3. Summarize the core issue in the case. What was the Wells Fargo scandal about?

4. From reading the case, to what extent were the company's senior leaders responsible for the scandal?

5. Evaluate Wells Fargo's response to the scandal. What actions were taken? Do you think the company's response has been effective?

C-238 Part 4: Cave Studies CASE 18 UNIVERSITY DARDEN VIRGINIA The Wells Fargo Banking Scandal We've been called, true or not, "the king of cross-sell." Wells Fargo Background' -Wells Fargo CEO John Stumpf's Wells Fargo was founded in 1852 in San Francisco by 2010 letter to shareholders Henry Wells and William Fargo and initially offered On October 25, 2016, Timothy J. Sloan, the new CEO of financial services as well as express delivery services Wells Fargo bank, addressed 1,200 of his employees in necessary to meet the needs of customers flocking to the Charlotte, North Carolina, for the first time. "I want to West during the California gold rush. Its famed delivery apologize to all of you," Sloan began. "I want to say we're network-epitomized by its ubiquitous stagecoaches- sorry for the pain you have experienced as team mem- allowed it to grow into a national brand by the early bers as a result of our company's failures." 20th century, even as its commercial banking focused Sloan, a 29-year veteran of Wells Fargo and previ- primarily on Northern California until the 1980s. A ously its COO and president, had been named to the series of mergers and acquisitions-most a takeover company's top position two weeks earlier, when then- by Norwest bank of Minneapolis in 1998-helped CEO John Stumpf resigned amid fallout from the Wells Fargo become one of nation's largest commercial banking scandal for which Sloan apologized. In banks by the beginning of 21st century. In addition September, Wells Fargo had agreed to a $185 million to serving individuals and small businesses through settlement with the Consumer Financial Protection commercial banking, Wells Fargo also had practices Bureau (CFPB) and two other regulatory bodies, admit- in wholesale banking, investment banking, wealth ting it had opened unauthorized accounts for millions of management, insurance brokering, loan servicing its consumers, and more. At the heart of the scandal were the company's com- John Stumpf became Wells Fargo's CEO in 2007 munity banking sales practices, which focused relent- and its chairman in 2010. One of 11 children of rural lessly on cross-selling multiple products to existing Minnesota dairy farmers, Stumpf often cited his hum- customers. Bank employees alleged that the pressure ble upbringing and hard-working, Midwestern values to sell products was so great that they were effectively when he explained the way he approached manage- forced to engage in illegal behavior to meet performance ment and leadership. "Even though we were very poor goals. During a five-year period, 5,300 bank employees financially, we learned the value of plural pronouns- were fired for improper sales behavior. When the CFPB us, we, and ours," he told Forbes in 2012. "There wasn't settlement came to light, public outrage over the behav- a lot of time for I, me, and my." He got his start in for of a bank many believed to be one of the few remain- financial services as a repo man, joined Norwest Bank ing good guys led to the resignation of Stumpf and other in 1982, and worked his way up through the commu- top executives, a dramatic drop in share price, and the nity bank. After Norwest's 1998 merger with Wells loss of Wells Fargo's prized place as "the world's most Fargo, Stumpf led Wells Fargo's community banking valuable bank." division and was named company president in 2005, "My primary objective," said Sloan to his employees, eventually succeeding Richard Kovacevich as CHO "is to restore trust in Wells Fargo-restore pride in our and chairman." company and mission. That may seem like a long way off Wells Fargo emerged from the 2008-2009 global today, but I promise you we will financial crisis in a considerably better position than I think it all begins with understanding where things many others banks.' It benefited from a low cost of broke down, and where we failed-as a culture, a com- funds, diversity of revenue sources, and a refusal to sell pany, and as leaders."2 some of the most complex synthetic investment vehicles This case was prepared by was prepared by Luana L Lynch, Almand H. Coleman Professor of Business and Cameron Catro (MBA 16]. It was waition al a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright e 2m? by the Cuntrian of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved, To onder copies, send an e-mail to sales@ denlenbusinesspullinbing farm No part of thi publication may be meproduced, stored in a metrical gotem, used in a proudsheet, or transmitted in day form er by any means decrome modem photocopying recording of otherwear- within the perrinion of for Decades School Foundation Our goal is to publish materials of the highest quality, Pick submit any errata to editoriale dardenbusinesspublishing.com.Case 18: The Wells Fargo Banking Scandal C-239 and no-documentation loans that opened other banks banking.""It was regularly ranked on Barron's "world's up to considerable risk. While it lost market share in the most respected companies" list, attaining a rank of seven mortgage business from 2003-2007, that setback was in 2015." viewed as a sign of virtue when other banks collapsed. By 2015, Wells Fargo enjoyed a reputation as the However, Wells Fargo did not emerge from the crisis "world's most valuable bank."" It ranked first in market unscathed: in 2012. Wells Fargo reached a $175 million value among all U.S. banks by year-end, ranked third in settlement agreement with the Department of justice terms of assets, and earned $22.9 billion in profits from over claims of discriminatory lending practices targeting $86.1 billion of revenue (up 2% from 2014). It proudly African American and Hispanic homeowners during the stated in its annual reports that "we serve one in three housing boom." It also paid $6.5 million to the SEC to households in the United States." Wells Fargo stressed settle charges related to the sale of risky mortgage-backed that the key to its success was its ability to manage risk securities." at every level. "We think everyone here is a risk man- Given its relative strength during the crisis, Wells ager," Stumpf told the San Francisco Chronicle in 2015. Fargo agreed in 2008 to acquire Wachovia, which at "Whether it's your official title or not, everything we do the time was the fourth-largest bank holding com- is part of that." pany in the country and dominated East Coast bank- In annual reports and elsewhere, Wells Fargo stressed ing. for $12.5 billion. Wachovia was forced into sale the importance of its approximately 265,000 employees by the United States government during the 2008 (known as "team members"). "We have always believed banking crisis because of the substantial losses it that our team members are our most valuable resource, had experienced from its loan business, the failure of and we want them to be with us for the long term," similar banks, and fear that Wachovia would not be Stumpf wrote in his 2015 letter to shareholders." Wells able to meet its depositors' requests for funds. In his Fargo boasted of hiring one of the most diverse work- 2008 letter to shareholders, CEO Stumpf wrote: "Our forces in corporate America, with more women and merger . . . has created the United States' premier minority employees than any other bank. coast-to-coast community banking presence, the most Since the 1990s, Wells Fargo's mission had been extensive distribution system of any financial services consistent: "to satisfy our customers' financial needs company across North America." Effectively merging and help them succeed financially."" The bank believed two banking giants was viewed as an enormous chal- this consistent mission and focus was key to continued lenge, as it required creating a combined network of growth, and it had six key priorities to achieving this: 11,000 branches, 12,000 ATMs, 70 million customers, Putting Customers First, Growing Revenue, Managing and over 200,000 employees." Expenses, Living our Vision and Values, Connecting After the Wachovia purchase, Wells Fargo got a vote with Communities and Stakeholders, and Managing Risk. of confidence from one of America's most respected Wells Fargo leadership also maintained an explicit investors, Warren Buffett. A longtime investor in Wells and consistent set of core values it believed set it apart Fargo, Buffett's Berkshire Hathaway increased its own- and helped the bank succeed: People as a Competitive ership of the company steadily from 2009-2013, say- Advantage, lithics, What's Right for Customers, Diversity ing he believed in Wells Fargo's business model and & Inclusion, and Leadership. The company provided management." "You can't take away Wells Fargo's cus- all employees with a 37-page book, Vision and Values, tomer base," Buffett told Fortune shortly after the invest- which included a letter from the CEO, explaining the ment. "It grows quarter by quarter. And what you make bank's priorities, values, and culture in detail, and also money off of is customers . . . and not doing anything outlined the importance of ethical behavior while ensur- dumb. And that's what they do."" By 2015, Berkshire ing the bank was financially successful.* Hathaway owned approximately 9.5% of Wells Fargo In speeches and annual reports, CEO Stumpf fre- shares." quently referenced the bank's values as key to its suc- Wells Fargo enjoyed a sterling public reputation cess. His 2011 annual report to shareholders lauded compared to other banks. Based in San Francisco, away Wells Fargo's 270,000 employees, who were "guided from the major New York banks, Wells Fargo was "one by our values and what we stand for: honoring and of the most respected financial institutions in the coun- supporting our people, striving for the highest ethi- try, viewed as a kindly, exceedingly well-run neighbor- cal standards, doing what's right for our customers, hood-oriented bank with only modest aspirations for learning from diversity, and calling on everyone to be the rough-and tumble world of Wall Street investment leaders."C-240 Part 4: Case Studies The Community Banking Division merger, Wells Fargo continually emphasized the impor- and Cross-Selling22 tance of cross-selling in its annual reports: At the heart of Wells Fargo's success was its community Our primary strategy . . . is to increase the number of banking division, whose purpose was to provide a wide products our customers utilize and to offer them all of the range of financial solutions (such as checking and sav- financial products that fulfill their needs. Our cross-sell ings accounts, loans, and credit cards) to households strategy... (facilitates] growth in both strong and weak eco- and small businesses. In 2015, it consisted of almost nomic cycles, as we can grow by number of products our 6,000 local bank branches across the United States. The current customers have with us, gain new customers in division was responsible for 57% of Wells Fargo's annual our extended markets, and increase market share in many businesses."2 revenue." In addition, it was the public face of Wells Fargo, as the branches symbolized the bank's fundamen "We've been called, true or not, the "king' of cross- tal connection to Main Street. sell," wrote Stumpf in his 2010 letter to shareholders: Community banking was led since 2007 by Carric Tolstedt, a 27-year veteran of Wells Fargo who had pre- To succeed at it, you have to do a thousand things right. viously served as a regional manager and vice president It requires long-term persistence, significant investment of regional banking." A Nebraska native, Tolstedt was in systems and training. proper team member incentives known for her tireless work ethic and obsessive attention and recognition, taking the time to understand your cus- to detail." tomers' financial objectives, then offering them products The division was vast and organized in a broad and solutions to satisfy their needs so they can succeed hierarchical structure. Tolstedt managed three regional financially . . . The bad news is it's hard to do. The good bank executives, who were responsible for 54 regional news is it's hard to do, because once you build it, it's a com- presidents. The regional presidents managed 120 area petitive advantage that can't be copied." managers, who in turn oversaw 600 district man- Wells Fargo was the only major bank to explicitly agers in charge of 5,700 branch managers. Beneath report on its cross-selling results in its annual reports these branch managers were the approximately and securities filings." Wells Fargo began regularly 100,000 branch bankers and tellers responsible for sell- reporting on the average number of products per cus ing and servicing financial products for individuals and tomer in annual reports around 1998, as it was one of small businesses. several strategic initiatives for the firm. Around 2001, The primary strategy of Wells Fargo's community Wells Fargo began referring to its cross-selling strategy banking was a practice known as "cross-selling, or gen- as "Going for Gr-Eight!" a reference to its goal of aver- erating more business from existing customers by sell- aging eight products per customer, which it estimated ing them additional products. For example, customers was approximately half the financial-services products who opened checking accounts would be encouraged to an average individual needed during a lifetime. open savings accounts, credit cards, or mortgages at the Wells Fargo enjoyed considerable success with its same bank. A common practice across financial services cross- selling strategy. The average number of products companies (and many other industries), cross-selling per customer grew from 3.2 in 1998, when Norwest is viewed as a key strategy to win market share in an acquired Wells Fargo, to 6.11 in 2015 (Table 1).By com increasingly commoditized market and retain customers parison, the national average was 2.71." Wells Fargo "is over the long term. the master at this," an independent bank consultant told While all banks emphasized cross-selling, Wells the Los Angeles Times in 2013. "No other bank can touch Fargo was unique in both the importance it placed on them."21 the strategy and its remarkable success at it. Cross- Wells Fargo's strength at cross-selling was seen as selling became a key component of Wells Fargo strategy crucial to the success of its Wachovia acquisition. Buying around the time it merged with Norwest bank in 1998. Wachovia's assets would provide a significantly larget Norwest CEO Kovacevich saw cross-selling as a major geography for Wells Fargo's community banking, and its competitive advantage and wanted Norwest to be "the cross-selling ability, combined with Wachovia's famed Wal-Mart of financial services, supplying 100% of cus- customer service, was seen as a highly promising feature tomers' industry average needs." Norwest was able to of the merger." sell an average of four products per customer compared The bank consistently emphasized that cross-selling to an industry average of two. " In the years following the and the long-term customer growth and retention in bedCine 18 The Wels Fargo Banking Scandal C-241 Table 1 Average Number of Products Per Retail Banking Customer at Wells Fargo, 1998-2015. Merger with Wachovia Merger with Norwest 4 3 2 1998 1990 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 National JAvy, 2015 Wells Fargo Data sources Wells Fargo annual reports. wall Street Journal. to depended on the strength of relationships between considered in determining the annual bonus for Division its branch employees and its customers. Successful President Carrie Tolstedt. cross-selling was essentially a proxy for "earning deep Sales metrics were regularly reported from individ- and long-lasting relationships" with customers, which ual branches up through the management hierarchy of required "not only knowing our customers, but also the division. Community banking head Tolstedt stressed understanding how they defined financial success." sales volume and number of products per customer and In this way, the firm viewed cross selling as a logical "unrelentingly focused on numbers showing growth," extension of its mission to satisfy its customers' financial according to former employees." Branch personnel needs. "Earning lifelong relationships, one customer at were assigned ambitious sales targets, and progress was a time, is fundamental to achieving our vision," wrote tracked in a daily "Motivator Report" sent to managers Stumpf in 2015. and discussed regularly in conference calls." According In order to make progress toward its ambitious goal to allegations in recent lawsuits, the measurement of of eight products per customer, Wells Fargo's community progress against sales targets was relentless. "Daily sales banking division relied on the salesmanship of its branch for each branch, and each employee, were reported and bankers and tellers. Throughout the division, manag- discussed by Wells Fargo's district managers four times ers focused on hiring and developing staff who could a day, at 11:00 a.m., 1:00 p.m., 3:00 p.m., and 5:00 p.m." engage with customers, understand their needs, and sell Former employees have described, in lawsuits and them products to meet those needs. They also developed news articles, examples of the importance managers incentive programs that encouraged bank personnel to placed on employee sales' numbers. One area presi- sell. Personal bankers, who earned approximately $14 to dent told employees to "do whatever it takes" to sell" $19 per hour, relied on sales incentive payments for 15% Personal bankers had daily and hourly sales goals." At to 20% of their compensation, while tellers, who earned some branches, employees could not go home until their approximately $11 to $13 per hour, derived about 3% of sales quotas for the day were met.""The branch manag- their pay from sales and service incentives." District ers were always asking, 'how many solutions did you sell management had specific sales goals they had to meet to today? They wanted three to four a day," reported one earn bonuses, and cross-selling metrics was one factor former employee to the New York Times." A 2011 e-mailC-242 Part 4: Cair Studies obtained by the Los Angeles Times shows a California that certain products are available only in packages with district manager chastising employees for only selling other products." One employee told the New York Times overdraft protection to 5% to 38% of customers. "This she would convince customers that they needed sepa- has to come up dramatically. We need to make a move rate checking accounts for travel, groceries, and emer- toward 80%."" gency spending." Some employees would issue debit Branch bankers and tellers who did not meet sales cards, including PINs, without consumer knowledge. goals were coached to improve their outcomes or ter- Employees would create phony c-mail addresses (c.g., minated from the company. Managers and regional noname@wellsfargo.com) to enroll customers in online presidents would offer objection-handling training to banking, which counted as a separate product against employees, often involving memorizing sales pitches to their sales goals." override people who objected to buying. A former banker Often, according to former employees, the customers told the New York Times, "Every morning I had to sit with targeted for fake accounts were those who were least able my boss and go over the previous day and every single to protect themselves." Members of Native American customer's relationship. I had to tell them why I didn't tribes, immigrants, college students, and the elderly were force them into opening that third, fourth, fifth checking frequent targets of aggressive sales tactics and were often account that they could have used for Christmas, their signed up for unneeded accounts or products without son's birthday, school, a pet, and so on."" their knowledge. Because Wells Fargo did not require At the management level, those with positive sales Social Security numbers to open accounts-one of the numbers enjoyed rapid career progression." Conversely, few major banks that did not-employees would often branch leaders who did not make their quota were sign up people with IDs from Mexican consulates, who "severely chastised and embarrassed in front of 60-plus sometimes did not speak English and did not understand managers in your area by the community banking pres- what products they were signing up for. "Bankers wanted ident."" the quickest, casiest sale-the low-hanging fruit,"-said It was well-known that Wells Fargo aggressively sold one former employee in San Jose. The majority of cases products to customers and that customers were often of phony accounts happened in clusters in Southern frustrated by being constantly asked to buy more. A 2015 California, Arizona, and Florida, though examples were study of the 10 largest banks, conducted by manage- cited across the country." ment consulting firm cg42, revealed a frustration among These allegations prompted federal and state regu Wells Fargo customers with the bank trying to get them lators to investigate. In September 2016, after an extent to sign up for products they didn't need or want. This sive investigation, the CFPB reported: "Wells Fargo frustration was expressed by 43% of Wells Fargo custom- employees secretly opened unauthorized accounts to ers, compared to an average of 24% for the remaining hit sales targets and receive bonuses . . . The bank had nine banks. This frustration was also expressed by Wells compensation incentive programs for its employees Fargo customers more than customers of others banks in that encouraged them to sign up existing clients for the cg42's 2011 and 2013 studies." deposit accounts, credit cards, debit cards, and online banking." Analysis done by Wells Fargo and reported by Employees Resort to Cheating 50 the CFPB concluded that employees opened more than 1.5 million deposit accounts and over 500,000 credit card Beginning 2013, reports in the press and allegations in accounts that may not have been authorized by consum- lawsuits suggested that some Wells Fargo employees ers. Some consumers were then charged fees to maintain had resorted to questionable behavior in order to meet the accounts." their sales goals. Employees would open additional Several employees who witnessed unethical behave accounts-checking accounts, online banking accounts, ior or undue pressure from management reported it to credit cards, and more-for existing customers without supervisors or through the company's ethics hotline their knowledge or authorization. Some employees even wrote to Stumpf directly, " A A former banker told the Los Angeles Times in 2013 of these employees have since claimed they that employees at his Los Angeles branch would open were terminated shortly after making whistle blower accounts and credit cards for customers without their calls. One banker in Pennsylvania was terminated fur knowledge, blaming it on a computer glitch if customers tardiness days after e-mailing human resources to report complained." Employees would encourage customers to that management had instructed him to open phony bundle products and then "incorrectly inform customers accounts." Another in California was terminated forCow 18 The Wells Fargo Banking Scandal C-243 "not meeting expectations" three days after calling into those terminated were branch tellers and bankers, but the ethics hotline to report colleagues opening unautho about 10% were managers. One area president was also Fixed accounts." terminated." Yet despite these efforts, the unethical sales practices persisted, which some employees blamed on the contin- Wells Fargo Responds ued existence of ambitious sales goals. "They warned us to Allegations of Fraud61 about this type of behavior and said "You must report it." but the reality was that people had to meet their goals. They needed a paycheck." said one former personal I do want to make it very clear that there was no orchestrated banker.* Managers talked constantly about strategies for effort . .by the company. We never directed nor wanted our increasing sales, and leadership publicly lauded those employees . . . to provide products and services to customers with the highest sales figures." they did not want or need. When reporters and investigators asked how these -Wells Fargo CEO John Stumpf's testimony to unethical practices could have occurred, Wells Fargo U.S. Senate Committee on Banking, Housing leadership consistently pointed to the individual and Urban Affairs, September 2016 actions of employees and defended its choice to termi- nate these employees. "I'm unaware of any overbear- Wells Fargo was aware of employees opening unau- ing sales culture," then-CFO Timothy Sloan said in an thorized accounts several years before the 2016 CFPB interview with the Los Angeles Times in 2013. In his report made the scandal public. According to testi- Senate testimony, Stumpf stressed that the 5,300 who mony provided by Stumpf to the U.S. Senate Banking were terminated made up only 1% of the retail banking Committee, Wells Fargo realized it had a problem as workforce in a given year. In any given year, 1,000 out early as 2011 and began taking steps to "detect and deter of 100,000 employees "didn't get it right. But I have to unethical conduct." say, the vast majority did do it right . . . every day." In 2011, Wells Fargo piloted a Quality-of-Sale Report "The 1% that did it wrong, who we fired, terminated, in Card in California, which used data analytics to monitor no way reflects our culture nor reflects the great work sales patterns to identify potentially unethical behav- the other vast majority of the people do," said a Wells ior. It monitored the number of inactive or unfunded Fargo spokesman. "That's a false narrative." accounts and set limits on the percentage of accounts In 2015, Wells Fargo hired third party auditors that were unused. However, one former manager noted from PricewaterhouseCoopers to determine how many that the limits-no more than 45% of debit cards were customers could have been impacted by the fraud- inactive, and no more than 27.5% of new accounts were ulent sales practices. It was this investigation that unfunded-were so high that they did little to spur determined, as the CFPB later reported, that approx- reform." This report card was scaled nationwide in 2012 imately 1.5 million deposit accounts (2% of all deposit and in 2013 became part of the incentive compensation accounts) could have been unauthorized, resulting program. in approximately $2.2 million in fees for consumers. Wells Fargo also began reducing the number of Likewise, 565,000 credit cards-about 6% of all those sales that employees needed for incentive bonuses. issued-had not been activated, had no activity, and From 2012 to 2015, the number of sales required to were assumed to be unauthorized. These cards resulted make incentive bonuses dropped by 30%. Wells Fargo in $400,000 in fees for consumers. All consumers were also reduced the emphasis on sales goals in perfor reimbursed for the fees. mance evaluations. Two months before the CFPB publicly announced Wells Fargo expanded the ethics training materials its settlement with Wells Fargo, the bank announced provided to managers in order to make clear what was the retirement of Community Bank President Tolstedt, right and what was wrong. It explicitly told employ- effective January 1, 2017. In announcing her retirement, ces at ethics workshops not to create fake accounts Stumpf praised her as a "one of our most valuable for clients." Wells Fargo leaders, a standard bearer of our culture. The bank also began terminating employees who a champion for our customers." Tolstedt, who earned it believed had practiced unethical behavior in order $27 million in her last three years with the bank, was to record sales. Between 2011 and 2016, the bank expected to retire with approximately $125 million in terminated approximately 5.300 employees. Most of stock and options.C-244 Part 4: Case Studies Fallout be forfeiting his unvested equity-worth approximately $41 million and would not receive a bonus in 2016. Because of the severity of these violations, Wells Fargo Two weeks later, on October 12, Stumpf announced his is paying the largest penalty the CFPB has ever imposed. resignation from the bank effective immediately, stat- Today's action should serve notice to the entire industry that ing: "While I have been deeply committed and focused financial incentive programs, if not monitored carefully on managing the Company through this period, I have carry serious risks that can have serious legal consequences. decided it is best for the Company that I step aside." -CFPB Director Richard Cordray Former CFO Tim Sloan was named CEO effective immediately. The company also split the role of CEO and On September 8, 2016, the CFPB announced that it chairman, effective December 1.78 and two other regulators had agreed to a $185 million Community Banking President Tolstedt, who had settlement with Wells Fargo over the fraudulent sales planned to retire at the end of the year, left the company practices employed by its branch workforce over the shortly after the scandal broke. She received none of course of several years. This was the largest penalty the the planned severance or 2016 bonus and also forfeited CFPB, founded in 2011, had ever imposed, but was rela- unvested equity. tively minor compared to other government settlements Wells Fargo began an internal investigation into the with banks in recent years over discriminatory mortgage rumors of retaliation against whistle-blowers, announce lending and questionable securities practices, including ing in January 2017 that it had found evidence that some fines imposed upon Wells Fargo." employees may have been terminated for reporting ques- In the days following the announcement, outrage tionable sales behavior to the ethics hotline." spread and congressional hearings were planned, and Wells Fargo also went to work to rebuild its image, Wells Fargo saw its share price begin to fall. Shares running commercials, taking out full-page advertise- dropped 13% in the month after the scandal went pub ments in most major newspapers, and selling up a lic, and Wells Fargo lost its place as the country's most special commitment website stating ways in which the valuable bank by market capitalization." Warren Buffett company was working to "make things right" and "build repeated his commitment to the company, but stated a better Wells Fargo," including changing leadership and "Wells Fargo . . . designed a system that produced bad introducing an employee performance plan based on behavior . . . The big mistake was they didn't do some customer service. thing about it." It remained to be seen what the impact of the scan- The day of the announcement, Wells Fargo stated dal would be on customer retention and growth. An that we regret and take responsibility for any instances October 2016 survey by consulting group ogd2 found where customers may have received a product that they that 30% of Wells Fargo's retail customers were exploring did not request."It announced that it would be over- banking alternatives and projected that the bank would hauling its performance-incentive program and removing lose $99 billion in deposits over the next 12 to 18 months product sales goals starting January 1. After considerable Similarly, the number of consumers interested in doing uproar from the media, the bank changed course and business with Wells Fargo had plummeted." announced on September 29 that sales quotas would be eliminated as of October 1." CEO John Stumpf initially rejected calls to resign, Moving Forward$2 stating that "the best thing I could do right now is lead As Tim Sloan addressed his employees in October 2016, this company, and lead this company forward." His sub- he acknowledged some of the underlying problems that sequent testimony in front of the U.S. Senate Banking had led to the scandal: product and sales goals that Committee and House Financial Services Committee resulted in questionable behavior, a failure of manage created a furor among lawmakers, including Senator ment to respond adequately to unethical practices, warn Elizabeth Warren who stated "Your definition of ing signs that could have been heeded sooner. "It's also accountability is to push blame to low-level employees ... important to note there are no quick fixes to our chal- it's gutless leadership." lenges," he said. "My pledge to you is that we will keep On September 29, independent members of Wells these lessons, and others we discover, part of our ongo Fargo's Board of Directors announced that Stumpf would ing conversation, so we may learn from our mistakes."(me 18. The Wells Fargo Banking Scandal C-245 Sloan closed by stressing Wells Fargo's mission: worthwhile because of the pride and satisfaction it gives We want to satisfy our customers' financial needs and help us, and because of the opportunity it offers us to deliver them succeed financially. This is why Wells Fargo exists. If value to customers, investors, and communities. This is our customers don't succeed, we don't. The mission remains our legacy and our future, and it's worth fighting for