Heitkamp: More accountability on Wells Fargo
Like most North Dakotans, when I walk into my local bank, I know and trust the folks behind the counter. They’re my friends and neighbors and and they’re incredibly dedicated to their work and to our community.
That’s why when I learned that at least 5,300 Wells Fargo employees had been fired for opening roughly 1.5 million fraudulent bank accounts and 565,000 credit card applications over the past five years I was flabbergasted. In North Dakota alone, Wells Fargo estimates that 1,939 accounts may have been unauthorized 84 of which incurred fees.
I wanted answers.
This week in the U.S. Senate Banking, Housing and Urban Affairs Committee where I serve as a subcommittee ranking member, I had the chance to ask Wells Fargo Chairman and CEO John Stumpf about what went wrong, how widespread this fraud was, and where the risk management failures were so we can prevent it from happening again. But most importantly I wanted to know what concrete steps were being taken to restore North Dakotans’ faith.
Every North Dakotan and every American consumer who puts their trust in a bank ought to be able to count on their personal information and their money being handled safely. And I wanted to hear directly from Stumpf about how faulty monitoring of the sales incentive programs he and his executives pushed went so wrong that the company broke that trust on such a massive scale.
But like many of my colleagues on the Committee, I was disappointed with what I heard. As I told Stumpf this long-term behavior was the result of a culture instilled by the practices and policies pushed by Wells Fargo’s leaders and no one believes that more than 5,000 employees acted independently on this.
Instead of telling me how he planned to not just fire en masse thousands of men and women at the end of the line most of whom were likely following orders but to hold those at the top accountable for failing to properly monitor the incentives they created which bolstered this behavior, Stumpf’s message repeated the same refrain: ‘Trust us we’re handling it.’
But trusting his word isn’t good enough when North Dakotans see top CEOs like him punishing the little guy and letting top managers like Carrie Tolstedt who oversaw Wells Fargo’s incentives program where the abuse took place off the hook. In fact, Tolstedt, who announced her retirement at the end of the year, stands to profit handsomely from compensation and bonuses and could walk away with more than $125 million in her pocket.
At the hearing, Stumpf didn’t demonstrate a plan to show North Dakota customers he wasn’t just using lower-level employees as a scapegoat, and he didn’t have an answer as to how or even if the Wells Fargo Board of Directors planned to claw back Tolstedt’s payout.
But most importantly, Stumpf didn’t sufficiently address how he planned to mend the perverse environment that led and even encouraged thousands of employees to corrupt behavior.
Good, hardworking employees that North Dakotans know make up the vast majority of workers and their local financial institutions deserve to be shielded from the type of rotten culture that festered in parts of Wells Fargo.
If Wells Fargo is serious about restoring the trust of customers, apologies without accountability at the top isn’t going to cut it. And the bank must provide better answers than ‘trust us’ on how it will protect its workers.
The silver lining is that our public watch dogs at the Consumer Financial Protection Bureau and attorneys in the City and County of Los Angeles caught the massive fraud when they did, and helped provide recourse to thousands of consumers who were harmed but it’s a grim reminder of the misbehavior that can occur without their oversight of large financial institutions.
Going forward, it’s absolutely critical that members of Congress and our federal regulators who uncovered the scam work together to put the proper safeguards in place to keeping sweeping breaches of trust like this from being repeated at Wells Fargo and other financial institutions.
And to do that, I’ll keep working to get answers and accountability from folks like Stumpf at the top, and to make sure that Wells Fargo doesn’t just clean house but cleans up its act by making the changes necessary to restore the safe environment employees need and North Dakota customers deserve.
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