Julia Miller was happy to shake the hand of John Stumpf, the chairman and chief executive of Wells Fargo, at an event in Orlando in May 2012. As one of the top branch managers at Wachovia, the bank Wells had bought a few years earlier, she had won an all-expenses-paid trip to Disney World with 300 other star performers from all over America.
But even back then, she says, she was dismayed at the way the bank was going. After the Wachovia integration was complete, sales goals at her small branch in Macungie, Pennsylvania were set much higher, and staff were hounded by district managers to hit them. When she moved to a bigger store in the nearby city of Allentown, where three or four bankers were supposed to generate seven new checking accounts and 42 other products every single day – while making 100 phone calls each – the “bullying” and “intimidation” got worse.
This month Wells was fined a record $185m for opening more than 2m deposit and credit-card accounts that may not have been authorized by customers – the result, Mr Stumpf said this week, of tellers and bankers acting “dishonestly.”
But if staff bent the rules to hit targets, says Ms Miller, it is probably because they feared for their jobs if they didn’t. She herself was fired for poor performance in August 2013, shortly after she returned from a six-week leave due to high blood pressure.
The CEO’s testimony to a Senate committee this week was “bullshit,” she says. “He said that low-level employees were the weak links, that they had no regard for ethics. We do, but I can understand why people did it. They were on a second [warning]. If they had one more, they’d be fired. It’s all about the numbers; that is all that it is.”
The scandal has already cost Wells its crown as the world’s biggest bank by market capitalisation, nudged aside last week by JPMorgan Chase. Even so, research analysts are pumping out more negative reports than at any time since early 2010, as they fret over lawsuits and further regulatory probes. Some are questioning whether Mr Stumpf – who stood down from a prestigious advisory committee to the central bank on Thursday – can hold on to his job.
But few rivals are enjoying watching the bank squirm, because they know that retributions will wash over them too. This week, for example, senators from both sides of the aisle called for the return of bonuses and stock grants awarded to Mr Stumpf and also Carrie Tolstedt, a 27-year veteran of the bank who recently stood down as head of the retail banking division. Clawbacks prompted by a hit to a bank’s reputation, rather than a big loss or an accounting restatement, could set a worrying precedent, from the banks’ point of view.
The Consumer Financial Protection Bureau could also be emboldened to regulate incentive pay for all manner of retail banking products – just like it currently caps bonuses for mortgage brokers at 10 per cent of the total.
Banks’ whistleblowing procedures will be under scrutiny too – especially in light of stories like that of Rasheeda Kamar, a former branch manager in New Milford, New Jersey, who got nowhere with appeals to more senior managers or a call to an internal ethics hotline. After she was accidentally copied in to an email with a draft letter of dismissal attached to it, she forwarded the mail in protest to Mr Stumpf. She explained that she was missing targets because she refused to allow staff to open sham accounts – a practice that she suggested was widespread elsewhere.
“For the most part funds are moved to new accounts to ‘show’ growth when in actuality there is no net gain to the company’s deposit base,” she wrote in the February 2011 email, which was seen by the FT. Wells Fargo declined to comment.
She got no reply, and Mr Stumpf told the Senate committee this week that he didn’t see the email. He’s due back on Capitol Hill next Thursday for another grilling.
As for Ms Miller, she’s off the Xanax and the Lexapro and is running an insurance business, trying to rebuild the credit history she damaged after defaulting on her (Wells Fargo) mortgage. She is also advocating for the Committee for Better Banks, a coalition of bank workers, hearing similar tales of stressed and poorly-paid employees struggling with “ridiculous” targets.
“People are texting me right and left; it’s happening everywhere. Wells was the ringleader, as the biggest retail bank. But whatever they did, the others followed suit.”