The Wells Fargo Fraud

Wells Fargo.  Fraud.

We could have stopped this post right there and our point would have been made.

But in the interests of putting things on the record (or more precisely quoting the New York Times that summed up a culture with many, many challenges well in three paragraphs):

We found out Friday that at least 5,300 of his employees — let me repeat that number because it is so mind-bogglingly large: 5,300 — were engaged in rampant sham deals, secretly signing up myriad customers for two million accounts that they did not authorize, did not know they had, did not need, and clearly did not understand.

Wells Fargo then charged customers at least $1.5 million in fees for those unwanted sham accounts, which were created simply to goose the income of bank employees whose incentive programs rewarded them for opening as many new accounts as possible. Some of the accounts were closed right away, as soon as the employee got credit for them.

The executive who oversaw this group of rogue employees, Carrie Tolstedt, conveniently announced plans to retire over the summer and, according to Fortune, is being paid $124.6 million on the way out. 

The Consumer Financial Protection Agency press release is one of those beautifully understated regulatory missives that just leaves one shaking their head.

Where does one start?

Lets start at the top – if it is true that the executive that oversaw the misadventure was allowed to resign and was nicely compensated for doing so, well scratch senior accountability off the lessons learnt.

If it is true that 5,300 people were engaged in a fraud – well that is one for the record books in terms of sheer cultural challenges the next generation of Wells Fargo leaders have to deal with.

If it is true that the misbehaviour was linked to a perverse incentive scheme – who amongst other organisations watching will be the first to caste their stone?

And finally – for now! – is, what next for Wells Fargo?  

Is this a scandal big enough to bring it to its knees (not in terms of the impact of the fine but in terms of reputation).

Remember we all thought Enron was impenetrable!

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