Let’s recap. Wells Fargo has experienced the following events in the past 12 months:
In September 2016, it uncovered 2.1 fake or unauthorized account set up by employees pursuant to a sales goal program (account reps were using fictitious names, opening accounts for relatives and then having them closed once the sales goals were met, and, in an old fashioned twist, just opening accounts up in customers’ names without the customers knowing
Shortly thereafter, Wells fired 5,300 employees, all whilst proclaiming that the sacked employees simply did not follow the bank’s motto of putting the customer first.
Some months later, mortgage repayment terms were changed without authorization in bankruptcies of Wells loan customers.
Two months ago, Wells disclosed that 800,000 loan customers had auto insurance they had not authorized.
Last week Wells announced that it was wrong on that number of unauthorized accounts, and added another 1.4 million to the original 2.1 figure.
The third-party investigation that uncovered the problems was an important step for Wells. And the voluntary disclosure was a big step as well. However, there comes a point when credibility, trust, and competency are in doubt. The steady drip, drip, drip leaves the impression that the bank still does not have its arm around one thing: What kind of culture do we have that these behaviors keep cropping up? And one important question has to be answered: Why would our employees believe that what they have done is acceptable behavior at Wells Fargo? Until the bank’s leadership and board know the answer to that question, its full-page apologies, its promises to do better, and its assurances that things are under control begin to look comical. The bank that can’t shoot straight. Wells stock has remained flat for a year. Chase, Bank of America, and Citigroup have an average gain of 40%. And let’s not even mention what has happened to new business at Wells. That is one ugly set of figures.
Wells is not there yet. A culture study, a strategic revamp, and different incentive plans are needed. Until the board comes to grips with the stories about employee actions and what they were doing (and apparently still doing) they cannot get the bank back on track. Answer that question, and you move forward. Ignore it, and the drips will continue.