Friends Don’t Let Friends Bank with Wells Fargo
Would you like to win the Powerball Jackpot? I think most of us dream of it.
Do you want to do your banking at a financial institution which provides its top executives with retirement packages which are as large as Powerball Jackpots? Probably not because it means you, the customer, is paying for their Jackpot.
This is what is happening right now at Wells Fargo. Over 5,300 employees were terminated because they defrauded millions of their customers. The crux of the problem was that the employees, not just the 5,300 who were terminated, were given unrealistic sales quotas in order to increase the number of customer relationships and drive up the stock price of Wells Fargo. Employees who did not reach their quotas were berated in weekly sales calls. In order to make the quota, the employees opened unauthorized accounts and credit cards using false emails. They did this to unsuspecting customers often preying on the elderly and foreign speaking people. The customers will be dealing with credit score issues for years with no idea of the real cost to them. The questionable sales tactics were disturbing and employees who tried to report it, were fired.
So who is really responsible? The scapegoats were the employees who were fired but truly the people responsible were the Top Executives pushing to increase the stock value and put money in their own pockets. Their behavior is reprehensible. The executive who oversaw the unit that defrauded all those customers, Carrie Tolstedt, retired last year with a Powerball Jackpot sized retirement package of $124.6 million, much of that in stock inflated by the practices above. Wells Fargo’s CEO, John Stumpf, is under fire in Congress and they are grilling him. In spite of a $41 million “clawback” from his unvested stock, if he were to retire today, he would still walk away with a Powerball Jackpot sized retirement package of $134.1 million, $109.8 million of that in common shares inflated by the practices above.
The Consumer Financial Protection Bureau has fined Wells Fargo $185 million, an exceptionally small fine considering the profits of the organization and compared to the retirement packages of just two of their executives.
Why would anyone bank with Wells Fargo? One of the ex-employees has started a National Close Your Wells Fargo Account Day on Facebook. A lot of the comments are to open an account at a Credit Union and I concur. Credit Unions are not-for-profit financial cooperatives without investors so you don’t have to worry about someone trying to increase stock prices. They are financial institutions but not a bank. They are membership organizations and when you open an account, you become an owner. Since you are an owner, your interests are their interests.
Credit unions are a great option and an alternative to using a bank. They are more accessible than ever. Many offer Co-op Shared Branching with over 6,500 branches and AllPoint with over 58,000 no-surcharge ATMs. It used to be that you had to work for a specific company or union to open an account at a credit union but credit union membership is much more open now. You can find a credit union for you right here: http://www.asmarterchoice.org/find-a-credit-union
Cindy Rein-Zima is the President/CEO of Hamilton Horizons FCU