Last week, scandal-plagued Wells Fargo launched a new ad campaign that acknowledged the bank’s past mistakes and outlined the steps taken to correct its misbehavior. The tag line: “Established 1852, Re-Established 2018.”
It turns out those ads might be a bit premature.
Wells Fargo is in trouble again, this time over employees who allegedly altered the documents of business clients, the Wall Street Journal reported today (paywall). According to the paper, the bank added or changed information like dates of birth and social security numbers on client documents it was submitting to regulators at the end of last year and the beginning of this year. Other Wells Fargo workers tipped off supervisors, and the bank self-reported the issue to the federal Office of the Comptroller of the Currency, which is investigating.
The offense is relatively minor compared to other recent Wells Fargo violations, which included the unauthorized use of customer data to open 3.5 million accounts, and charging 800,000 clients for auto insurance they didn’t need. Those scandals, and others, triggered intense scrutiny from regulators and Congress, resulting in unusually severe sanctions from the Federal Reserve and a $1 billion settlement announced last month.
In the aftermath, CEO John Stumpf and a handful of other executives were were fired (along with the 5,300 employees caught falsifying accounts), the board chair was replaced, and the bank pledged to end its practice of rewarding low-level employees based on how many customer accounts they opened.
While those fixes were necessary and appropriate, it appears they were insufficient. Changing a corporate culture is hard, particularly when the behavior that needs to be changed—an aggressive, win-at-all-costs mentality that tolerates rules-bending—is the behavior that made Wells Fargo the nation’s third-largest financial institution. Even as the bank says it’s reining in its excesses, Wall Street is demanding more aggressive sales targets. No wonder that in the wake of the fake-account scandal, new CEO Tim Sloan denied the bank has a culture problem. “We don’t feel like we have to do anything new other than to make sure that our customers understand that we’re out there,” he told Bloomberg earlier this year.
It’s perhaps telling that the snafu revealed today is a byproduct of an even earlier blunder, a 2015 violation of regulations to guard against money laundering. To comply with a consent order (pdf), Wells Fargo needed to verify 100,000 customer accounts, with many needing additional information. It was in the scramble to meet its June 20 deadline that documents were altered, the Journal said.
In an emailed statement, Wells Fargo tried to differentiate this misconduct from earlier outrages, saying, “This matter involves documents used for internal purposes. No customers were negatively impacted, no data left the company, and no products or services were sold as a result.”