By now we all know that Wells Fargo & Co. (NYSE: WFC), one of America's premier banking giants, got slapped with $185 million in fines to settle charges of widespread fraud.
Or was it a screw-up? Maybe management, compliance officers, risk monitors, and auditors simply failed to catch thousands of employees who happened to be engaged in a massive and likely criminal enterprise going back five years.
In fact, this was encouraged by pervasive "trickle-down" bankster culture that puts a premium on profit above, well, everything else. Wells Fargo just managed to get caught at it.
The truth of this isn't pretty…
Wells Fargo Won't Be Popular Much Longer
San Francisco, Calif-based Wells Fargo & Co. calls itself "a diversified, community-based financial services company." Magazines Global Finance and The Banker call it 2016's best U.S. bank. Brand Finance calls it the most valuable bank brand on Earth. CEO John Stumpf was even named 2015's "CEO of the Year" by Morningstar.
In other words, the Wells' media accolades are plastered on thick and heavy. It's broadly admired (or at least it was), even by an American public who are sick to death of big banks and who, by now, can largely see through them.
Despite the warm, fuzzy feeling Wells seems to give Americans, this is a big bank: Its $1.9 trillion in assets are handled by 269,000 "team members" who deal with 70 million customers out of 8,800 locations.
I've got some more big numbers to talk about…
Wells Fargo has long prided itself in its ability to cross-sell its customers different banking and financial services. Customers with multiple accounts and services are considered "sticky" customers who aren't inclined to leave the bank.
The company reports that its customers use an average of 6.15 services, the highest in the industry.
Cross-selling isn't just a way to keep customers, it's a way to make more money – a lot more – out of each customer. In fact, cross-selling really shines out in Wells' financial and proxy statements.
It shines out so much that cross-selling bonuses and commissions account for between 3% and 15% of sales associates' salaries. The practice is so important to Wells that many employees reported being fearful of losing their jobs should they miss sales goals.
A Los Angeles Times investigation, published in a Dec. 21, 2013, article by E. Scott Reckard, titled "Wells Fargo's Pressure-Cooker Sales Culture Comes at a Cost," lays bare aggressive tactics pushing banker sales teams to cross-sell products like checking and savings accounts, overdraft protection, credit cards, mortgages, and wealth-management products to existing customers.
In the article, Reckard writes, "The relentless pressure to sell has battered employee morale and led to ethical breaches, customer complaints, and labor lawsuits."
Employees reported being forced to work after-hours and weekends to make up missed quotas. The Times reports one branch manager was constantly told she'd "end up working for McDonald's" during hourly browbeatings masquerading as "conference calls."
And now we know that 5,300 "team members," bankers, and branch managers who allegedly set up bogus accounts for customers who never authorized them, to rip customers off and pad their own salaries and bonus payments (and perhaps save their jobs or have a weekend off once in a while), all over the past five years, and all in offices across the country.
Five years. Across the country.
About the Author
Shah Gilani is the Event Trading Specialist for Money Map Press. In Zenith Trading Circle Shah reveals the worst companies in the markets - right from his coveted Bankruptcy Almanac - and how readers can trade them over and over again for huge gains.Shah is also the proud founding editor of The Money Zone, where after eight years of development and 11 years of backtesting he has found the edge over stocks, giving his members the opportunity to rake in potential double, triple, or even quadruple-digit profits weekly with just a few quick steps. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.