Update:
Can Wells Fargo CEO John Stumpf keep his job? He will be dragged before The Senate Banking Committee to answer for the bank’s horrible mistakes
Wells Fargo’s (NYSE: WFC) shares have fallen so much from the the point at which a fraud was disclosed which cost 5,200 employees their jobs and the bank suffered $185 million in fines, that $10 billions has been cut off the bank’s market cap. Shares trade at $48.61, down 3.61% for the day
(Several analysts have pointed out that J.P Morgan (NYSE: JPM) has just passed Wells Fargo as the largest bank in the U.S. as measured by market cap)Wells Fargo & Co. (NYSE: WFC) said in a press release:
A statement by CEO John Stumpf to inflame investors. He said:
“Our objective has always been and continues to be to meet our customers’ financial needs and drive customer satisfaction. We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers.”
“We believe this decision is both good for our customers and good for our business. The key to our success is the lifelong relationships that result from providing each customer with great value. For the past several years, we have significantly strengthened our training programs, controls and oversight and have evolved our model to ensure we are rewarding deeper relationships and providing excellent customer service. The elimination of product sales goals represents another step to reinforce our service culture, helps ensure that nothing gets in the way of our ability to achieve our mission, and is consistent with our commitment to providing a great place to work.”
Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us. Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.
However, in the initial press release Stumpf’s name was not mentioned at all, odd since usually statements about important companies problems usually include a reaction for the CEO
… agreements with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the Office of the Los Angeles City Attorney, regarding allegations that some of its retail customers received products and services they did not request.
Whatever Stumpf’s opinions were about the scandal, he kept them mostly to himself.
On the basis of math, a total of 5,300 employees were fired because of the scandal. Wells Fargo has 286,000 workers. That means 2% of the bank’s workers were let go. That will not be the end of it. Someone in management will take a fall, and that may be Carrie Tolstedt who ran the units where the problems occurred. She left the bank with a $125 million pay package. (By the way, a huge number of customer lawsuits are on the way.)
There is an old proverb: The fish stinks from the head. A good chief executive, among other things, sets the ethical code, which works its way down to the bottom-most workers. For 5,300 people to engineer a cheat is a sign that Stumpf is among the worst sort of leaders. He is one who runs a company in which even the most basic moral rules have been ignored and in such a public way that it will hurt the bank’s reputation for years. To mix metaphors, “the buck stops here.
A note to Wells Fargo lead director Stephen W. Sanger, retired chairman of General Mills, and Federico F. Peña, the chairman of the Wells Fargo’s Corporate Responsibility Committee of the board and former U.S. Secretary of Energy and former U.S. Secretary of Transportation, many customers, shareholders and employees want to know why Stumpf is still CEO. And why no one at Wells Fargo has taken responsibility.
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