to try to erase any lingering trace or evidence of the previous presence of an aggressive sales atmosphere. All bankers and tellers have been re-trained to not talk about products at all and instead focus only on customer service. All sales meetings and outbound calling activities have been canceled indefinitely and any outbound calls can only be made for service issues or concerns. There is a lot of rumors going around and concerns as to how will these changes affect some team members, in particular those in various sales positions. There is considerable speculation about more layoffs as some positions become obsolete.
Before resigning Stumpf announced that he made a recommendation to the board of the company to “claw back” $41 million of his stock awards and his 2016 bonus. It was also announced that executive and head of community banking Carrie Tolstedt would not be paid any severance or bonus, and will forfeit $19 million worth of unvested stock awards she was scheduled to receive. But despite all this, Toldstedt will still walk away with $77 million worth of Wells Fargo stock for her “great job” over the past decade. Now without sales goals, it will be interesting to see how Wells Fargo workers will not have their income plummet — and we don’t have $77 million to fall back on.
We pay taxes, they avoid them
Stumpf recently told the Wall Street Journal that he doesn’t “want one dime of income that’s not earned properly.” But CNN revealed that in 2015, Stumpf was awarded $4 million in bonuses for bringing in a significant number of new consumer and business customers to the bank. The award was also due to Stumpf’s success in “reinforcing a culture of risk management and accountability across the company.” What a joke!
The most insulting thing about these “performance” bonuses are that he did not have to pay taxes for them! As the executives were getting millions in bonuses and getting huge tax breaks, us at the branch level were receiving crumbs in comparison and being taxed almost half of our bonus compensation. Stumpf made more than $21 million a year compared to a teller who makes $12 an hour. The executives used Section 162(m), a tax loophole for executives of companies created by none of other than former President Bill Clinton. According to The Nation magazine, this tax provision allows executives to write off and get an exemption for stock options or any other pay that is considered “performance-based.” In addition, the law “created a legal process by which publicly held companies can lower their tax bills by boosting CEO pay.”
In other words, these publicly held corporations are allowed to deduct the already extravagant pay of CEOs, saving the company millions in taxes, and taxpayers pick up the bill. To put in into perspective, between 2012 and 2015, Stumpf was paid about $155 million in “performance-based” bonuses, meaning that “Wells Fargo was able to claim a $54.2 million tax subsidy in those years based solely on Stumpf’s pay.” (The Nation, September 1, 2016)
The bank was later fined a total of $10.4 billion for misconduct during those very years, after receiving more than 42,000 complaints from the Consumer Protection Bureau.
Wells Fargo isn’t alone in all this of course. Last year in 2015, the Economic Policy Institute released a report titled “Top CEOs Make 300 Times More than Typical Workers.” In this report it was found that from the years of 1978 to 2014, total pay of CEOs increased by almost 1000% while pay for the average worker in a given company only increased by 10.9%. The trend has shown an extreme widening gap over the last half century. The CEO-to-worker pay ratio was 20-1 in 1965, then 60-1 in 1990, and a significant spike of 303-1 in 2014. Clinton’s tax bill helped the trend, but was only one of many factors.
Regardless of what comes out of the Congress hearings and the current investigations, one thing is for certain: these unlawful practices along with the widening gap of the rich corporate executives will continue. This is not a case of a few bad apples — as Congress is suggesting by singling out a few bank executives and accusing them of mismanaging their companies. The whole system is rigged. Stumpf’s predecessor Dick Kovacevich was no different — except for the fact that did not get caught. Kovacevich, like Stumpf was well known in the banking industry as a product pusher and big on cross-sell. According to a CNN article, “Both often won banker of the year awards from various industry organizations because of their cross-selling prowess.”
While the scandal has surely hurt Wells Fargo’s reputation and customer base, the scandal has barely registered a blip on the bank’s bottom line. They have just announced huge third quarter profits ($5.6 billion). Even with the elimination of sales goals and the backlash from the scandal, Wells Fargo continues to fill-up the pockets of their executives and major shareholders. When you are in the business of finance capital, enjoying cash flows from so many directions, a $185 million fine is chump change. Last year alone, Wells Fargo and four other major banks brought in about $1.7 billion in overdraft fees each — made from thin-air by charging people for not having any money.
Maybe Congress should instead take a look at the bigger scandal: the fact that the big banks are nothing more than a legal mafia, designed to make billions in profits by ripping off millions of poor and working class people. I know. I work at one.