A letter has emerged, addressed to former Wells Fargo CEO John Stumpf in September 2007, detailing the widespread practice of creating fraudulent bank and credit card accounts in order to meet sales quotas and predicting that the practice would lead to a major scandal. CNN Money has the details (full letter is here), saying that a second letter was sent at the same time to the bank's board's audit and examination committee but it's unclear if either letter was ever read or acknowledged. What is clear is that the unnamed male employee from the Bay Area was likely retaliated against as a result of his attempts to report the problems, and he won a federal whistleblower lawsuit in 2008 after the bank relocated him.
In its October 7 episode, the NPR podcast Planet Money delved into the scandal, speaking to an anonymous former salesperson at the bank who describes the intense pressure to meet quotas and humiliating "coaching sessions" that would occur when she didn't. The called the bogus account making as "a systemic thing that was taught. It’s the sales culture."
Stumpf has not commented on the whistleblower letter, but it's especially damning given that it would be another nine years before the issue would be investigated, and 5,300 people fired as a result. As the letter presciently explained, "In Northern California’s Greater Bay Region, the activity is widespread and so highly encouraged that it has become a normal sales practice. Left unchecked, the inevitable outcome shall be one of professional and reputational damage, consumer fraud, and shareholder lawsuits, coupled by regulatory sanctions."
The scandal surrounding Wells Fargo has been particularly problematic for the city of San Francisco where the bank has a long history though it was founded in New York, the bank has long had a major headquarters here, as well as a history museum, and Wells Fargo played a pivotal role in the early years of San Francisco, operating the Pony Express and connecting the city and the rest of the American West with eastern banking centers.
Thus you have Supervisor John Avalos, as he introduced a resolution Tuesday calling for the city to cut all it financial ties with Wells Fargo, saying, "It’s disheartening to see our hometown bank was engaged in this sort of reckless behavior, and that its initial response was to scapegoat lower-level employees while senior executives walked with millions." As the Business Times reports, the resolution also calls for the city attorney to investigate if any other banks in the city were engaged in any similar behavior.
Also piling on with the chastising and disgust are City Treasurer Jose Cisneros, who's already suspended Wells Fargo from a city program reaching out to the financially underserved, and doubled down Tuesday with a new statement obtained by the Business Times:
What Wells Fargo has done is deceptive, it is wrong and it is predatory. By cutting financial ties to the bank, San Francisco is communicating in a language a bank understands: money.
California State Treasurer John Chiang earlier said, as the scandal broke last month and he suspended the bank from some lucrative business it does with the state, "If they have to get down on to their knees, maybe in a little genuflection or a little prayer, that will help them. We want to see massive change in behavior."
The SF Board of Supervisors will take a vote on the resolution, which was co-sponsored by Avalos and Jane Kim, next week. Meanwhile, late Tuesday, as KTVU tells us, Santa Clara County supervisors voted to cut ties with the bank as well.
Maybe the election has just drowned out the news but I'm kind of surprised SNL hasn't done a parody of this yet.
OH WAIT, they totally did. With Lin-Manuel Miranda, no less.