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The Wells Fargo Banking Scandal – Case Solution

The Wells Fargo Banking Scandal case study analyzes the Wells Fargo account fraud scandal, which came to the forefront of the public eye in September 2016. It is one of the biggest scandals in the financial world in which 3.5 million unauthorized bank accounts had been created by Wells Fargo employees to achieve unrealistic sales targets set by senior management.

​Luann J. Lynch; Cameron Cutro Harvard Business Review ( UV7267-PDF-ENG ) October 27, 2017

Case questions answered:

• Identify the relevant corporate governance issues, practices, and problems at Wells Fargo.
• Apply corporate governance theory relevant to that industry/profession and the identified issues and problems.
• Provide recommendations for improving the corporate governance practices of Wells Fargo in order to resolve the identified problems.

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The Wells Fargo Banking Scandal Case Answers

Executive summary – the wells fargo banking scandal.

This report analyses the Wells Fargo account fraud scandal, which came to the forefront of the public eye in September 2016. It is one of the biggest scandals in the financial world in which 3.5 million unauthorized bank accounts had been created by Wells Fargo employees to achieve unrealistic sales targets set by senior management.

The corporation has paid hefty fines since then and has undergone corporate restructuring to a great extent due to pressure from the Government and increased legal regulations in the industry.

After thorough analysis, the major causes of this scandal have been identified as decentralization of management, the Principal-Agent problem, and the dual role of Chairman and CEO, which was played by the same person, John Stumpf.

The authority is given to local managers in the absence of a formal plan to reach sales targets, and the intense pressure faced by employees to reach their targets led to a number of employees adopting fraudulent practices.

Such actions clearly portray that the employees did not have the best interests of the business owners on their minds, suggesting a principal-agent problem.

The dual role played by John Stumpf led to poor governance, design, and implementation of corporate strategies and also led to one man holding too much power in the organization.

In response, we recommend Wells Fargo empower its Board of Directors to centralize the key decision-making process, align divergent interests of employees and shareholders to mitigate the agency problem, and hire different executives for the positions of Chairman and CEO.

A better organizational culture needs to be created, and a set of independent directors need to be hired who can share an unbiased view of different strategies and techniques adopted by the organization.

This shall prevent a similar mishap from happening and ensure that Wells Fargo ethically moves ahead on a growth trajectory in the future.

1. Introduction

Fierce competition emerged in the American Financial Sector due to Global Market and Technology Developments, macroeconomic pressures, and deregulation of the sector (Hawkins & Mihaljek, 2001), which led to the use of immoral techniques to attain greater profit and market share.

Needless to say, it is extremely important for organizations to follow an ethical approach to achieve their objectives, which shall not just lead to healthy competition in the market but also manage customer and stakeholder expectations.

Different problems arising as a result of poor Corporate Governance mechanisms combined with an extremely aggressive sales practice, unscrupulous corporate culture, and inadequate supervision can be delved into using the Wells Fargo Scandal.

2. Background to the Case

Wells Fargo & Company is one of the biggest financial services firms in the world the third biggest in terms of assets in the USA, which caters to all customer groups across all major industries (Wells Fargo and Company SWOT Analysis, 2019). The company headquarters are in San Francisco, California, USA, and is presently operating across North America, Europe, Asia, and the UAE.

It has an extremely strong market position in the USA, and the main challenges it is facing today are intense competition and growing legal regulations in the country.

Owing to the intense competition in the Banking Industry, the senior management started using strong-arm sales tactics and pressuring employees to achieve unrealistic sales quotas. Employees were threatened about the security of their jobs and had to work unpaid hours if they were unable to meet these sales quotas (Levine, 2016).

In 2016, Wells Fargo employees were found guilty of opening 3.5 million (Mehrotra & Keller, 2017) fake accounts on behalf of their customers, creating one of the biggest scandals in the financial world. They were fined approximately $185 million in 2016 and have borne fines of about $1.7 billion as a result of this Financial Scandal (Colvin, 2017).

Despite sounding like a mortgage crisis, the Wells Fargo scandal seems different as it was not carried out by the 1% wealthy investment bankers but rather carried out by $12 per hour employees (Delshad, 2016).

The decentralized management structure led to less governance from senior management and more autonomy for local managers, who misused unethical sales methods to achieve their targets. The dual role of the chairman and the CEO, played by John Stumpf, is another key issue; separate roles could have proven beneficial in mitigating such a disaster.

Boyd (1995) has stated that the dual role has a negative, weak relationship with firm performance. Having a single role in the organization as a CEO would have resulted in effective corporate governance and allowed Stumpf to focus on operations and strategy execution completely. It would have nullified disagreements in regard to executive compensation, recruitment of directors, or an independent board.

Thus, this case provides a clear example of a disaster, poor Corporate Governance, and risk management combined with aggressive and unethical policies that can lead to an organization.

3. Root Causes for The Wells Fargo Banking Scandal

A fraud of this scale accumulated various perspectives, opinions, and reasons for what had gone wrong. Analyzing these with deeper insights, we have highlighted three root causes that led to the Wells Fargo Account Fraud Scandal.

3.1. CEO Duality

Studies have given no positive inference on the effects of CEO duality. Fama and Jensen (1983) have suggested that duality may affect the ability of the board of directors to monitor their management, thereby increasing the agency cost, whereas Donaldson and Davis (1991) have argued that duality would help in better designing and implementing strategies, thereby leading to better firm performance.

Since 2007, John Stumpf has been the Chairman and the Chief Executive Officer for Wells Fargo until his resignation in 2016. CEOs of large firms in the US are typically not the major stakeholders (Boyd B. K., 1994).

In case of issues, corporations tend to leave the decision management task to the CEO and the decision control task to the board, giving the CEO the responsibility for initiating and implementing the strategic decisions while leaving the board with the responsibility to ratify and monitor those decisions, making the board as the internal controller (Walsh & Seward, 1990).

However, by serving as the chairman, the CEO gets wider power and control (Hambrick & Finkelstein, 1987), weakening the board’s decision-controlling authority (Morck, Shleifer, & Vishny, 1989).

In 2010, Stumpf decided to impose extremely aggressive sales goals on their employees in order to live up to their reputation of being the best cross-sellers, addressing the following statement:

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• Contributors

The Wells Fargo Cross-Selling Scandal

Brian Tayan  is a Researcher with the Corporate Governance Research Initiative at Stanford Graduate School of Business. This post is based on a recent  paper  by Mr. Tayan.

Recently, attention has been paid to corporate culture, “tone at the top,” and the impact that these have on organizational outcomes. While corporate leaders and outside observers contend that culture is a critical contributor to employee engagement, motivation, and performance, the nature of this relationship and the mechanisms for instilling the desired values in employee conduct is not well understood.

For example, a survey by Deloitte finds that 94 percent of executives believe that workplace culture is important to business success, and 62 percent believe that “clearly defined and communicated core values and beliefs” are important. Graham, Harvey, Popadak, and Rajgopal (2016) find evidence that governance practices and financial incentives can reinforce culture; however, they also find that incentives can work in opposition to culture, particularly when they “reward employees for achieving a metric without regard to the actions they took to achieve that metric.” According to a participant in their study, “People invariably will do what you pay them to do even when you’re saying something different.”

The tensions between corporate culture, financial incentives, and employee conduct is illustrated by the Wells Fargo cross-selling scandal.

Wells Fargo Culture, Values, and Management

Wells Fargo has long had a reputation for sound management. The company used its financial strength to purchase Wachovia during the height of the financial crisis—forming what is now the third largest bank in the country by assets—and emerged from the ensuing recession largely unscathed, with operating and stock price performance among the top of its peer group (Exhibit 1). Fortune magazine praised Wells Fargo for “a history of avoiding the rest of the industry’s dumbest mistakes.” American Banker called Wells Fargo “the big bank least tarnished by the scandals and reputational crises.” In 2013, it named Chairman and CEO John Stumpf “Banker of the Year.” Carrie Tolstedt, who ran the company’s vast retail banking division, was named the “Most Powerful Woman in Banking.” Wells Fargo ranked 7th on Barron’s 2015 list of the “Most Respected Companies.”

Wells Fargo’s success is built on a cultural and economic model that combines deep customer relations and an actively engaged sales culture. The company’s operating philosophy includes the following elements:

Vision and Values . Wells Fargo’s vision is to “satisfy our customers’ needs, and help them succeed financially.” The company emphasizes that:

Our vision has nothing to do with transactions, pushing products, or getting bigger for the sake of bigness. It’s about building lifelong relationships one customer at a time. … We strive to be recognized by our stakeholders as setting the standard among the world’s great companies for integrity and principled performance. This is more than just doing the right thing. We also have to do it in the right way.

The company takes these statements seriously. According to Stumpf, “[Our vision] is at the center of our culture, it’s important to our success, and frankly it’s been probably the most significant contributor to our long-term performance.” … “If I have any one job here, it’s keeper for the culture.”

Cross-Selling . The more products that a customer has with Wells Fargo, the more information the bank has on that customer, allowing for better decisions about credit, products, and pricing. Customers with multiple products are also significantly more profitable (Exhibit 2). According to Stumpf:

To succeed at it [cross-selling], you have to do a thousand things right. It requires long-term persistence, significant investment in systems and training, proper team member incentives and recognition, [and] taking the time to understand your customers’ financial objectives.

Conservative Stable Management . Stumpf’s senior management team consisted of 11 direct reports with an average of 27 years of experience at Wells Fargo. Decisions were made collectively. According to former CEO Richard Kovacevich, “No single person has ever run Wells Fargo and no single person probably ever will. It’s a team game here.” Although the company maintains independent risk and oversight mechanisms, all senior leaders are responsible for ensuring that proper practices are embedded in their divisions:

The most important thing that we talk about inside the company right now is that the lever that we have to manage our reputation is to stick to our vision and values. If we are doing things for our customers that are the right things, then the company is going to be in very good shape. … We always consider the reputational impact of the things that we do. There is no manager at Wells Fargo who is responsible for reputation risk. All of our business managers in all of our lines of business are responsible.

Wells Fargo has been listed among Gallup’s “Great Places to Work” for multiple years, with employee engagement scores in the top quintile of U.S. companies.

Cross-Selling Scandal

In 2013, rumors circulated that Wells Fargo employees in Southern California were engaging in aggressive tactics to meet their daily cross-selling targets. According to the Los Angeles Times, approximately 30 employees were fired for opening new accounts and issuing debit or credit cards without customer knowledge, in some cases by forging signatures. “We found a breakdown in a small number of our team members,” a Wells Fargo spokesman stated. “Our team members do have goals. And sometimes they can be blinded by a goal.” According to another representative, “This is something we take very seriously. When we find lapses, we do something about it, including firing people.”

Some outside observers alleged that the bank’s practice of setting daily sales targets put excessive pressure on employees. Branch managers were assigned quotas for the number and types of products sold. If the branch did not hit its targets, the shortfall was added to the next day’s goals. Branch employees were provided financial incentive to meet cross-sell and customer-service targets, with personal bankers receiving bonuses up to 15 to 20 percent of their salary and tellers receiving up to 3 percent.

Tim Sloan, at the time chief financial officer of Wells Fargo, refuted criticism of the company’s sales system: “I’m not aware of any overbearing sales culture.” Wells Fargo had multiple controls in place to prevent abuse. Employee handbooks explicitly stated that “splitting a customer deposit and opening multiple accounts for the purpose of increasing potential incentive compensation is considered a sales integrity violation.” The company maintained an ethics program to instruct bank employees on spotting and addressing conflicts of interest. It also maintained a whistleblower hotline to notify senior management of violations. Furthermore, the senior management incentive system had protections consistent with best practices for minimizing risk, including bonuses tied to instilling the company’s vision and values in its culture, bonuses tied to risk management, prohibitions against hedging or pledging equity awards, hold-past retirement provisions for equity awards, and numerous triggers for clawbacks and recoupment of bonuses in the cases where they were inappropriately earned (Exhibit 3). Of note, cross-sales and products-per-household were not included as specific performance metrics in senior executive bonus calculations even though they were for branch-level employees.

In the end, these protections were not sufficient to stem a problem that proved to be more systemic and intractable than senior management realized. In September 2016, Wells Fargo announced that it would pay $185 million to settle a lawsuit filed by regulators and the city and county of Los Angeles, admitting that employees had opened as many as 2 million accounts without customer authorization over a five-year period. Although large, the fine was smaller than penalties paid by other financial institutions to settle crisis-era violations. Wells Fargo stock price fell 2 percent on the news (Exhibit 4). Richard Cordray, director of the Consumer Financial Protection Bureau, criticized the bank for failing to:

… monitor its program carefully, allowing thousands of employees to game the system and inflate their sales figures to meet their sales targets and claim higher bonuses under extreme pressure. Rather than put its customers first, Wells Fargo built and sustained a cross-selling program where the bank and many of its employees served themselves instead, violating the basic ethics of a banking institution including the key norm of trust.

A Wells Fargo spokesman responded that, “We never want products, including credit lines, to be opened without a customer’s consent and understanding. In rare situations when a customer tells us they did not request a product they have, our practice is to close it and refund any associated fees.” In a release, the banks said that, “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.”

The bank announced a number of actions and remedies, several of which had been put in place in preceding years. The company hired an independent consulting firm to review all account openings since 2011 to identify potentially unauthorized accounts. $2.6 million was refunded to customers for fees associated with those accounts. 5,300 employees were terminated over a five-year period. Carrie Tolstedt, who led the retail banking division, retired. Wells Fargo eliminated product sales goals and reconfigured branch-level incentives to emphasize customer service rather than cross-sell metrics. The company also developed new procedures for verifying account openings and introduced additional training and control mechanisms to prevent violations.

Nevertheless, in the subsequent weeks, senior management and the board of directors struggled to find a balance between recognizing the severity of the bank’s infractions, admitting fault, and convincing the public that the problem was contained. They emphasized that the practice of opening unauthorized accounts was confined to a small number of employees: “99 percent of the people were getting it right, 1 percent of people in community banking were not. … It was people trying to meet minimum goals to hang on to their jobs.” They also asserted that these actions were not indicative of the broader culture:

I want to make very clear, that we never directed nor wanted our team members to provide products and services to customers that they did not want. That is not good for our customers and that is not good for our business. It is against everything we stand for as a company. If [employees] are not going to do the thing that we ask them to do—put customers first, honor our vision and values—I don’t want them here. I really don’t… The 1 percent that did it wrong, who we fired, terminated, in no way reflects our culture nor reflects the great work the other vast majority of the people do. That’s a false narrative.

They also pointed out that the financial impact to the customer and the bank was extremely limited. Of the 2 million potentially unauthorized accounts, only 115,000 incurred fees; those fees totaled $2.6 million, or an average of $25 per account, which the bank had refunded. Affected customers did not react negatively:

We’ve had very, very low volumes of customer reaction since that happened. … We sent 115,000 letters out to people saying that you may have a product that you didn’t want and here is the refund of any fees that you incurred as a result of it. And we got very little feedback from that as well.

The practice also did not have a material impact on the company’s overall cross-sell ratios, increasing the reported metric by a maximum of 0.02 products per household. According to one executive, “The story line is worse than the economics at this point.”

Nevertheless, although the financial impact was trivial, the reputational damage proved to be enormous. When CEO John Stumpf appeared before the U.S. Senate, the narrative of the scandal changed significantly. Senators criticized the company for perpetuating fraud on its customers, putting excessive pressure on low-level employees, and failing to hold senior management responsible. In particular, they were sharply critical that the board of directors had not clawed back significant pay from John Stumpf or former retail banking head Carrie Tolstedt, who retired earlier in the summer with a pay package valued at $124.6 million. Senator Elizabeth Warren of Massachusetts told Stumpf:

You know, here’s what really gets me about this, Mr. Stumpf. If one of your tellers took a handful of $20 bills out of the cash drawer, they’d probably be looking at criminal charges for theft. They could end up in prison. But you squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket. And when it all blew up, you kept your job, you kept your multimillion dollar bonuses and you went on television to blame thousands of $12-an-hour employees who were just trying to meet cross-sell quotas that made you rich. This is about accountability. You should resign. You should give back the money that you took while this scam was going on and you should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission.

Following the hearings, the board of directors announced that it hired external counsel Shearman & Sterling to conduct an independent investigation of the matter. Stumpf was asked to forfeit $41 million and Tolstedt $19 million in outstanding, unvested equity awards. It was one of the largest clawbacks of CEO pay in history and the largest of a financial institution. The board stipulated that additional clawbacks might occur. Neither executive would receive a bonus for 2016, and Stumpf agreed to forgo a salary while the investigation was underway.

Two weeks later, Stumpf resigned without explanation. He received no severance and reiterated a commitment not to sell shares during the investigation. The company announced that it would separate the chairman and CEO roles. Tim Sloan, chief operating officer, became CEO. Lead independent director Stephen Sanger became nonexecutive chairman; and Elizabeth Duke, director and former Federal Reserve governor, filled a newly created position as vice chairman.

Independent Investigation Report

In April 2017, the board of directors released the results of its independent investigation which sharply criticized the bank’s leadership, sales culture, performance systems, and organizational structure as root causes of the cross-selling scandal.

Performance and Incentives . The report faulted the company’s practice of publishing performance scorecards for creating “pressure on employees to sell unwanted or unneeded products to customers and, in some cases, to open unauthorized accounts.” Employees “feared being penalized” for failing to meet goals, even in situations where these goals were unreasonably high:

In many instances, community bank leadership recognized that their plans were unattainable. They were commonly referred to as 50/50 plans, meaning that there was an expectation that only half the regions would be able to meet them.

The head of strategic planning for the community bank was quoted as saying that the goal-setting process is a “balancing act” and recognized that “low goals cause lower performance and high goals increase the percentage of cheating.”

The report also blamed management for, “tolerating low quality accounts as a necessary by-product of a sales-driven organization.”:

Management characterized these low quality accounts, including products later canceled or never used and products that the customer did not want or need, as “slippage” and believed a certain amount of slippage was the cost of doing business in any retail environment.

The report faulted management for failing to identify “the relationship between the goals and bad behavior [even though] that relationship is clearly seen in the data. As sales goals became more difficult to achieve, the rate of misconduct rose.” Of note, the report found that “employees who engaged in misconduct most frequently associated their behavior with sales pressure, rather than compensation incentives.”

Organizational structure . In addition, the report asserted that “corporate control functions were constrained by [a] decentralized organizational structure” and described the corporate control functions as maintaining “a culture of substantial deference to the business units.”

Group risk leaders “took the lead in assessing and addressing risk within their business units” and yet were “answerable principally to the heads of their businesses.” For example, the community bank group risk officer reported directly to the head of the community bank and only on a dotted-line basis to the central chief risk officer. As a result,

Risk management … generally took place in the lines of business, with the business people and the group risk officers and their staffs as the “first line of defense.”

John Stumpf believed that this system “better managed risk by spreading decision-making and produced better business decisions because they were made closer to the customer.”

The board report also criticized control functions for not understanding the systemic nature of sales practice violations:

Certain of the control functions often adopted a narrow “transactional” approach to issues as they arose. They focused on the specific employee complaint or individual lawsuit that was before them, missing opportunities to put them together in a way that might have revealed sales practice problems to be more significant and systemic than was appreciated.

The chief operational risk officer:

did not view sales practices or compensation issues as within her mandate, but as the responsibility of the lines of businesses and other control functions (the law department, HR, audit and investigations). She viewed sales gaming as a known problem that was well-managed, contained and small.

The legal department focused:

principally on quantifiable monetary costs—damages, fines, penalties, restitution. Confident those costs would be relatively modest, the law department did not appreciate that sales integrity issues reflected a systemic breakdown.

Human resources:

had a great deal of information recorded in its systems, [but] it had not developed the means to consolidate information on sales practices issues and to report on them.

The internal audit department:

generally found that processes and controls designed to detect, investigate and remediate sales practice violations were effective at mitigating sales practices-related risks. … As a general matter, however, audit did not attempt to determine the root cause of unethical sales practices.

The report concluded that:

while the advisability of centralization was subject to considerable disagreement within Wells Fargo, events show that a strong centralized risk function is most suited to the effective management of risk.

Leadership . Furthermore, the board report criticized CEO John Stumpf and community banking head Carrie Tolstedt for leadership failures.

According to the report, Stumpf did not appreciate the scope and scale of sales practices violations: “Stumpf’s commitment to the sales culture … led him to minimize problems with it, even when plausibly brought to his attention.” For example, he did not react negatively to learning that 1 percent of employees were terminated in 2013 for sales practices violations: “In his view, the fact that 1 percent of Wells Fargo employees were terminated meant that 99 percent of employees were doing their jobs correctly.” Consistent with this, the report found that Stumpf “was not perceived within Wells Fargo as someone who wanted to hear bad news or deal with conflict.”

The report acknowledged the contribution that Tolstedt made to the bank’s financial performance:

She was credited with the community bank’s strong financial results over the years, and was perceived as someone who ran a “tight ship” with everything “buttoned down.” Community bank employee engagement and customer satisfaction surveys reinforced the positive view of her leadership and management. Stumpf had enormous respect for Tolstedt’s intellect, work ethic, acumen and discipline, and thought she was the “most brilliant” community banker he had ever met.

At the same time, it was critical of her management style, describing her as “obsessed with control, especially of negative information about the community bank” and faulting her for maintaining “an ‘inner circle’ of staff that supported her, reinforced her views, and protected her.” She “resisted and rejected the near-unanimous view of senior regional bank leaders that the sales goals were unreasonable and led to negative outcomes and improper behavior.”

Tolstedt and certain of her inner circle were insular and defensive and did not like to be challenged or hear negative information. Even senior leaders within the Community Bank were frequently afraid of or discouraged from airing contrary views.

Stumpf “was aware of Tolstedt’s shortcomings as a leader but also viewed her as having significant strengths.” … He “was accepting of Tolstedt’s flaws in part because of her other strengths and her ability to drive results, including cross-sell.”

Board of Directors . Finally, the report evaluated the process by which the board of directors oversaw sales-practice violations and concluded that “the board was regularly engaged on the issue; however, management reports did not accurately convey the scope of the problem.” The report found that:

Tolstedt effectively challenged and resisted scrutiny from both within and outside the community bank. She and her group risk officer not only failed to escalate issues outside the community bank, but also worked to impede such escalation. … Tolstedt never voluntarily escalated sales practice issues, and when called upon specifically to do so, she and the community bank provided reports that were generalized, incomplete, and viewed by many as misleading.

Following the initial Los Angeles Times article highlighting potential violations, “sales practices” was included as a “noteworthy risk” in reports to the full board and the board’s risk committee. Beginning in 2014 and continuing thereafter, the board received reports from the community bank, the corporate risk office, and corporate human resources that “sales practice issues were receiving scrutiny and attention and, by early 2015, that the risks associated with them had decreased.”

Board members expressed the view that “they were misinformed” by a presentation made to the risk committee in May 2015 that underreported the number of employees terminated for sales-practice violations, that reports made by Tolstedt to the committee in October 2015 “minimized and understated” the problem, and that metrics in these reports suggested that potential abuses were “subsiding.”

Following the lawsuit by the Los Angeles City Attorney, the board hired a third-party consultant to investigate sales practices and conduct an analysis of potential customer harm. The board did not learn the total number of employees terminated for violations until it was included in the settlement agreement in September 2016.

Wells Fargo response . With the release of the report, Wells Fargo announced a series of steps to centralize and strengthen control functions. The board also announced that it would claw back an additional $47.3 million in outstanding stock option awards from Tolstedt and an additional $28 million in previously vested equity awards from Stumpf.

Long-Term Overhang

The board report and related actions did not put an end to shareholder and regulatory pressure. At the company’s 2017 annual meeting, 9 of the company’s 15 directors received less than 75 percent support and 4 received less than 60 percent, including board chairman Stephen Sanger (56 percent), head of the risk committee Enrique Hernandez (53 percent), head of the corporate responsibility committee Federico Peña (54 percent), and Cynthia Milligan who headed the credit committee (57 percent). The bank subsequently announced the resignations of 6 directors, including Sanger, who was replaced by Elizabeth Duke as board chair.

Wells Fargo continued its efforts to reexamine all aspects of its business. In August 2017, the company increased its estimate of the number of potentially unauthorized consumer accounts to 3.5 million and issued an additional $2.8 million in refunds. The bank also announced that it identified sales practice violations in both its auto and mortgage lending divisions. In February 2018, citing “widespread consumer abuses,” the Federal Reserve Board took the unprecedented action of placing a strict limit on the company’s asset size, forbidding the bank from growing past the $1.95 trillion in assets it had at year end until it demonstrated an improvement in corporate controls. According to Federal Reserve Board Chair Janet Yellen:

We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again. The enforcement action we are taking today will ensure that Wells Fargo will not expand until it is able to do so safely and with the protections needed to manage all of its risks and protect its customers.

In April 2018, the bank agreed to a $1 billion settlement with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency to resolve auto and mortgage lending violations. Two weeks later it agreed to pay $480 million to settle a securities class action lawsuit over cross-selling. In December 2018, the company settled with 50 state attorneys general to resolve civil claims for cross-selling, auto lending, and mortgage lending violations and agreed to pay $575 million.

Why This Matters

• The Wells Fargo compensation system emphasized cross-selling as a performance metric for awarding incentive pay to employees. The company also published scorecards that ranked individual branches on sales metrics, including cross-selling. Was the company wrong to use cross-selling as a metric in its incentive systems? Would the program have worked better if structured differently? The independent report suggests that employee pressure was a greater contributor to misconduct than financial incentives. Is this assessment correct?
• Branch-level employees were incentivized to increase products per household but the senior-executive bonus system did not include this metric. Did this disconnect contribute to a failure to recognize the problem earlier?
• Wells Fargo prides itself on its vision and values and culture. By several measures, these have been highly beneficial to the company’s performance. What factors should senior executives consider to ensure that compensation and performance systems encourage the achievement of company objectives without compromising culture?
• The dollars involved in the Wells Fargo cross-selling scandal were small (less than $6 million in direct fees) but the reputational damage to the bank was massive. How can a company prepare against problems that do not seem to be “material” in a financial sense but ultimately have a material impact on the business and its reputation?
• The independent investigation concludes that “a strong centralized risk function is most suited to the effective management of risk.” Is this conclusion correct? What steps can executives in a decentralized organization take to minimize gaps in oversight without creating unnecessary bureaucracy?
• The Wells Fargo cross-selling scandal highlights the challenge of a high-performing executive whose behavior ultimately does not align with company values. How much autonomy should high-performing executives be afforded? How can a company balance autonomy and accountability?
• The independent investigation largely exonerates the Wells Fargo board of directors. How much blame does the board deserve? What could it have done differently to prevent the cross-selling issue from snowballing?
• Wells Fargo had the elements in place of a properly functioning governance system, including risk management, audit, legal, and human resources. Furthermore, each of these groups was—at least to some degree—aware of sales practice violations in the consumer bank. And yet no one recognized the systemic nature of the problem or took the necessary steps to address it. How can a company gauge whether its governance system is effective in identifying and mitigating risk?

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Students also studied

The Wells Fargo Cross-Selling Scandal

Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance No. CGRP-62 Version 2

Stanford University Graduate School of Business Research Paper No. 17-1

16 Pages Posted: 5 Dec 2016 Last revised: 14 Jan 2019

Brian Tayan

Stanford University - Graduate School of Business

Date Written: January 8, 2019

In this updated Closer Look, we examine the tensions between corporate culture, financial incentives, and employee conduct as illustrated by the Wells Fargo cross-selling scandal. In 2016, Wells Fargo admitted that employees had opened as many as 2 million accounts without customer authorization over a five-year period. We discuss the factors that contributed to the scandal, the repercussions for the bank, and its response. We ask: • How did the company’s incentive system contribute to the scandal? • Would the system have worked better if coupled with additional metrics or controls? • What systems should have been put in place to identify and escalate potential problems earlier? • What steps should senior management have taken to better contain the fallout? • Is an inside or outside CEO successor better positioned to help the bank recover? • How do you maximize the positive contribution that incentives make to culture while minimizing potentially negative outcomes? The Stanford Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance and executive leadership. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the books “Corporate Governance Matters” and “A Real Look at Real World Corporate Governance.” This updates the original Closer Look with more recent information.

Keywords: Corporate governance, risk, reputational risk, risk management, scandal, culture, tone at the top, leadership, incentives, incentive systems, compensation, controls, oversight, board of directors, corporate governance research

JEL Classification: G3, G30, G34

Suggested Citation: Suggested Citation

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Wells Fargo and Moral Emotions

In a settlement with regulators, Wells Fargo Bank admitted that it had created as many as two million accounts for customers without their permission.

On September 8, 2016, Wells Fargo, one of the nation’s oldest and largest banks, admitted in a settlement with regulators that it had created as many as two million accounts for customers without their permission. This was fraud, pure and simple. It seems to have been caused by a culture in the bank that made unreasonable demands upon employees. Wells Fargo agreed to pay $185 million in fines and penalties.

Employees had been urged to “cross-sell.” If a customer had one type of account with Wells Fargo, then top brass reasoned, they should have several. Employees were strongly incentivized, through both positive and negative means, to sell as many different types of accounts to customers as possible. “Eight is great” was a motto. But does the average person need eight financial products from a single bank? As things developed, when employees were unable to make such sales, they just made the accounts up and charged customers whether they had approved the accounts or not. The employees used customers’ personal identification numbers without their knowledge to enroll them in various products without their knowledge. Victims were frequently elderly or Spanish speakers.

Matthew Castro, whose father was born in Colombia, felt so bad about pushing sham accounts onto Latino customers than he tried to lessen his guilt by doing volunteer work. Other employees were quoted as saying “it’s beyond embarrassing to admit I am a current employee these days.”

Still other employees were moved to call company hotlines or otherwise blow the whistle, but they were simply ignored or oftentimes punished, frequently by being fired. One employee who sued to challenge retaliation against him was “uncomfortable” and “unsettled” by the practices he saw around him, which prompted him to speak out. “This is a fraud, I cannot be a part of that,” the whistleblower said.

Early prognostications were that CEO John Stumpf would not lose his job over the fiasco. However, as time went on and investigations continued, the forms and amount of wrongdoing seemed to grow and grow. Evidence surfaced that the bank improperly changed the terms of mortgage loans, signed customers up for unauthorized life insurance policies, overcharged small businesses for credit-card processing, and on and on.

In September of 2016, CEO Stumpf appeared before Congress and was savaged by Senators and Representatives of both parties, notwithstanding his agreement to forfeit $41 million in pay. The members of Congress denounced Wells Fargo’s actions as “theft,” “a criminal enterprise,” and an “outrage.” Stumpf simultaneously took “full responsibility,” yet blamed the fraud on ethical lapses of low-level bankers and tellers. He had, he said, led the company with courage. Nonetheless, by October of 2016 Stumpf had been forced into retirement and replaced by Tim Sloan.

Over the next several months, more and more allegations of wrongdoing arose. The bank had illegally repossessed cars from military veterans. It had modified mortgages without customer authorization. It had charged 570,000 customers for auto insurance they did not need. It had ripped off small businesses by charging excessive credit card fees. The total number of fake accounts rose from two million to 3.5 million. The bank also wrongly fined 110,000 mortgage clients for missing a deadline even though the party at fault for the delay was Wells Fargo itself.

At its April 2017 annual shareholders meeting, the firm faced levels of dissent that a Georgetown business school professor, Sandeep Dahiya, called “highly unusual.”

By September, 2017, Wells Fargo had paid $414 million in refunds and settlements and incurred hundreds of millions more in attorneys’ and other fees. This included $108 million paid to the Department of Veterans Affairs for having overcharged military veterans on mortgage refinancing.

In October 2017, new Wells Fargo CEO Tim Sloan was told by Massachusetts Senator Elizabeth Warren, a Democrat, that he should be fired: “You enabled this fake-account scandal. You got rich off it, and then you tried to cover it up.” Republicans were equally harsh. Senator John Kennedy Texas said: “I’m not against big. With all due respect, I’m against dumb.”

Sloan was still CEO when the company had its annual shareholders meeting in April 2018. Shareholder and protestors were both extremely angry with Wells Fargo. By then, the bank had paid an additional $1 billion fine for abuses in mortgage and auto lending. And, in an unprecedented move, the Federal Reserve Board had ordered the bank to cap its asset growth. Disgust with Wells Fargo’s practices caused the American Federation of Teachers, to cut ties with the bank. Some whistleblowers resisted early attempts at quiet settlements with the bank, holding out for a public admission of wrongdoing.

In May 2018, yet another shoe dropped. Wells Fargo’s share price dropped on news that the bank’s employees improperly altered documents of its corporate customers in an attempt to comply with regulatory directions related to money laundering rules.

Ultimately, Wells Fargo removed its cross-selling sales incentives. CEO Sloan, having been informed that lower level employees were suffering stress, panic attacks, and other symptoms apologized for the fact that management initially blamed them for the results of the toxic corporate culture, admitting that cultural weaknesses had caused a major morale problem.

Discussion Questions

1. What moral emotions seem to have been at play in this case? On the part of the bank’s employees? The bank’s victims? The bank’s regulators? The bank’s shareholders?

2. What factors contributed particularly to the outrage and anger that legislators, regulators, customers, and shareholders felt?

3. Clearly inner-directed emotions such as guilt and embarrassment affected the actions of Wells Fargo employees. Were they always sufficient to overcome the employees’ utilitarian calculation: “I need this job”?

4. Did moral emotions motivate some of the whistleblowers? How?

5. In the wake of everything described in the case study, Wells Fargo has fired many employees, clawed back bonuses from executives, replaced many of its directors, dismantled its sales incentive system and made other changes.

• Do you think these changes were made out of a utilitarian calculation designed to avoid further monetary penalties, or a desire to avoid the shame and embarrassment the bank’s managers and employees were feeling?
• Or was it a combination of both of these things?
• If a combination, which do you think played a bigger role? Why?

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Bibliography

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Two Million Fake Accounts: Sales Misconduct at Wells Fargo

Brian Kenny: In July 2010, at the peak of the global financial crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. A year later, Dodd-Frank would pave the way for the Consumer Financial Protection Bureau, an agency that's supposed to make sure that banks, lenders, and other financial companies treat you fairly. Their website keeps a running tally of how many complaints they've fielded since opening the doors in 2011. As of March 28, 2018, the number was 996,214. The searchable database, where they post all the complaints as well as the responses from financial institutions, reveals that 61,372 of those complaints are about Wells Fargo and Company. JPMorgan, the largest bank in the US, had 11,000 fewer complaints than Wells Fargo.

Today we'll hear from Professor Suraj Srinivasan, the Philip J. Stomberg Professor of Business Administration, about his case study, Sales Misconduct at Wells Fargo Community Bank . I'm your host Brian Kenny, and you're listening to Cold Call .

Kenny: Suraj Srinivasan teaches in the MBA and Executive Education programs at Harvard Business School. His research examines the institutions of corporate governance in the US and internationally, and he doesn't shy away from writing controversial cases, which is why we love to have you on the program, Suraj. Thanks for joining me.

Srinivasan: Thank you Brian. By the way, those statistics are fascinating and tell you the scope of the problem.

Kenny: This case continues to pop up in the headlines since it first surfaced a couple of years ago, so I think people will really be interested to hear your take on it and what you discovered. Maybe you could start by telling us what's the context? How does the case begin and who are the central characters in the case?

Srinivasan: Absolutely. By the way, from a case writer's perspective it's the gift that keeps giving. You have a case B and a C and D keep happening every few months. But stepping back, the case is set at around the time that consumer regulators, several of them, started levying huge fines and holding the board and the company accountable for the scandal.

The case is written with my co-authors, Dennis Campbell and Susanna Gallani. We wrote the case because it actually serves a very, very useful pedagogical purpose. The central characters in the case are the CEO, John Stumpf, and the head of the Community Bank, Carrie Tolstedt. But also looming large in the background is the board of directors of the company.

As those numbers from CPFB indicated, this was a huge problem. This was a problem not of a few bad apples—this was a systematic problem. The bank itself fired over 5,000 employees. It's a large bank no doubt, there are more than 200,000 employees, but not all of them are in the sales department, and 5,000 people were let go in the sales department. Two million customers at that point, and that number has increased over time and it has crossed the Community Bank into other parts of the business, the insurance business, in the lending part of the business subsequently.

But it was a systematic problem and it was fascinating and a puzzle frankly, because Wells Fargo was the most successful bank coming out of the financial crisis. They were held up as a role model for how a bank should have behaved during the crisis. It was the second largest bank in the US. At the time this all broke, they were one of the most profitable banks ... They were the fifth largest in the world.

So it was a surprise and a puzzle that a bank that actually not just survived, but thrived through the crisis and subsequently after, ended up in this kind of a problem.

Srinivasan: Absolutely. At that point a $1.8 trillion balance sheet. This was the total size of the assets that they had, which now the Federal Reserve has capped at $2 trillion until they show effective risk management. So there's actually a cap on the size of what they can do and grow; they are right now feeling the heat from that.

Kenny: Can you talk a little bit about the retail banking industry and the competitive pressures in that segment of the financial services space?

The other big idea in this is that the cross-selling which got Wells Fargo into trouble is actually a well-established phenomenon that several banks pursue. I have received offers where to open an account you get $500 to open an account in a local bank, because the lifetime value of getting a customer is high.

So you combine the commodity nature of the business with the cross-selling part of it and that creates a competitive dynamic, which Wells Fargo is facing.

Kenny: People do all of this by phone or they do it digitally, so you're distanced ... You don't have the relationship necessarily that you might have had 20, 30 years ago with your local bank.

Srinivasan: That's absolutely true, though for some kinds of transactions, for a loan, you might still try to go in. But you're right. A lot of these things are done online, over the phone, and so on.

Kenny: Maybe you can describe some of the things that were happening and that began to surface at Wells Fargo?

Srinivasan: It's very much a retail bank, and the largest retail bank therefore, so lots of branches, lots of front-end people, tellers and customer service folks who are helping customers and trying to open accounts. Any sales organization thrives on a certain sales culture, which includes targets and sales pressure. That's not just banking, that's any industry. What comes along with that of course is the need to have tight boundaries around what are allowable and not allowable practices. How much can you push? That's where Wells Fargo seems to have had a slightly harder time.

What we learned, exposed now from the inquiries, is that the pressure was high. It was higher than what you might have expected in a relationship bank. The employee turnover, for instance, was over 30 percent. They would benchmark that with other sales organizations such as department stores, and retail is seen as a high turnover industry. However, a relationship bank is not exactly comparable to selling clothes, but that seemed to have been the idea behind the sales culture at Wells Fargo.

Kenny: They weren't making a lot of money either? One of the things the case talks about is the average salary for a retail sales person was about $30,000.

It appears that along with more than usual sales pressure and sales incentive was combined with weaker boundaries of what was possible. The people who were held up as effective salespeople weren't the ones who were really pulling the tight and narrow as you say. For example, there was a practice of running the gauntlet. Every week in the morning meeting people would run up to the front and write on a whiteboard ... Write the number of sales prospects they had converted, and you can imagine the ones that were not were feeling the pressure in a very public way.

Kenny: Shaming...

Srinivasan: Shaming exercise. Exactly. The ones that were doing well, even though it wasn't the best of practices, would be sent around as role models to other branches to quote-unquote teach others how to do this. It created a very high pressure front-end sales force, which one can say is useful in a sales-driven environment subject to having the right checks and balances.

One of the things that Wells Fargo initiated afterwards was a customer notification every time an account was opened. That's just Risk Control 101, if a customer had been notified if there was some activity on the account which would have automatically prevented an employee from opening a fake account. [Which was] essentially what happened…

The pressure on the employees to do this ... So the company had this “Eight is Great.” Said rightly, it rhymes, “Eight is Great.” It rhymes when you say it... The CEO would go on conference calls and investor presentations and say that was their target. When asked why, he would literally say it rhymes well. So there wasn't a theory behind it, you know, eight is the optimal number of accounts that a customer should have, but it was just a nice sounding target. Something like that adds enormous pressure to the front end, and absent boundaries, that can lead to trains going off the rails.

Kenny: So these sales folks were just opening up accounts to try and get as close to that number for each customer they represented as possible?

Srinivasan: Absolutely, and they had targets for how much they could cross-sell. This is not in our case, but subsequently we found out several other places, several insurance products that were being sold fraudulently. We found out recently from a whistleblower that complained that there were mortgages that people are being asked to repay them when they've actually not taken them out. So this practice seems like it was quite prevalent.

But the big issue that they got fined on was these false accounts. You asked when did this all start surfacing. The key trigger was the Los Angeles Times expose in 2012. Following that, the District Attorney from Los Angeles started investigating and finding lots of things against the company, so this was not new when it actually broke in 2016. It had been around for three or four years.

But several of those practices actually kept continuing until much later, several years later, which raises several other questions that I know you'll get into about the board and the risk management of the company and so on.

Kenny: Why don't we actually transition to that now. Let's talk a little bit about Carrie Tolstedt and John Stumpf. John's name came up in a podcast that we did before with you around the data breach at Target, so John's had kind of a checkered past here as it comes to some of these things where he's been on the watch. Tell us a little bit about Carrie and what her role was.

Srinivasan: Carrie Tolstedt was the head of the Community Bank. Like I said, this was a very, very successful community bank, one of the best performing retail banks in the country. In fact, their cross-selling was held up as a role model for other banks. Carrie Tolstedt was a very well-respected banker within the bank. She had spent the last part of her career at Wells Fargo. You learn from the board reports subsequently that the bank held her in high esteem, John Stumpf held her in high esteem, which turns out perhaps was part of the problem, that she was so well-respected for her past successes that there was a certain reluctance to question her... protected her from certain kinds of questioning and also protected her from the otherwise useful risk controls and other governance that was prevalent at the bank.

A related issue was that the bank was highly decentralized. The structure of the bank was that while there was a central risk management, you had the Community Bank and other parts of the bank having their own risk controls, which they should have. But it turned out that the force of Carrie's personality was strong enough that the communication outside of the Community Bank to other parts of the organization were not just weak, they were expressly discouraged and frowned upon by her.

There are instances that have subsequently come to light on the central part of the bank asking questions and Carrie would reprimand people who would answer those questions or not keep her in the loop when questions such as those were being asked. The board subsequently has said that they were misinformed by Carrie Tolstedt about the number of people that were being let go of in the bank, that the number had been low-balled. After the LA Times article came out there were a few bad apples and they were letting 100 people go, when it was in fact 600 or 700 per quarter, and the board used that as a defense; you know, we can only ask. We have no means of verifying, especially coming from a person as well respected as Carrie.

So there was this kind of dual thing going on with respect to her role, a very highly performing manager, on the other hand trying to keep a tight control over what was going on and not liking when questions were asked.

Kenny: So isn't it John's job to look a little bit more closely at this and...

Srinivasan: As the CEO, the buck stops there. Absolutely. It's interesting you refer to the Target cyber breach. John's role there was of course secondary in the sense that he was on the board. He was not the CEO of the company, but one can imagine certain parallels between those two situations.

Yes, that should have been the CEO's job and now he paid for it with his job and all the reputational harm that's come his way because of this. It appears that he relied a lot on Carrie and the relationship was one of mutual trust, or at least trust one way, and did not push very much.

Kenny: In your research with other companies, I would suspect this is not unusual. That if you've got somebody who's really performing well, by appearances at least, and revenue is coming in, you don't really want to mess with that, right?

Srinivasan: That's true at every level. Investors don't question companies when they're doing very well, and subsequently they crash. Boards don't question CEOs when things are going very well. It's hard to start looking under rocks when things are going very well, and it's true at every level beyond that, which is why you have risk management. Risk management is the flip side of strategy. These are risks that companies voluntarily take on, because that's how you make money. But then you have to make sure that the risk doesn't go out of control.

Structurally there was a problem, and that was John Stumpf's job I would think, to try to understand where was the risk coming in the bank and how would ... Think about it. This is a bank. This is one of the largest banks in the world. Risk management is a core competence of banks, otherwise you don't run banks.

Somehow they discounted that just the front-end sales force can create risk. You think about all kinds of risk. You think about lending risk. You think about foreign currency risk. You think about money laundering risk. You think about high level risk. But this kind of ... Should not have, at least in hindsight, been blindsided there.

Kenny: So blindsided is one way to look at it, but the case also talks about the fact that there were some red flags that were popping up here and there. Let's go to the board now, because the board ... this wasn't the first time that they had heard about it.

Srinivasan: There's a doctrine developing in Delaware, it's called the Red Flag Doctrine, you normally depend on the company and managers, the board I mean, for information because you're launching your own investigations and calling four levels down the line, asking for ... You know, you trust the CEO, you trust the next level for information when they give you information, but if there are red flags, like you said, then you have to be on alert on what was happening, and it seems like there were more than enough red flags. To be fair though, there were some processes being put by the risk part of the board, but probably not enough, and they still relied on management a little too much.

If you think about it, at the bank there were actually terms that the employees were using such as “bundling.” The front-end employees would falsely tell a customer for instance if you open a checking account that you have to open a savings account along with that, that these are bundled products, when actually in reality there were no bundled products. That you have to take a credit card, when in reality you didn't have to do that.

There was another thing called “sandbagging.” These were informal terms that the sales force was using. They would try to manage targets in particular ways, and of course the easiest grade was floating around there. Even way back in 2004 there was a gaming report, a gaming quote-unquote, that the bank was at risk because the employees were game targets. So this was not new for the bank, and this was certainly not new for sales driven companies.

Kenny: Do you think that in the wake of something like what happened at Wells Fargo that board directors should really be thinking hard about their role and the commitment they're making when they step onto a board?

Srinivasan: Board roles are hard for the following reasons. Like you said, you don't want to be getting on a board always with the attitude that I'm going to be second-guessing everything that management is telling me. I don't want to be probing under rocks for risk and bad news that doesn't exist, because you are entering into a trusting relationship. The board monitors the company. The management runs the business. It's a fine line to try to figure out where to draw that line.

The norm, especially in the US, is for the boards to defer much more to the management unless there's a reason to believe otherwise. Now when do you decide there's reason to believe otherwise? Were these red flags enough? My personal feeling is the boardroom is too safe a place for management. But again, how do you draw that line? When do you decide it's too safe and when do you want to make it a little unsafe in terms of the kinds of questions that you want to ask?

Like I said, it's a $2 trillion organization, a $2 trillion asset organization, hundreds of thousands of employees, so it has to be almost a fulltime job for some of the people who are doing this. On the other hand, the management does run the business. So yes, I think incidents like Wells Fargo raise very important questions for management, too, that you should involve the board more, that you have to be much more willing to be transparent and expose the board to what's happening inside the organization. You should, in fact, have somebody on the board who asks the tough questions.

But there should be some process by which we are not indulging in group think, and that's not the first time that anybody has mentioned about group think in the context of a board or just, you know, it's a group of 10 or 12 people, and who bells the cat? The best boards do have that. They do have somebody or a group of people that in different circumstances are charged with asking the tough questions so that things don't go unasked because nobody knows whether it's their job to ask them.

Kenny: Do you think there's a role here for activist investors, too? We're hearing a lot about activist investors. Sometimes they come off looking really bad, but I'm wondering if there's an important role that an activist investor plays in holding the board and the leadership of an organization accountable?

Srinivasan: Yes and no. The no part of that [is that] the problems of Wells Fargo are not the typical issues that an activist investor would have surfaced, because it's more of a risk management issue. This is more of an issue where things are happening in the front end. This is certainly an issue for compliance and the role of the whistleblowers. Are the whistleblower complaints getting through to the board? What is the process for understanding them? Are there enough of a certain kind of issue?

I bet in a bank like this they would have had some processes. It's unimaginable that they would not have had, but it's probably worked well for every board to go back and try and understand yes, we think we have a process. Have we reviewed it recently? Are there blind spots that we're facing in this?

Kenny: You've discussed this case in class, have you?

Srinivasan: Several times. We've done it in our MBA program. We've done it and we have used it in both programs. We've used it in programs for risk managers. We've used it in senior executive programs. We use it for two big purposes. One is to understand risk management. One of the very common risk management motives is what we call the fraud triangle, and how the fraud triangle plays out. The three legs of the triangle are opportunity, rationalization, and pressure. The idea is that all these three have to come together at the same time for risk controls to fail.

Kenny: Suraj, thanks so much for joining us today.

Srinivasan: Thank you. It's really a pleasure to be here.

Kenny: If you enjoyed listening to the Wells Fargo case, you can find Cold Call wherever you listen and subscribe to podcasts. Every episode features a business case taught to MBA students right here at Harvard Business School. We'd love to hear your thoughts, so take a few moments to write a review. I'm Brian Kenny, your host, and thank you for listening to Cold Call, an official podcast of Harvard Business School.

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The Wells Fargo Fake Accounts Scandal: A Comprehensive Overview

Exploring the events, consequences, and lessons of the largest banking scandal in recent history.

In 2016, the Wells Fargo fake accounts scandal shook the banking industry to its core. Before the scandal emerged, Wells Fargo stood as one of the most respected banks in the United States. Notably, it was also among the most successful. Furthermore, it was known for its strong customer service. Equally important, the bank upheld ethical business practices.

However, the discovery that the bank had been creating fake accounts in the names of its customers without their knowledge or consent was a major blow to its reputation and financial stability.

This blog post will explore the events leading to the fake accounts scandal. We will examine the consequences for Wells Fargo. We will also look at the impact on its stakeholders. Lastly, we will discuss the lessons learned from this major financial scandal.

The Initial Revelation

The Wells Fargo fake accounts scandal emerged in 2016. It was then revealed that the bank created fake accounts. These accounts were in the names of its customers. Customers were unaware of this and had not given their consent. The fake accounts were created by bank employees who were under pressure to meet unrealistic sales targets.

In order to meet these targets, the employees resorted to creating fake accounts and enrolling customers in financial products and services without their knowledge or consent.

The revelation of the fake accounts scandal was a major shock to the public and the financial industry. It was a significant blow to Wells Fargo’s reputation, which had previously been built on a foundation of customer trust and ethical business practices.

The scandal also had significant financial consequences for the company, with its stock price plummeting and its reputation among investors and customers taking a major hit.

The Investigation and Fallout

In the wake of the fake accounts scandal, Wells Fargo faced intense scrutiny from regulatory agencies and government bodies. The Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of the Currency (OCC), and the Los Angeles City Attorney’s office all launched investigations into the bank’s practices.

The investigations revealed that the fake accounts scandal was more widespread than initially thought, with millions of fake accounts being created over several years. The investigations also uncovered evidence of other unethical practices within the bank, including charging customers for financial products and services they did not need or want.

The consequences of the investigations were severe for Wells Fargo. The bank was hit with massive fines and settlements, totaling billions of dollars. Additionally, the bank forced several top executives to resign and encountered significant legal and regulatory consequences.

To address the scandal and prevent similar incidents in the future, Wells Fargo implemented a number of reforms and measures. These included strengthening its compliance and ethics programs, improving its customer service and communication practices, and increasing transparency and accountability within the company.

The Legal Consequences

The legal consequences of the Wells Fargo fake accounts scandal were significant for the bank and its stakeholders. The company faced a series of fines and settlements from regulatory agencies and government bodies, totaling billions of dollars.

One of the most significant legal consequences of the scandal was the $185 million fine levied against the bank by the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC).

At the time, the CFPB imposed the largest fine ever, dealing a significant blow to Wells Fargo’s financial stability.

In addition to the fines and settlements, several top executives at the bank faced criminal charges in relation to the fake accounts scandal. These charges included fraud, conspiracy, and making false statements to regulators.

The legal consequences of the fake accounts scandal significantly impacted Wells Fargo and its stakeholders. The fines and settlements represented a major financial burden for the company, and the criminal charges against top executives further damaged its reputation.

The Reputational Damage

The Wells Fargo fake accounts scandal had a major impact on the bank’s reputation among customers and investors. The revelation that the bank had been creating fake accounts in the names of its customers without their knowledge or consent was a major blow to its reputation for honesty and integrity.

In the aftermath of the scandal, Wells Fargo faced significant backlash from customers and the public. Many customers closed their accounts and moved their business to other banks, and the company’s reputation among investors was also severely damaged.

Wells Fargo implemented several measures to repair its reputation and rebuild trust with customers and investors. These included improving its customer service and communication practices, increasing transparency and accountability within the company, and strengthening its compliance and ethics programs.

The bank also launched a major marketing campaign to try and repair its reputation and restore trust with the public. This included advertising campaigns that highlighted the company’s commitment to customer service and ethical business practices and efforts to engage with customers and stakeholders through social media and other channels.

Despite these efforts, Wells Fargo’s reputation has yet to fully recover from the damage inflicted by the fake accounts scandal. Many customers and investors remain skeptical of the bank, and it continues to face scrutiny and criticism from regulatory agencies and the public.

The Long-Term Impact

The Wells Fargo fake accounts scandal had a significant long-term impact on the bank and its stakeholders. The scandal had far-reaching consequences. As a result, the company has faced lasting impacts. Similarly, its customers have continued to feel the effects. Even years after the fake accounts came to light, these repercussions persist.

The fines and settlements from the scandal placed one of the most significant financial burdens on the company in the long term. These costs represented a major drain on the bank’s resources and contributed to a decline in its financial performance in the years following the scandal.

In addition to the financial impact, the fake accounts scandal had a major impact on the bank’s reputation and trust with customers and investors. Many customers and investors remain skeptical of the bank and its business practices, which has negatively impacted its overall performance and financial stability.

The Wells Fargo fake accounts scandal also had broader implications for the financial industry as a whole. The scandal highlighted the importance of transparency, accountability, and ethical business practices in the financial sector, and it sparked a wave of reforms and regulatory changes aimed at improving the integrity and stability of the industry.

Lessons to be Learned

The Wells Fargo scandal serves as a stark reminder of the potential consequences of lax oversight, a problematic corporate culture, and the absence of robust checks and balances within large financial institutions. As we reflect on the events and their aftermath, we must underline several key lessons, especially when emphasizing the importance of good corporate governance :

Ethics Over Profits

The relentless pursuit of unrealistic sales targets compromised the ethical foundation of the bank. Institutions must prioritize ethical business practices even if it means sacrificing short-term gains.

Robust Internal Controls

Good corporate governance mandates the need for strong internal controls. These controls can detect and prevent unethical behaviors before they escalate into full-blown scandals.

Transparency and Accountability

Institutions must foster a culture of transparency. Employees at all levels should hold themselves accountable for their actions and report unethical behaviors without fearing retribution.

Protecting Stakeholder Interests

Stakeholders, from investors to customers, place their trust in institutions. Protecting their interests should be at the forefront of every decision. This includes safeguarding their financial assets and their personal data.

Ongoing Training and Communication

Continuous training on ethical practices and open channels of communication can prevent misunderstandings and guide employees in making the right choices.

Leadership Responsibility

The leadership of any institution plays a pivotal role in setting the tone for corporate culture. Leaders must lead with ethical behavior and weave good corporate governance into the organization’s fabric.

Regular Reviews and Audits

Regular internal and external audits can uncover potential lapses in governance and ethical practices, allowing institutions to rectify them proactively.

Swift Response to Transgressions

In the event of transgressions, institutions must act swiftly. Firstly, they must take responsibility for their actions. Additionally, they need to address the root causes. Finally, they should assure stakeholders that measures are in place to prevent a recurrence.

The Wells Fargo scandal underscores the indispensable role of good corporate governance in ensuring financial institutions’ ethical and sustainable functioning. As the financial landscape continues to evolve, it is imperative that organizations prioritize integrity and trustworthiness, ensuring such lapses remain relegated to the annals of history.

Conclusion:

The Wells Fargo fake accounts scandal was a major financial scandal that shook the banking industry to its core. The bank was revealed to have created fake accounts.  Shockingly, these accounts were in the names of its customers. without their knowledge or consent. Consequently, its reputation was greatly affected, and its financial stability suffered severe impacts.

The scandal had far-reaching consequences. As a result, the company still grapples with its impacts. Furthermore, its stakeholders experience ongoing effects. To this day, these repercussions remain palpable.

In this blog post, we delved into the events leading up to the fake accounts scandal. Additionally, we examined the consequences for Wells Fargo. We also discussed the impact on its stakeholders. Lastly, we highlighted the lessons learned from this significant financial scandal.

We hope that this overview has provided insight into the events and consequences of the Wells Fargo fake accounts scandal, and that it will serve as a cautionary tale for the financial industry as a whole.

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16 comments

Have been victim for years ,just now had rejected SoundCloud with payment I did not create

My daughter was hacked with a fake account here in New Jersey. It has been issued and reissued over the last 3 years. I am presently looking for an attorney experienced in this case.

I had a line of credit with Wells Fargo for over 24 years with my fine arts business creating and developing sculptural design projects local, regional and national. The line of credit worked very well for my business then Wells Fargo closed my account without notice saying my credit score had dropped -approx 2015. I checked all the credit reporting groups and did not find any problems; I found out Well Fargo added a persons name to my sole owner account that had bad credit. They gave me the name of that person. Months later offered me a \$100.00. I had a balance in the line of credit around \$90,000.00. I also had some very promising projects that were going to retire the balance but that all evaporated, with the sudden closing of the account. I am still paying on that balance with interest increase etc. I have never missed a payment and have since been rated disabled by the VA. With daily pain from my service injury and my disability check from the VA I have been able pay the money to Wells Fargo. I still feel very much I was wronged by Wells Fargo and never treated fairly or compensated for my major loss.

I bank to Wells Fargo in 2008 and 2009. I been charge multiple times by this bank 35.00 over draft because the checking was not link to my savings. I end up closing my account. In one day I have 15 OVer Draft charges. Is there a class action lawsuit on this one. How should I know if my identity was not used by this sector.

They arbitrarily closed my investment account, and refuse to give any reason. They keep asking me to fill out a four page form, so I can get my own money back. They will transfer the money, after I do what they ask. There is a $30 fee to wire transfer the money, which they received easily enough when I opened the account. Today I found out they have removed on line access to my credit card, which I guess is going to make me late in paying the balance. Hope the Comptroller of the Currency can intervene, and at least get me from these crooks. They have the morals of an alley cat.

A Wells Fargo underwriter released personal information about the refinancing of my mortgage to an ex boyfriend. The underwriter was specifically told not to call this number and was aware that I wasn’t married. Afterwards the ex boyfriend maliciously put me as an authorized user on several high balance credit cards, ($45,000)etc and somehow had his date of birth placed on my Equifax. The underwriter handed off the refinancing to two other people and the date of closing was extended twice. I was told they had to recheck my credit. Due to the unauthorized information given by the Wells Fargo underwriter and malice intent from the ex boyfriend my credit score dropped from 700’s to 618. Wells Fargo denied my refinancing of my mortgage. After the fact someone called me and offered $200.00 for my inconveniences. Currently, after spending over two years repairing my credit Wells Fargo has caused my credit to decrease again. Wells Fargo’s online banking failed to transfer payments I made from my Wells Fargo account to my Wells Fargo credit card. They waived delinquent fees because of their inadequacies, but reported delinquencies on my credit. I found out about my credit today when I was in the process of purchasing a second vehicle for transportation to work. Now my interest rate will be higher. Unbelievable.

ETHICS ALWAYS MUST BE THE FIRST

I just found out in February 2024 that Wells Fargo enrolled me in some kind of health protection plan without my knowledge in.May2010 for 5 months and I got a letter in 2024 about it. Membership number they only want to give me about 500.00 for this act of evil that they did.whatever company they used got my name, social security number, birthrate and Hod only knows where else this info went.. I deserve abetter compensation than 500.00 event hough it was only 5months. Who knows what’s out there lurking around with your private information.

The Wells Fargo fake accounts scandal of 2016 sent shockwaves through the banking industry, tarnishing the reputation of a once-respected institution. Allied Fusion BPO understands the critical importance of maintaining ethical business practices and upholding customer trust, especially in the financial sector. As a trusted outsourcing partner, Allied Fusion BPO prioritizes transparency, integrity, and adherence to strict ethical standards in all client interactions. By partnering with Allied Fusion BPO, businesses can rest assured that their operations are handled with the highest level of professionalism and ethical integrity, safeguarding their reputation and fostering long-term success.

I started a account with Wells Fargo and since then I have not been able to have access or retrieve my unemployment COVID-19 funds there has not been any attempts from Wells Fargo to track me down or even answer my emails or evertime I call customer service to speak with a live agent the other ends up hanging my phone call to them frustrated and I really need the money back to help with my non-profit online small organization that I formed right before COVID started and I use the money to help feed and cloth around half the city of Muncie IN please can anyone help me out with this problem

I had a mortgage with Wells Fargo ! They (sent a notice of my home in My Pleasant SC)it was going to a “Sheriff Sale!!!? Continued to make my Mortgage payments!A lady that was working for Wells Fargo ,shared with me that the Banks of Wells Fargo was in big trouble!She also was higher up on the food chain and said it was illegal once your served a foreclosure notice or a Sherrif notice …. No more money should be paid! My realtor Sold my house and therefore it did not go against my credit report!My closing attorney informed me!!!And his comments were “at least it won’t be on your credit report!Due to it being a Normal sale and not a short saleI I never received any monies from the Sale or back paid for them excepting my monthly payments!!! How do I go about getting in on the Lawsuit???

My husband was part of the Scandal with Wells Fargo he did not give permission to have accounts open there was a total of five accounts that was open in his name he had no clue until 2024 when he received four checks a different amount they wanted him to sign form saying that he would not do any litigation against the company. Can we still sue Wells Fargo for what they did and who’s to say how many more accounts are out there.

I had six fake accounts opened in my name starting in 2006 Wells Fargo even double down on two of them opening and closing them back to back in 2016 I had no idea that they have even done this. I’ve been a loyal customer with Wells Fargo for years now they want to give me less than $500 for six fake accounts that went back as far as 2006 2006 deserve a hell of a lot more i’ve been trying to go through mediation haven’t heard a thing from them and I wonder why looking for a good lawyer to handle these cases all six

The Legal Consequences should be investigated

Anything goes in a world without regulation. Have just been overcharged in another fraud scheme. Where are our safeguards?

My sister worked in their call center for a few years before they shut down and shipped her job over seas. It was a very hard 5 years for her. She was in customer service but was always stressed about “sales”. She had all these metrics to follow AND had to make a sale—which was really getting the customer interested in another product or service and transferring them to the sales team. With people breathing down her neck to get these “sales”, she would do horrible stuff like hang up on customers (to average out call time) or transfer customers to sales without their full knowledge to hit her marks. I always wondered when someone would do something as this was terrible customer service. Customer service should be about taking care of customer issues, NOT being pushed into things you didn’t ask for. It’s no wonder fake accounts were being opened. It was all very unrealistic and high pressured. It was never about the bonus either, she never saw those since they’d find any reason to not pay out. She dealt with all this stress merely to keep her job. I hated seeing her like that. She was extremely happy when she was forced out of that job. Wells Fargo should not recover, they’re just snakes that took greed a bit too far and got caught. I’d never bank with them.

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Investigating The Wells Fargo Scandal

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The entrance to Wells Fargo Headquarters on California Street in San Francisco. Ariel Zambelich/NPR hide caption

Former Wells Fargo Employees Describe Toxic Sales Culture, Even At HQ

October 4, 2016 • Wells Fargo workers blame a toxic high-pressure sales culture for pushing some workers to engage in deceptive practices — even in the bank branch at the company's headquarters in San Francisco.

Planet Money

Episode 728: the wells fargo hustle.

October 7, 2016 • We take you inside the headquarters of Wells Fargo bank. It's a place where a bunch of young, stressed-out workers were rewarded for doing some very bad things.

Fired Wells Fargo Employees Allege Attempts To Blow The Whistle

October 14, 2016 • Wells Fargo's CEO has said the banking scandal was the the fault of some bad apples at the company who have been fired. But former workers are now speaking out and telling NPR they were "good apples," and they were fired, too. Some were fired after calling the company's ethics line repeatedly to complain about the gaming and fraud and oppressive sales culture at the company. And some say being fired by Wells Fargo a few years ago has badly damaged their careers ever since.

In the ongoing scandal engulfing Wells Fargo, the bank says it fired wrongdoers. But some workers say they were trying to blow the whistle and Wells Fargo fired them. Ariel Zambelich/NPR hide caption

Workers Say Wells Fargo Unfairly Scarred Their Careers

October 21, 2016 • In the ongoing scandal engulfing Wells Fargo, the bank says it fired wrongdoers. But some workers say they were trying to blow the whistle and Wells Fargo fired them.

Episode 732: Bad Form, Wells Fargo

October 28, 2016 • Banks like Wells Fargo have a weapon that can destroy an employee's career: A form. A long, boring form most people don't even know exists.

Sen. Elizabeth Warren questions John Stumpf, then CEO of Wells Fargo, during a Senate Banking Committee hearing on Sept. 20. Pete Marovic/Bloomberg via Getty Images hide caption

Senators Investigate Reports Wells Fargo Punished Workers

November 4, 2016 • Elizabeth Warren and two other senators are asking the bank about reports of retribution against would-be whistleblowers. The senators cite NPR reports about workers who were fired or pushed to quit.

Reports On Wells Fargo Whistleblowers Spark Inquiry In Congress

December 30, 2016 • Ex-workers who resisted pressure to push banking products on customers who didn't want them say Wells Fargo retaliated against them by docking their permanent record, sabotaging future job prospects.

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The Price of Wells Fargo’s Fake Account Scandal Grows by $3 Billion

The bank reached a settlement with federal prosecutors and the Securities and Exchange Commission after abusing customers.

By Emily Flitter

Wells Fargo has agreed to pay $3 billion to settle criminal charges and a civil action stemming from its widespread mistreatment of customers in its community bank over a 14-year period, the Justice Department announced on Friday.

From 2002 to 2016, employees used fraud to meet impossible sales goals. They opened millions of accounts in customers’ names without their knowledge, signed unwitting account holders up for credit cards and bill payment programs, created fake personal identification numbers, forged signatures and even secretly transferred customers’ money.

In court papers, prosecutors described a pressure-cooker environment at the bank, where low-level employees were squeezed tighter and tighter each year by sales goals that senior executives methodically raised, ignoring signs that they were unrealistic. The few employees and managers who did meet sales goals — by any means — were held up as examples for the rest of the work force to follow.

“This case illustrates a complete failure of leadership at multiple levels within the bank,” Nick Hanna, U.S. attorney for the Central District of California, said in a statement. “Wells Fargo traded its hard-earned reputation for short-term profits, and harmed untold numbers of customers along the way.”

Now the bank is grappling with the lingering consequences. Part of Friday’s deal, which includes a settlement with the Securities and Exchange Commission, is a deferred prosecution agreement, a pact that could expose the bank to charges if it engages in new criminal activity.

“We are committing all necessary resources to ensure that nothing like this happens again,” Wells Fargo’s chief executive, Charles W. Scharf, said in a statement on Friday.

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Top 25 Wells Fargo Interview Questions (Example Answers Included)

Mike Simpson 0 Comments

By Mike Simpson

Wells Fargo is undoubtedly a giant in the world of banking. Since its launch in 1852 , the company has worked to provide innovative financial services to customers. That’s why so many people jump at the opportunity to work for the company. For candidates, that means you’ll face a lot of competition, so impressing when you face off against the Wells Fargo interview questions is a must.

Fortunately, with a solid strategy, you can tackle interview questions at Wells Fargo with ease. Here’s what you need to know to make that happen.

How to Answer Wells Fargo Interview Questions

Before we take a look at the top Wells Fargo interview questions and example answers, it’s a good idea to spend a moment discussing strategy. While practicing answers to common questions is essential, you also need to prepare for the unexpected. With the proper techniques, that’s far easier.

Overall, Wells Fargo has more than 268,500 employees. While that means they often have plenty of openings, your odds of facing stiff competition are incredibly high. So, you need to seize opportunities to show you’re a perfect match for the company.

Wells Fargo stands out from the competition for a few reasons. Along with being community-oriented, the company is very customer-focused. Wells Fargo is dedicated to helping customers and businesses , so having a customer-first mindset is essential.

Along with demonstrating a commitment to customer service, you’ll need to ensure you’re ready to discuss the hiring manager’s other needs. How do you find out about those? By doing some research.

Start by taking a close look at the job description. Find any keywords discussing the responsibilities, required skills, requested experience, and desirable traits. That way, you can integrate those into your answers.

Next, review the Wells Fargo mission and values statements for more insights into what the company is after. Couple that with a review of the company’s social media profiles, allowing you to find out more about the company’s culture and any recent achievements .

Once you’ve done that, you have a ton of useful information at your disposal. Now, all you need to do is learn how to approach different types of Wells Fargo interview questions.

First, there are traditional interview questions, which are pretty cut and dry. The hiring manager will ask if you have specific knowledge or skills, and you’ll let them know if that’s the case. If so, follow up with an example of you putting that capability to work. If not, let the hiring manager know how you’ll acquire it or express a willingness to learn.

Now, you’ll need a different technique for behavioral and situational questions. Here, discussing an example or outlining how you’d navigate a scenario is essential. Fortunately, by taking the STAR Method and mixing in the Tailoring Method , you’ll have a winning formula. In the end, your answers will be thorough, compelling, and relevant, making it easier to stand out from the crowd.

Top 3 Wells Fargo Interview Questions

Before we dive into our top three Wells Fargo interview questions and example answers, it’s critical to note that every interview is unique. After all, Wells Fargo hires customer service representatives, IT professionals, product managers, mortgage specialists, and more.

Ultimately, a portion of the interview questions for a Wells Fargo job will be role-specific. However, some come up in the vast majority of interviews, regardless of the position. Additionally, some jobs are far more common than others.

With that in mind, here’s a look at our top three Wells Fargo interview questions.

1. If you caught a colleague stealing, what would you do?

If you’re trying to land a position at a Wells Fargo branch location, there’s a good chance that you’ll encounter this question. Theft is a big concern for any company that handles large sums of money. As a result, the hiring manager wants to know that you’ll take the right actions if you witness stealing.

While you might think that just saying you’d report it is enough, that leads to a lackluster answer. Ideally, you want to outline a step-by-step process you’d use instead, making your response more thorough.

EXAMPLE ANSWER:

“If I caught a colleague stealing, my first step would be to intervene if that was possible, reasonably safe, and aligned with company policy. Next, I would speak with my manager or the designated person for such matters immediately. I’d let them know what I witnessed, including as many details as possible. For example, if I saw that my coworker removed cash from a specific register or noticed a particular denomination, I’d mention that. Similarly, if I saw where my colleague put the money, I’d bring that up, too. Another step I would take is to discuss my coworker’s position in the office at the time of the theft. Security cameras are prevalent, so letting my manager know where they were could help them determine what footage needs reviewing. If filing a formal written report was part of standard company procedure, I’d handle that as well.”

2. What impact are current economic conditions having on the banking and financial services industry?

The world of banking and financial services has seen more than its fair share of challenges in recent years. Between the pandemic and inflation, people are making different decisions in regard to their money.

This question is designed to test your industry savvy in relation to current events. Ultimately, you want to incorporate details about current economic conditions and discuss how you believe they could impact a company like Wells Fargo.

“The past few years have been tumultuous, fundamentally altering many aspects of the banking and financial industry. During the height of the pandemic, many people began having different expectations about how they engage with companies. As a result, I believe that banks had to update their offerings, shoring up their technology to support more forms of communication and make information accessible. The development of more chatbots is a prime example, as they allow customers to get access to questions quickly without engaging with a live person. Since inflation and rising interest rates became a factor, there are new shifts in customer behavior. When interest rates go up, borrowing typically slows, which could harm earnings. Requirements also tighten, which has a similar effect. Whether we’ll see changes in savings rates is currently unclear. While interest rates are heading upward, the purchasing power of a dollar is diminished to the point where many people may struggle to set money aside. As a result, this creates a new potential challenge for the banking and financial services industry, should it come to pass.”

3. What would you do if you believed you exceeded expectations when handling a task, but your manager felt otherwise?

This question isn’t one many candidates expect, which is why it’s a good one to practice. Here, the hiring manager wants to know how you deal with constructive criticism, especially when you feel you met or exceeded expectations initially.

In this situation, you want to show that you can handle negative feedback calmly and professionally. Additionally, highlighting your willingness to learn can work in your favor.

“If I felt that I exceeded expectations, but my manager felt otherwise, I would welcome any feedback they could provide. After mentioning their disappointment, I’d work with them to determine the best way for me to improve. I’d ask clarifying questions to get a genuine sense of any missteps, as well as discuss alternative scenarios of how I could have handled the task. Ultimately, my goal would be to learn more about what my manager was after, allowing me to use that information to improve my performance.”

22 More Wells Fargo Interview Questions

Here are 22 more Wells Fargo interview questions you might encounter:

• Why Wells Fargo?
• What can you tell me about Wells Fargo?
• Who are Wells Fargo’s primary competitors, and how does Wells Fargo separate itself from the pack?
• What inspired you to start a career in the financial services industry?
• Are you willing to travel to other branches? If so, how far are you willing to travel?
• Tell me about a time when you had to handle an especially difficult customer. What was the situation, why was it challenging, and how did you tackle it?
• Can you describe what you believe a typical day looks like in this job?
• Are you a Wells Fargo customer? Why or why not?
• If you had some unexpected downtime, how would you make the most of it?
• What do you do to ensure you offer an excellent customer service experience?
• Describe a time when you failed at work and what you learned from the experience.
• What are some of the risk factors associated with investing?
• How well do you multitask when under pressure?
• Can you tell me about a time when you took initiative at work?
• Describe a process you created that improved efficiency in your workplace.
• Tell me about your customer service experience.
• If a customer asked you a complex financial question and you didn’t know the answer, what would you do?
• How do you build relationships with clients?
• When faced with two tight deadlines, how do you decide which one to prioritize?
• Can you tell me about your cash handling experience?
• In your past positions, have you had any financial analysis responsibilities?
• What steps do you take to remain informed about the state of the banking and financial services industry?

5 Good Questions to Ask at the End of a Wells Fargo Interview

As your Wells Fargo interview starts coming to a close, the hiring manager typically gives you an opportunity to ask some questions of your own. This is a crucial moment, one that lets you showcase your enthusiasm while you learn more about the company.

During your interview, some questions may come to mind that you want answers to, and it’s perfectly fine to present those. However, you also want a few more questions prepared in advance. That way, when this point in the interview arrives, you’ll have some backups ready.

Here are five good questions to ask at the end of a Wells Fargo interview:

• Why did you choose to work at Wells Fargo instead of a competitor?
• What’s your favorite part of Wells Fargo’s company culture?
• How is success measured in regard to this position?
• Has this job grown or evolved over the past five years? How do you envision this role changing in the future?
• What’s one challenge that Wells Fargo faces that the new hire could potentially help solve?

Putting It All Together

At this point, the idea of answering interview questions at Wells Fargo probably doesn’t seem so intimidating. Use every tip and piece of information above to your advantage. That way, when it’s time to face off against the Wells Fargo interview questions, you’ll be ready.

Co-Founder and CEO of TheInterviewGuys.com. Mike is a job interview and career expert and the head writer at TheInterviewGuys.com.

His advice and insights have been shared and featured by publications such as Forbes , Entrepreneur , CNBC and more as well as educational institutions such as the University of Michigan , Penn State , Northeastern and others.

Learn more about The Interview Guys on our About Us page .

About The Author

Mike simpson.

Co-Founder and CEO of TheInterviewGuys.com. Mike is a job interview and career expert and the head writer at TheInterviewGuys.com. His advice and insights have been shared and featured by publications such as Forbes , Entrepreneur , CNBC and more as well as educational institutions such as the University of Michigan , Penn State , Northeastern and others. Learn more about The Interview Guys on our About Us page .

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