Andrew Kim Columnist
Since its inception in 1852, Wells Fargo has been the banking hub for average Americans. The enterprise has provided dependable financial services for generations, often being recognized for three key attributes: loyalty, ardor, and honesty. After the recent revelation of the Wells Fargo “phony account” scandal, this is definitely no longer the case.
According to federal regulators, Wells Fargo employees have opened up millions of fake accounts in secret. These unauthorized bank and credit card accounts ultimately allowed certain workers to boost their reported sales. But this simple explanation is a gross understatement of the whole situation. In reality, the sheer scope of the company’s wrongdoing is overwhelmingly amoral and widespread.
Further investigation has disclosed that more than 1.5 million “ghost” accounts were opened through various back doors since early 2011 — each accompanied by both fake e-mail accounts and PIN numbers. Since the discovery of the accounts, Wells Fargo has fired over 5,300 employees involved in the transgression, in addition to complying with a $185 million fee imposed by the Consumer Financial Protection Bureau. Be that as it may, the bank has still not been held adequately accountable for its years of shady and potentially reckless behavior and customer betrayal. A one-time congressional hearing will not pay back the tens of millions of dollars that have been stolen from the American public.
“I didn’t sign up for any bloody checking account. They lost me as a banking customer, and I have warned family and friends,” said Brian Kennedy, a Maryland retiree who seemed to speak on behalf of people across the country.
Wells Fargo’s leaders will have to explain themselves to the entirety of the financial community, if they have any hope of retaining the bank’s $250 billion valuation. Two weeks ago, the bank had an opportunity to clarify both the origins behind the catastrophe along with its lack of action since.
Regrettably, John Stumpf, the former CEO of Wells Fargo, managed to botch that juncture. During a cross-examination by the representatives of the House Financial Services Committee, Stumpf was thoroughly grilled by members of Congress, Republicans and Democrats alike. On top of the crimes outlined by the committee, which ranged from identity theft to fraud, the bank’s CEO was battered by a hail of insults — blatantly being compared to a “bank robber” in addition to running a “criminal enterprise.” And rightfully so.
The last time the world witnessed a corporate blunder of this scale was when Enron executives falsified earning reports and destroyed evidence of poorly-graded audits. Much like the Wells Fargo scandal, Enron’s downfall was a classic example of corporate corruption.
The difference is that those responsible for the Enron impropriety atoned for their sins by coming clean in court and declaring bankruptcy. Wells Fargo, on the other hand, has failed to fire a single senior executive, brazenly denying responsibility. Stumpf even had the guts to resign and walk away with a $134 million retirement payout as one last shameless act of disrespect to the American people.
Wells Fargo may be just one mismanaged bank, but it represents a much larger problem. Just a few days before the scandal broke, Deutsche Bank was accused of market manipulation, accumulating $14 billion in fines. As of now, high-level Deutsche Bank executives face trial while the European bank scrambles for a bail-out itself. Although many are beginning to call for a break-up of these enormous financial entities, the solution lies not in downsizing but transparency. In a market of underhand deals and constant fraud, the only way to achieve improved management is through trust and proper inspection. The world simply cannot continue to suffer the debacles of corrupt banks.
