John Stumpf is a team player.
Stumpf boasted of such many times over the years. As he rose through the banking ranks, first at Norwest, and later as head of Wells Fargo, the Minnesota native always demurred when attention landed his way.
He buttressed this claim of a team-first mentality with folksy stories about growing up one of 11 kids on a farm in the central Minnesota hamlet of Pierz. He played up his willingness to break bread with the rank-and-file employees on company retreats.
In 2014, during a groundbreaking for an office complex that would bring 5,000 employees to downtown Minneapolis, Stumpf said, “We have such great team members here.”
But whenever his team was caught cheating, Stumpf was the first to point fingers.
Wells Fargo had built its reputation by playing to Main Street rather than Wall Street. It eschewed complex financial instruments in New York or London, focusing on savings, checking, and loans for regular folks. It’s been a success, especially here: Wells Fargo is the most popular bank in Minnesota, with some $80 billion of in-state holdings.
Its growth depended on deepening its relationship with customers. This was done through “cross-selling” new accounts, a specialty at Wells Fargo. Stumpf liked to tell his employees (and investors) that “eight is great,” setting a goal for each customer to open eight different accounts, from savings, to credit cards, to mortgages, to car loans.
This may not have been good for clients, but it was very good for Stumpf, creating eight different veins to tap for fees.
More than 2 million accounts were opened without the customer’s consent or knowledge. Many clients only learned of their accounts when the scandal broke.
Stumpf initially tried to write down the bank’s damages, blaming the controversy on rotten “team members.” Some 5,300 low-level staffers had been fired.
That the banker tried to skirt responsibility by throwing smaller teammates under the bus shouldn’t have surprised anyone.
In 2010, when the company was sued in Minnesota for losing more than $400 million in charities’ money in risky schemes, Stumpf also claimed innocence and ignorance. Any mistakes had arisen from below, far below. The company paid a $30 million settlement and denied wrongdoing.
A year later, Wells was back in trouble, this time with the feds. The bank agreed to an $85 million settlement with the Federal Reserve — the largest in the agency’s history — for saddling up to 10,000 homebuyers with improper mortgages. Some were subprime loans; others were based on faked documents.
Wells Fargo’s reputation had survived the mortgage and credit crisis. Its customers hadn’t. Stumpf said the bad loans were the fault of a “relatively small group of team members.”
Blaming the little guy worked. A 2013 story in the Economist called Wells Fargo “the big winner from the financial crisis,” thanks to its “prosaic” practice of serving customers.
At the time, those customers were still in the dark. But low-paid employees knew something stunk.
A petition launched that year, eventually signed by 11,000 employees, sought to end the bank’s “obsession with sales goals.” Many signers told superiors they simply couldn’t meet the “eight is great” number, to say nothing of “Jump into January,” when the daily “sales” goal rose to 20. Others had already been fired for failing to meet the marks.
The workers organized loudly, delivering petitions to Wells Fargo “stores” in St. Paul and a company shareholders meeting in the spring of 2015. About 16 months shy of his downfall, Stumpf said Wells Fargo would “never want to put our team members in a position where they need to make incentive goals in order to make the rent payment.”
No, he’d rather fire them. Let them figure out rent on their own.
No one, including Stumpf, gave a shit while workers were being fired. It wasn’t until customers were alerted — and Congress wailed — that the bank’s heartless gluttony was revealed.
To Stephen Lerner, an organizer who worked with labor and community groups opposing Wells Fargo’s unfair practices, it’s a rare shared victory, watching unaffiliated customers and workers marching on Wall Street arm in arm, pitchfork to pitchfork.
On October 12, they ousted the king. John Stumpf, who’d survived the mortgage crisis and credit crunch, stepped down as CEO of America’s third-largest bank.
“Workers, combined with consumers, forced him out of the company, and that’s an incredibly important lesson,” Lerner says.
It’s a lesson other bankers might soon learn: “Pre-Wells Fargo, people didn’t credit them, these ‘complaining workers.’ The finance industry and the banks need to realize there’s an army of people stepping up and reporting them.”
For all his folksy stories about farm life, there’s another part of Stumpf’s past that plays directly into his present.
Back in 1976, after graduating from St. Cloud State University, Stumpf got his first job in banking — as a repo man. He showed up at people’s houses and took back their stuff when they couldn’t pay.
The same thing just happened to Stumpf, who was forced to give up $41 million in Wells Fargo stock he’d accumulated.
It’s an important lesson. These titans of finance don’t care much about losing face. They can afford a new one.
But the loss of livelihood and the repossession of their fortune? Treating them the same way they treat employees? That’s enough to turn even a banker into a team player.
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