Unforgiven: Wells Fargo

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S1: Ma’am, me and Wells Fargo go all the way back to my high school graduation to works for The Washington Post, she’s global opinions editor.

S2: They’re working on stories from all over the world. Sixteen years ago, though, she was a newly minted high school graduate from a suburb of Dallas, ready to commemorate her entry into adulthood with a very grown up ritual.

S1: My mom gave me a purse and a check with which I could go and open my first bank account at the Wells Fargo and Tom Thumb grocery store in DeSoto, Texas. And so I remember that very well. And I remember feeling like, wow, I like a real grown up. Now I can put my, you know, coins and dollar bills from the jar into a real brick and mortar bank account.


S2: Wells Fargo wasn’t a bad choice for a first bank. Her parents had banked with Wells Fargo for years as a kid. Going to the bank with her mom was a little ritual.

S1: All the bankers knew my mom because we would always go there after grocery store shopping or whatever would be part of her errands. You know, you have those memories of going to the bank counter and they’ve got those little lollipops and stuff and they know your name.

S2: Getting her own checking account made Karen feel like an adult.

S1: It was kind of cool to feel like, yeah, hi. Now you’re going to get to know me. I’m Karen, you know.


S3: Wells Fargo has always wanted to be the sort of bank that you feel good about. It’s a main street bank, meaning that by and large it makes its money by selling services to individuals and small businesses, checking accounts, savings accounts, mortgages, safety deposit boxes, all the stuff your grandparents thought about when they thought about a bank. Now, it’s possible your grandparents actually did their banking at Wells Fargo, especially if they’re from California. From its beginnings as a Cross Country Express service. In 1852, the company evolved into a regional powerhouse and from there to one of the biggest retail banks in the world, Wells Fargo has branches and ATMs in 36 states, which makes it a convenient choice.


S1: If, like Karen Attia, you tend to move around a lot in many of the cities I would end up moving to, they were just branches all over the place like brick and mortar stores. So I felt like in many ways Wells Fargo was just kind of everywhere in my head. I was like, oh, well, you know, this is easier to do business with Wells Fargo. But then it started getting a little harder once I started seeing the news of all the scandals.

S4: Oh, yes, all the scandals, it’s been sort of a bad decade for Wells Fargo in 2013, the Los Angeles Times broke a blockbuster story about how I quote Pressure-Cooker Internal sales culture centered on meeting unrealistic quotas have led Wells Fargo employees to sign what turned out to be millions of customers up for accounts and credit cards they didn’t want, didn’t need and often didn’t even know. About fifty three hundred Wells Fargo employees were fired for creating those fake accounts. CEO John Stumpf pleaded ignorance to the whole scheme. The Senate Banking Committee called stumped onto the carpet. Here’s committee member Elizabeth Warren.


S5: Here’s what really gets me about this, Mr. Stump, if one of your tellers took a handful of 20 dollar bills out of the cash drawer, they’d probably be looking at criminal charges for theft. They could end up in prison. But you squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket. And when it all blew up, you kept your job. You kept your multimillion dollar bonuses, and you went on television to blame thousands of twelve dollar an hour employees who were just trying to meet cross-sell quotas that made you rich. This is about accountability. You should resign. You should give back the money that you took.


S2: Stumpf did resign later that year, and he was later banned from the banking industry for life. And Wells Fargo itself also face consequences. It was fined one hundred and eighty five dollars million and paid 480 million dollars to settle a shareholder lawsuit. That wasn’t even the only scandal Wells Fargo had to contend with in the past few years, the cities of Sacramento, Philadelphia, Miami and Oakland have sued the bank for allegedly giving unfavorable mortgage terms to black and Latino homebuyers. And every time the Wells Fargo hit the headlines, Karen Attia looked at her debit card and wondered why exactly she hadn’t yet moved her money elsewhere. The breaking point for Karen came earlier this year when current CEO Charles Sharf told employees that the bank had failed to diversify its executive core because they’re just plain weren’t enough qualified black people to hire.


S1: The exact quote was, the unfortunate reality is that there is a very limited pool of black talent to recruit from. But for me, with everything that’s going on, it was the last straw in a series of straws over the last years.


S2: In September, Karen wrote a column for the Washington Post headlined I’m Done with Wells Fargo. Afterward, she heard from readers recounting their own negative experiences with Wells Fargo, people who had also had enough and were planning to cut ties with the bank. Karen says this feedback made her wonder how this iconic American company came to so thoroughly squander its brand equity and make so many people feel betrayed.

S1: I mean, now that I think about it, the brand of lollipops that they always had were like dumb dumbs, those tiny little like balloons. And so maybe that’s just like a metaphor for how they were taking everybody for dumdum.


S6: The history of American business is littered with companies whose reputations fell apart overnight, but it’s rare for a company with such an August history to suffer so quick and thorough a fall for one hundred and sixty years. Wells Fargo was a feel good brand name today. For many people, that name stands for Scandal. How did things go so wrong so quickly as Wells Fargo gone from Stagecoach Driver to bandit?

S7: This is thrilling tales of modern capitalism. I’m Justin Peters, in for Seth Stevenson. On today’s episode, Unforgiven, Wells Fargo.

S8: Before Wells Fargo was America’s most hated bank, it was a stagecoach, a whole fleet of them actually delivering grapefruit from Tampa and salmon from Seattle and raisons from Fresno and myriad other things to customers hither and yon in the 19th and early 20th centuries.

S6: It was a cross country express service toting mail parcels, passengers and valuables across the mountains, deserts and plains from New York to California and all points in between the.

S3: By the way, again, nearly 100 years after its founding, the excitement of a Wells Fargo carriages arrival in a small town was immortalized in the 1957 musical The Music Man, which was made into a hit movie in 1962.

S9: All the Wells Fargo wagon is coming down the street. I wish I wish I knew what it could be.

S3: Henry Wells was a businessman and William Fargo was a champion horse messenger.

S2: In 1850, there were two of the founders of an express mail company called the American Express Company. American Express has its own storied history, you might have one of its credit cards in the wallet right now, but in the early days, Wells and Fargo were convinced that Amex was missing a trick.


S8: The two men saw fortune seekers heading west in the gold rush and they knew those prospectors would need transportation delivery and security services. But their partners in the American Express company refused to operate in California. So Wells and Fargo struck out on their own to found a banking and express service that would serve the Wild West, its employees road pell-mell across the country, delivering cargo, safeguarding valuables and serving customers in areas where reasonable people wouldn’t go.

S10: The West was a lawless place in those days, and a man who worked for Wells Fargo had to be long on courage to hold down his job.

S11: That’s from the 1957 pilot episode of The Tales of Wells Fargo TV series, and it effectively summarizes Wells Fargo’s found and business model.


S2: Take the gold rush prospectors, for instance. If they did strike gold, they had to get it out of the boomtowns and into a vault somewhere without being robbed or murdered along the way. Enter Wells and Fargo and their growing network of armed guards, locked safes and banking offices across the nation. If you had gold, they’d buy it from you or they’d stored in vaults across the West or they’d transported back east for you. Critically, they’d insure the property you entrusted to them in case of robbery or other disaster. Now, those risks weren’t just theoretical ones. The Western stagecoach lines were stalked by desperadoes with colorful names such as Rattlesnake Dick or fighting Tom Bell.


S12: The most notorious one of them all was an old man with a big grudge against Wells Fargo, I’m the poet laureate about lowering the California box robbery first thing my first and the day express. But my name is Charlie Bolden. Blackbird on the Dust in my eye. Wall Street, lack of soul and character talk.

S3: That’s the musician Norman Blake singing about the outlaw Charles. Both Dark and now legend has it that men connected with Wells Fargo had bullied Bolton out of a gold claim he’d staked at one point years later, wearing a sack over his head and calling himself black.

S11: Bart Baldwin made it his business to revenge himself against the company by robbing their stagecoaches over and over and over again, 28 separate times. He generally wouldn’t touch anything belonging to the passengers, and he’d sometimes leave poems behind at the scenes of his robberies. Here’s one he left in 1877.

S10: I’ve labored long and hard for bread, for honor and for riches, but on my corns too long, you tread fine haired sons of bitches.

S11: For Wells Fargo, bandits like Black Bart, where cost of doing business, they instructed their drivers not to resist stagecoach robbers, but they also employed a staff of detectives to hunt them down and bring those robbers to justice.

S6: Wells Fargo Cockblock Barton, 1883. And he did a stretch in San Quentin. But time he got out the world that changed. The gold rush was long since over the Wild West was quickly being tamed and the stagecoach was losing its business to the growing number of transcontinental railroad lines. In 1995, the company spun off what would soon become the most important part of his business. Its banking division. Wells Fargo had offered banking services to its customers since the early days of its business, but compared to its famous express service, Wells Fargo, the bank was pretty small. For decades, it stayed in northern California, selling checking accounts and issuing mortgages and helping communities grow. But it had something unique among retail banks. Its brand summed up by the image of the stagecoach and galloping horses. As America grew nostalgic for the Frontier West, the name Wells Fargo became a familiar presence in films, comic books, television, musical theater. Unlike Chase Manhattan or Bank of America, the name Wells Fargo suggested romance and excitement as well as reliability. Which would prove to be a valuable advantage when it once again came time to take Wells Fargo nationwide, as business writer Bethany McLean explains, when you’re trusting your financial well-being to your bank, that’s your life.


S13: It’s your it’s your safety. It’s your ability to retire. It’s your ability to pay for your kid’s education. And so the idea that it’s just a star, I think is actually fundamentally wrong.

S6: More on that after the break.

S2: Back in the old days, you know, before the Reagan era, banks were smaller and that wasn’t an accident either. Federal regulations kept him that way. In the 80s and 90s, though, those regulations were repealed or neutered and the banks began to grow.

S14: The idea was that banks were businesses and they had to be able to compete on a global scale. In a way, it’s the same refrain that we heard after the financial crisis that other countries banks could do all these things and could compete globally. And if we in America were keeping our banks artificially hamstrung, then they weren’t going to be able to compete with these giant global banks.

S2: That’s Bethany McLean. She’s a reporter who’s covered business and finance for a quarter century. She’s the co-author of The Smartest Guys in the Room about the rise and fall of Enron.

S14: There’s also an argument that as banks have become bigger and bigger, they’ve lost their responsibility to the communities in which they operate.

S2: Wells Fargo’s journey from a Main Street bank to a We’re on every Main Street bank began in the late 90s when it was targeted for a merger by a Minnesota based bank called the Norwest Corporation and its charismatic CEO, Dick Kovacevich. Kovacevich came to Norwest from Citicorp and the two banks could hardly have been more different. Citicorp sits at the heart of American corporate finance, and Norwest sold savings accounts to Lutherans and St. Cloud. But Kovacevich soon took control of a corporate culture that had until then been defined by Minnesota. Nice. When Bethany McLean profiled Kovacevich for Fortune in 1997, she was charmed by his charisma and by his ideas on how to transform the business of banking.


S14: When I listen to Dick Vosovic talk about how a bank was just a consumer brand in your checking account was just a product. And instead of banking being something sacrosanct, where perhaps the banker owed a different kind of responsibility to the consumer, they were just selling you products.

S2: At the helm of Norwest Kovacevich brought a bushel of innovative consumer marketing practices to bear on the stodgy business of banking. His signature idea was a tactic called cross selling, where you take a customer who comes in for one reason and try to sell that person a whole suite of separate products. Is anyone ever asked you would you like fries with that? That’s cross showing more or less under Kovacevich, if you came into a Norwest branch to open a checking account. The question became, would you like a savings account with that or a credit card? How about a home loan? Trier money market accounts. They’re very good today.

S14: And it never occurred to me at the time that there was anything not wonderful about this, that there was anything slightly dark about this. I don’t think it occurred to any of us at that point. I don’t think we realized that the businesses that are selling us things aren’t always doing so in an ethical manner or aren’t always operating in our interest.

S15: But it was in the bank’s interest, at least at the time. Cross-selling helped boost Norwest profits, putting it in position to gobble up other banks. In 1998, Northwest merged with Wells Fargo in a deal that made the new conjoint entity the sixth largest bank in the United States. Norwest existing branches took down their Norwest signs and adopted Wells Fargo’s branding, which was, after all, one of that bank’s biggest assets.


S16: Wells Fargo had this old West pioneer spirit behind its branding, right, which also made it seem very approachable and cool and, you know, linked to America’s history. It was a really good brand and kind of better than I mean, what’s the Norwest right there?

S15: As Wells Fargo had this iconic stagecoach as CEO of this new conglomerate, Kovatchev, it set out to take cross-selling to new heights to motivate the troops. He deployed a little slogan going for great with an eight, you know, as in six, seven, eight.

S16: And what he meant was that if you could get a customer to buy eight products from the bank, they would be more likely to be loyal to you. They’d be more likely to stay put at the bank. And one of a bank’s big costs, like one of a lot of businesses, big cost is customer acquisition, trying to get new customers to come and do business with you. And so if you figured out a way to retain your customers and keep them, then you’ve kind of created a money machine in a way.

S15: Now, lots of American banks built money machines over the past 25 years, but going for great was a different kind of money machine.

S2: It must have seen sort of penny ante to Wells Fargo’s peers, I mean, here all these other big banks growing fat and happy on securitized mortgage debt and other complex financial instruments. And here’s Wells Fargo building its business one up sell at a time. But when the subprime mortgage bubble collapsed in 2007, Wells Fargo small bore, consumer focused strategy started looking pretty good.

S14: So Wells Fargo has a really different history than, say, a Goldman Sachs, because Wells Fargo’s positioning was we didn’t do that stuff that led to the financial crisis. We were safer than other banks in the mortgages that we need. And we didn’t have this big securities business, this big Wall Street business that was packaging up these mortgages.


S2: Of course, it was sort of a self-serving story. Wells Fargo issued plenty of subprime mortgages, but it wasn’t playing games with the global economy and thus it escaped from the subprime crisis relatively unscathed. It kept expanding. It kept cross selling. Dick Kovacevich passed the baton to a new CEO, John Stumpf, a soft spoken Minnesota native. Wells Fargo became the bank there, was known for doing things right.

S14: There was a glowing piece in Forbes about John Stamp’s Wells Fargo, which basically said it was the most admired, wonderful bank in the country. And it talked about John Stamp’s homespun mottos like, you know, before we care about how much we want, you know, we want to know about how much you care stuff.

S2: Had another motto, too. In the company’s 2010 annual report, he suggested the Wells Fargo revise its internal sales motto to Let’s Go Again for 10.

S9: Wells Fargo was being hit with one hundred and ninety million dollar fine for creating fake customer accounts that regulators say were illegal. Prosecutors allege the bank pushed customers into costly financial products they didn’t need or ask for. They say employees created some two million ghost deposit in credit accounts under pressure to generate more sales.

S13: Relentless pressure, unrealistic sales targets, a culture built on selling as many products to customers as possible. Former Wells Fargo employees say that is what they faced on the job. Now the bank is struggling to rebuild trust in an industry already fighting a greedy banker reputation.

S2: Two million fake accounts. When the fake account scandal first came to light, Wells Fargo tried to play it off as the work of a few bad apples.

S14: And Wells Fargo investigated. And John Stumpf wrote in an email, how far from being upset about this? We should be really proud of ourselves because our internal investigation shows only one percent of our employees are engaging in this kind of behavior. And, of course, that one percent, it only captured one thing which for the employees who are engaging in this behavior, who are being caught.


S2: Further investigations revealed that Wells Fargo branch employees were under incredible pressure to sell more products to more customers. Senior executives threatened branch managers. Branch managers threatened their staff. They were pushed to go for great and then again for 10, as if their jobs were on the line every day. Which is why that internal report really didn’t give a full picture.

S14: It didn’t capture where the pressure to engage in this kind of behavior was coming from an audit. It really measure anything because the turnover at Wells Fargo among their bankers was 30 to 40 percent a year. So in other words, a lot of people were leaving either because they couldn’t keep up with the sales pressure or because they couldn’t deal with it.

S2: Banks would hold morning sales meetings to announce sales goals for the day. Some managers would do hourly check ins to see if individual employees were making progress toward their quotas. Now, these employees, by and large, were just normal people. They came from the communities they served and they needed the jobs they had. And so they tried their best to meet those unrealistic quotas.

S15: The tactics they used to cross sell were extreme and sometimes ridiculous, according to reporting by The New York Times, some bankers would manufacture fraud alerts on people’s accounts in order to get them to close those accounts and open new ones, sign them up for online banking to they didn’t have an email address, make one up for them. If someone came in to open a checking account, bankers would pressure those people to open additional accounts for family members for special occasions just as a backup and maybe a credit card as overdraft protection for those 14 unnecessary checking accounts to what, a 14 credit cards for some Wells Fargo workers. The pressure was too much to bear. The Times reported on one Wells Fargo banker in Wisconsin who took the chugging bottles of hand sanitizer at work to relieve her anxiety. Bethany McLean remembers interviewing a banker at a small branch in St. Helena, California.


S13: There were only about eleven thousand five hundred potential customers in the area and 11 other financial institutions, her quotas total twelve thousand daily solutions each year, including three thousand new checking accounts without fraud. The numbers just didn’t work.

S2: It’s important to recognize that these fake accounts and high pressure sales tactics didn’t even make Wells Fargo much money. Yes, some customers ended up paying fees on accounts, credit cards they didn’t need. But those bankers who were going for great weren’t trying to maximize Wells Fargo sales revenue. Not really. They were just trying to boost the number of sales.

S14: And for a while it worked, what it did was it enabled Wells Fargo to go to Wall Street, its investors, and say, look, we’re better than all these other financial firms because our customers do so much more business with us than they do with other financial firms. So it was part of Wells Fargo’s brand and it was part of the reason that Wells Fargo’s stock for a long time traded at a higher multiple, meaning it was more valuable than other financial firms because investors believed they’d figured out the secret sauce, that Wells had this miraculous way of getting customers to do more business with them.

S4: When the extent of the problem was finally revealed, it was as if a dam had burst. Customers and former employees clamored to spill their worst stories about Wells Fargo and these high pressure strategies that had turned bank branches into boiler rooms and caused so much stress for so many people.

S16: A lot of times in scandal stories, it’s really hard to get people to talk right? It’s hard to find people who are willing to share what went wrong in the Wells Fargo case. You couldn’t get people to shut up. I mean, it just came out of the woodwork because people had been so mad for so long.


S4: John Stumpf said he didn’t know anything about the extent of the fake accounts and bogus sales. He still says that even after stepping down and giving up millions of dollars in compensation, Bethany McLean says that even if that’s true, it’s no excuse if you’ve put in place a structure such that you’re insulated from this kind of knowledge and yet you’re benefiting directly from it, then I don’t care if you didn’t know that.

S14: That’s almost worse in some ways. And it gets to the heart of that self-righteous, sanctimonious culture that Wells Fargo had.

S15: If you’re a company with a brand that’s built on trust and you preside over a massive breach of trust. How do you fix things? Wells Fargo tried stump stepped down the bank, paid a lot of money in fines and a class action settlement to shareholders. And the bank says that its ended sales goals at its branches.

S2: It also issued an unusual corporate mia culpa in the form of an ad about trust and how the bank was sorry that it had squandered so much of it.

S17: We know the value of trust. We were built on it back when the country went west for gold. We were the ones who carried it back east by steam, by horse, by iron horse. Over the years, we built on that trust, we always found the way. Until we lost it. But that isn’t where the story ends. It’s where it starts again with a complete.

S2: Wells Fargo has long been obsessed with its own history. It employs internal historians and operated 12 Wells Fargo museums across the country, or at least it did up until this year when it closed 11 of them. And there’s nothing wrong with that either. The company’s history is really interesting, and it did play an important role in the story of America’s westward expansion. But history can also be a way to deflect attention from the present. After all, companies it’s been around for 170 years. Can’t be all bad, right? Bethany McLean suggests that in many ways, Wells Fargo’s preoccupation with its past helped keep it in denial about its present.


S14: One of the reasons Wells Fargo handled it so badly as they they couldn’t get over their self-righteous horror that this was happening to them and their view the rest of the world was wrong because they were Wells Fargo and they were perfect. And of course, they didn’t mean to do anything like this. And this was all an accident. And why was the press after them? It literally could not understand why people were so upset. I think that sanctimoniousness just extended throughout the executive suite into the very blood and bones of the company.

S2: We reached out to Wells Fargo to see if one of their internal historians would come on the show with us to talk about the bank’s long history. After some back and forth, the bank decided not to make him available to speak with us. We also reached out to Wells Fargo for comment more generally after some back and forth, Wells Fargo declined to comment.

S18: In January 2020, Treasury Department officials issued a report on the Wells Fargo account scandal Itaú Wells Fargo’s executive suite to shreds. The report found that the community banks business model, quote, imposed intentionally unreasonable sales goals and unreasonable pressure on its employees to meet those goals and fostered an atmosphere that perpetuated improper and illegal conduct. The office fined the former head Wells Fargo’s community banking division, 25 million dollars. John Stumpf got a seventeen point five dollars million fine and a lifetime ban from the banking industry.

S15: This all came two years after the Fed had capped the bank’s assets at just under two trillion bucks as punishment. And yet, unlike some of the low level employees who lost their jobs. Wells Fargo will be fine. Yes, the company has had a wave of layoffs this year, and like many other companies recently saw its stock plunge by more than half this winter during the onset of the covid-19 pandemic. But it’s still the fourth biggest bank in the country. It might be a retail bank rather than a major player in the global economy, but Wells Fargo is still too big to really fail. But it’s not Karen at his bank anymore. She went ahead and closed her account with Wells Fargo.


S7: She did it over the phone.

S19: And when the representative asked, can I ask you why you’re deciding to close this account? And I just said, well, I’m just tired of banking with a bank that’s constantly in the news for scandalous practices. And I don’t want to put my money in a place that actively discriminates against black people like me. So that’s why I’m moving my money. And the representative was just like, well, I’m sorry to hear that, ma’am. OK, so we’ll be having your cashier’s check out. I’m really happy I broke up with those. Fargo, we’re never, ever getting back together again.

S7: And that’s our show for today. This episode was produced by Jess Miller with help from Cleo Levin and Asha Solutia Technical Direction from Merritt. Jacob Gabriel Roth is Slate’s editorial director for audio. Alicia Montgomery is the executive producer of podcast at Slate. June Thomas is senior managing producer of the Slate Podcast Network. Next time on the show, when the like button is replaced by a click to donate.

S20: Oh, here’s a new platform, one that I haven’t been banned from. That is a way to not only disseminate ideas, but also like make money while doing it.

S7: We’re taking a break next week, so tune in Friday, December 4th for the thrilling tale of Go Fun, Seth Stevenson. I’ll be back then. For now, I’m Justin Peters. Thanks for listening.