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CASE 18 UNIVERSITY DARDEN VIRGINIA Business Publishing The Wells Fargo Banking Scandal We've been called, true or not, "the king of cross-sell." Wells Fargo Background3 -Wells Fargo CEO John Stumpf's 2010 letter to shareholders Wells Fargo was founded in 1852 in San Francisco by 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 ior 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 CEO '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." some of the most complex synthetic investment vehiclesand 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 2015,15 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, Ethics, 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."21The Community Banking Division merger, Wells Fargo continually emphasized the impor- and Cross-Selling27 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 Carrie 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.30 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-Eighth, 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."34 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 larger 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 it ledTable 1 Average Number of Products Per Retail Banking Customer at Wells Fargo, 1998-2015. 7 Merger with Wachovia 6 5 Merger with Norwest 4 3 2 1 1998 1999 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015, National Avg, 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."40 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 eis 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-mailobtained by the Los Angeles Times shows a California district manager chastising employees for only selling overdraft protection to 5% to 38% of customers. \"This has to come up dramatically. We need to make a move toward 80%?\" Branch bankers and tellers who did not meet sales goals were coached to improve their outcomes or ter- minated from the company. Managers and regional presidents would offer objection-handling training to employees. often involving memorizing sales pitches to override people who objected to buyingn former banker told the New York Time's,"Every morning I had to sit with my boss and go over the previous day and every single customer's relationship, I had to tell them why I didn't force them into opening that third. fourth, fth checking account that they could have used for Christmas, their sons birthday. school, a pet, and so on.\"6 At the management leveL those with positive sales numbers enjoyed rapid career progression." Conversely. branch leaders who did not make their quota were \"severely chastised and embarrassed in front of ISOplus managers in your area by the community banking pres- indent?\"3 It was welllmowu that Wells Fargo aggressively sold products to customers and that customers were often frustrated by being constantly asked to buy more. A 2015 study of the It] largest banks, conducted by manage- ment consulting firm cg42, revealed a frustration mung Wells Fargo customers with the bank trying to get them to sign up for products they didn't need or want. This frustration was expressed by 43% ofWells Fargo custom- ers, compared to an average of 24% for the remaining nine banks. This Frustration was also expressed by Wells Fargo customers more than customers of others banks in the cg42's 2011 and Bills studies." Employees Resort: to IEhoatdng-"lJ Beginning 2013, reports in the press and allegations in lawsuits suggested that some Wells Fargo employees had resorted to questionable behavior in order to meet their sales goals. Employees would open additional accountschecking accounts, online banking accosmta. credit cards. and morefor existing customers without their knowledge or authorization. A former banker told the Les negates Times in 2013 that employees at his Los Angeles branch would open accounts and credit cards for customers without their knowledge. blaming it on a computer glitch if customers complained.\" Employees would encourage customers to bundle products and then \"incorrectly inform customers that certain products are available only in packages with other products.\"n One employee told the New York Times she would convince customers that they needed sepa- rate checking accounts for travel, groceries, and emer- gency spending.\" Some employees would issue debit cards, including PINs. without consumer knowledge. Employees would create phony e-mail addresses (e.g., noname@wellsfargo.com} to enroll customers in online banking, which counted as a separate product against their sales goals.\" Often. according to former empioyees, the customers targer for fake accounts were those who were least able to protect themselves.55 Members of Native American tribes, immigrants, college students1 and the elderly were frequent targets of aggressive sales tactics and were often signed up for unneeded accounts or products without their knowledge. Because Wells Fargo did not require Social Security numbers to open accountsone of the few major banks that did notemployees would often sign up people with IDs from Mexican consulates, who sometimes did not speak English and did not understand what products they were signing up for."Banlcers wanted the quickest. easiest salethe low~hanging fruitTsaid one former employee in San Jose. The majority ut'cascs of phony accounts happened in clusters in Southern California. Arizona: and Florida: though examples were cited across the country.5n These allegations prompted federal and state regu- lators to investigate. In September 2016, after an exten- sive investigation. the CFPB reported: \"Welis Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses . . . The bank had compensation incentive programs for its employees that encouraged them to sign up existing clients for deposit accounts, credit cards, debit cards, and online banking? Analysis done by Wells Fargo and reported by the CFPB concluded that employees opened more than 1.5 million deposit accounts and over 500,000 credit card accounts that may not have been authorized by consum- ers. Some consumers were then charged fees to maintain the accounts.\" Several employees who witnessed unethical behav- ior or undue pressure from management reported it to supervisors or through the company's ethics hotline. Some employees even wrote to Stumpf direc'dy. A number of these employees have since claimed they were terminated shortly after making whistle-blower calls. One banker in Pennsylvania was terminated for tardiness days after e-mailing human resources to report that management had instructed him to open phony accounts.\" Another in California was terminated for "not meeting errlzrectations'g three days after calling into the ethics hotline to report colleagues opening unautho- rized accounts.\" 1Itltells Fargo Responds to Allegations of Fraud" i do want to notice it very cieorthczt there was no orchestrated sjj'ort. . . by the company: We neverdirected nor mad our employees. . . topmvideprodncts and services to customers they did not \"out or need. Weilr Fargo CEOJohn Srungofs testimony to US. Senate Committee on Banking. Housing. and Urban d'oirs. September 2016 Wells Fargo was aware of empioyees opening unau thorized accounts several years before the Zl CFPB report made the scandal public. According to testi- mony provided by Stumpf to the US. Senate Banking Committee. Wells Fargo realized it had a problem as early as Zl] and began taking steps to \"detect and deter unethical conduct.\" In 2011. 'Wells Fargo piloted a QualityofSale Report Card in California. which used data analytics to monitor sales patterns to identify potentially unethical behav- ior. It monitored the number of inactive or unfunded accounts and set limits on the percentage of accounts that were unused. However. one former manager noted that the limitsno more than 15% of debit cards were inactive, and no more than 215% of new accounts were unfundedhere so high that they did little to spur reform.\" This report card was scaled nationwide in 2012 and in 2013 became part of the incentive compensation program. Wells Fargo also began reducing the number of sales that employees needed for incentive bonuses. From 2012 to 2015, the number of sales required to make incentive bonuses dropped by 313%. Wells Fargo also reduced the emphasis on sales goals in perfor mance evaluations. Wells Fargo expanded the ethics training materials provided to managers in order to make clear what was right and what was wrong. It explicitly told employ- ees at ethics workshops not to create fake accounts for clients.\" The bank also began terminating employees who it believed had practiced unethical behavior in order to record sales. Between 2011 and 2016, the bank terminated approximately 5,3011 employees. Most of those terminated were branch tellers and bankers, but about 10% were managers. One area president was also termina J\" Yet despite these efforts. the unethical sales practices persisted. which some employees blamed on the contin- ued existence of ambitious sales goals."Ti1ey \"turned us 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 banker.\" Managers talked constantly about strategies for increasing sales. and leadership publicly lauded those with the highest sales figures.\" When reporters and investigators asked how these unethical practices could have occurred. Wells Fargo leadership consistently pointed to the individual actions of employees and defended its choice to termi- nate these employees. \"I'm unaware of any overbear- ing sales culture." then-CFO Timothy Sloan said in an interview with the Los Angeies Times in 2013. In his Senate testimony. Stumpf stressed that the 5,300 who were terminated made up only 1% of die retail banking workforce in a given year. In any given year. 1.0% out of 160.0111] employees \"didn't get it right. But I have to say. the vast majority did do it right . . . every day.\"'w \"The 1% that did it wrong, who we fired, tenninated, in no way reects our culture nor reects the great work the other vast majority of the people do.\" said a Wells Fargo spokesmn.\"That's a false narrative.\"s In 2015. Wells Fargo hired thirdparty auditors from PricewaterhouseCoopers to determine how many customers could have been impacted by the fraud- ulent sales practices. It was this investigation that determined, as the CFPB later reported. that approx- imately L5 million deposit accounts {2% of all deposit accuunts] could have been unauthorized, resulting in approximately 32.2 million in fees for cousumers. Likewise. 565.1101] credit cardsabout 6% of all those issuedwhad not been activated. had no activity. and were assumed to be unauthorized. These cards resulted in $400.00 in fees for consumers. All consumers were reimbursed for the Fees. 'I'wo months before the CPPB publicly announced its settlement with Wells Fargo. the bank announced the retirement of Community Bank President Tolstedt, effective january 1. 2111?. In announcing her retirement, Stumpf praised her as a 9'one of our most valuable Wells Fargo leaders. a standard bearer of our culture, a champion for our customers?\" Tolstedt. who earned $2? million in her last three years with the bank. was expected to retire with approximately $125 million in stock and options. Fallout Because of the severity of these violations, Wells Fargo is prying the largest penalty the CFPB has ever imposed. Today's action should serve notice to the entire industry that nancial incentive programs. if not monitored carefulin Garry serious risks that can have serious legal consequences. CFPB Director Richard Cordroy On September 8, 2016, the CFPE announced that it and two other regulators had agreed to a $185 million settlement with Wells Fargo over the fraudulent sales practices employed by its branch workforce over the course of several years. This was the largest penalty the CFPB, founded in 2011. had ever imposed, but was relau tively minor compared to other government settlements with banks in recent years over discriminatory mortgage lending and questionable securities practices, including tines imposed upon Wells Fargo.\" In the days following the announcement, outrage spread and congressional hearings were planned, and Wells Fargo saw its share price begin to fall. Shares dropped 13% in the month after the scandal went pub- lic, and Wells Fargo lost its place as the country's most valuable bank by market capitalization?I Warren Buffet: repeated his commitment to the company, but stated \"Wells Fargo . . . designed a system that produced bad behavior . . . The big mistake was they didn't do some- thing about it?\" The day of the announcement, Wells Fargo stated that"we regret and take responsibility for any instances whore customers may have received a product that they did not request?\" It announced that it would be over- hauling its performance-incentive program and retaining product sales goals starting January 1. After considerable uproar from the media. the bank changed course and announced on September 2.9 that sales quotas would be eliminated as of October 1." CED Iohn Stumpf initially rejected calls to resign, stating that "the best thing I could do right nonr is lead this company. and lead this company forwardm His sub- sequent testimony in front of the US. Senate Banking Committee and House Financial Services Committee created a furor among lawmakers. including Senator Elizabeth Warren who stated \"Your definition of accountability is to push blame to low-level employees it's gutless leadership?\" (in September 29, independent members of Wells Fargo's Board of Directors announced that Stumpf would be forfeiting his unvested equityworth approximately $41 millionand would not receive a bonus in 2016. Two weeks later. on October 12, Stumpf announced his resignation from the bank effective immediately, stat- ing: We I have been deeply committed and focused on managing the Company through this period. I have decided it is best for the Company that I step aside?\" Former CFO Tim Sloan was named CEO effective immediately.'lbe company also split the role ofCEO and chairman. effective December 1.\" Community Banking President Tolstedt. who had planned to retire at the end of the year, but the company shortly after the scandal broke. She received none of the planned severance or 2016 bonus and also forlieited unvested equity. Wells Fargo began an internal investigation into the rumors of retaliation against whistle-blowers, announc- ing in Ianuary 201'? that it had found evidence that some employees may have been terminated for reporting quese tionable sales behavior to the ethics hotline.\" Wells Fargo also went to work to rebuild its image, running commercials. taking out full-page advertise- ments in most major newspapers, and setting up a special commitment website stating ways in which the company was working to "make things right" and "build a better Wells Fargo? including changing leadership and introducing an employee performance plan based on customer service.\" It remained to be seen what the impact of the scan dal would be on customer retention and growth. An October 2015 survey by consulting group :34: found that 30% of Wells Fargo's retail customers were exploring banking alternatives and projected that the bank would lose 399 billion in deposits over the next 12 to 13 months. Similarly, the number of consumers interested in doing business with Wells Fargo had plummeted.\"1 Moving Forward\" As Tim Sloan addressed his employees in October 2016, he aclotowledgod some of the underlying problems that had led to the scandal: product and sales goals that resulted in questionable behavior, a failure of manage- ment to respond adequately to unethical practices, warn- ing signs that could have been heeded sooner. \"It's also important to note there are no quick xes to our chal- lenges," he said. \"My pledge to you is that we will keep these lessons. and others we discover. part of our ongo ing conversation. so we may learn from our mistakes.\" Case 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