Recently, ex-employees of Wells Fargo sued the company over allegations that they were fired for refusing to engage in fraudulent practices. The fraudulent practices in question involved creating millions of secret and unauthorized bank accounts to raise the company’s profits. This incident displays a primary problem with banking culture in the U.S, a narrow minded focus on increasing profits with no concern for ethics or the law.
This drive to accumulate wealth no matter the cost often leads those in positions of authority to put employees beneath them in the unfair spot of breaking the law or losing their job. When the time comes for someone to answer for the crimes committed, it is often those at the bottom of the corporate ladder who face the consequences, while those at the top at most get a slap on the wrist in the form of a fine. To prevent these kinds of practices from ensuing harsher penalties, tighter regulation should be imposed on the banking industry.
As reported by NPR, in order to meet sales quotas, “thousands of employees opened bank accounts without customer approval,” and as many or more than two million unauthorized accounts might have been created. NPR reported that Wells Fargo agreed to pay “$185 million in fines and penalties,” refunded $2.6 million to customers affected by the incident, and fired more than 5,300 employees involved in the fraud. The question remains: is this enough to make up for Wells Fargo’s blatant disregard for the law, their customers, and their employees?
Wells Fargo has faced some backlash for their fraudulent practices. As reported by The New York Times, their profits have stagnated and their revenue has dropped $200 million from the previous year. To some this may appear as adequate blowback for the company, but sone still must remember the ex-employees. As their lawyers allege in the suit over their unfair termination, “people who were fired for refusing to break the law are left out in the cold.” It is true that, whether or not they engaged in the fraud, the everyday employees who lost their jobs were the ones who ultimately faced the severest consequences, as customers got refunded and executive leaders got to keep their jobs.
Some changes are needed in the U.S banking culture if we wish an incident like this won’t transpire again. First, there must be a change to the corporate mentality that profits, above all else, matter. It is true Wells Fargo is a business, and like any business should be allowed to raise a profit for themselves and their stakeholders. Still, a line must be drawn from lawful actions in the pursuit of profits, and reckless behavior driven by greed. Tighter regulations and harsher fines on the banking industry can help motivate banking companies to change their mentality over profits, seeing as they will think twice about engaging in fraudulent practices if it hurts their bottom line.
Additionally those at the top of the corporate ladder who encourage reckless behavior should be made to shoulder more of the consequences that arise when fraudulent practices are discovered. Though the people who oversaw Wells Fargo’s practices at the time have already retired, a prevalent problem remains where those at that top get off relatively scot-free when fraud is committed.
If we desire a change in the banking culture, it must start at the top with harsher fines and potential jail-time for corporate leaders who encourage fraud.