Rodriguez, David

April 20, 2017

Wells Fargo

The Scandal

Wells Fargo had in place a sales quota that everyone must meet. To meet the

ever-growing expectations set by corporate sometimes people had to cheat. The way

this worked was that employees would save personal information from new actually

clients or even old clients that came in. They would save information such as social

security numbers to open fake accounts. Some employees would even do this to family

members. This account would count as a “sale” which would contribute to bonuses and

money for Wells Fargo as I will explain. Now they were supposed to close the account

soon after but this did not happen all the time. These “ghost accounts,” that the original

people had no idea were made, sometimes gathered fees and fines. These fees and

fines would be attributed to the original customer who had no idea that there was an

extra account in their name and would in turn hurt their financial credit scores as well as

generate free money for the bank. This scandal is pretty big, an internal analysis

revealed that up to 1.5 million accounts may have been made under false intent.1

The People Involved

Over the last few years Wells Fargo states that it had fired 5,300 employees who

contributed to this practice of making false accounts. Unfortunately, as seen from the

1
http://money.cnn.com/2016/09/08/investing/wells-fargo-created-phony-accounts-bank-fees/

1
Rodriguez, David

April 20, 2017

large numbers above this did not do much to deter what was actually going on in the

business. People’s own self-interest got in the way of what was ethically and morally

sound. They had to keep up with the status quo asked of them and found no real way to

abide by them. Employees began doing the only thing they could which was to cheat

the system. It was for the sake of their own livelihood that people chose to do this. The

way I would relate most employees to the play An Enemy of the People is to Mrs.

Stockman, who first and foremost considers her family first. Employees were only doing

so that they held their jobs and not to get reprimanded. It’s a noble cause to look after

one’s own self-interest and not be the one who is unemployed, right? Those other

people can afford to have extra accounts. Through a clause in their own contract they

were able to get out of fraud lawsuits as well.2 To protect themselves from liability once

again. The upper management was just trying to hedge the risk and maintain normalcy.

This can be connected to the way that Peter Stockman behaves and his interest in the

play. Maintaining course is the safer choice or option and as far as upper management

was concerned with the clause in the contract in place it wasn’t actually costing them a

lot or affecting them. Similar to the belief that small micro-organisms unseen in the

water wouldn’t really affect the people.

Motivations

2
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-wells-arbitration-20160926-snap-story.html

2
Rodriguez, David

April 20, 2017

The self-interest of ground level employees is what kept perpetuating this

behavior. The employee’s own livelihood was at stake, the way the make money and

live life and are able to afford food, housing and basic necessities could be at risk if they

did not make the ever relentlessly increasing goals. People will think of themselves and

their family obligations first. Overlooking the basic rights of others. This seems similar to

bounded awareness almost. They realize that there may be consequences for others

but it is overlooked by the figures of making sales and bonuses. That other negative

information doesn’t even come up in though any longer. This in turn makes managers

turn a blind eye as well. Motivated by money and higher profit margins and probably

being awarded for sales they choose a sort of motivated blindness. With ever increasing

demand from on top the regular employees must think its common practice now and get

a confirmation bias that it must be good because they are being awarded. This is an

overvaluation of the outcomes and have come to bite the company back .

Theories

This plays into Kantian deontological theory. Where duty is the most important, it

is based not on the consequences or outcomes but more on the reason of why this

option was chosen. So this means it is good because the reason behind it was to

protect one’s own family, right? Well the second part of the rule is that you must not use

people as a means, which instantly breaks this rule. People were used and left with

issues that can potentially affect them for a long time afterwards.

3
Rodriguez, David

April 20, 2017

Utilitarianism can also be applied to this. For example, how many people were

actually harmed with this practice? The figure is that there were over 1.5 million ghost

accounts made but there weren’t that many people affected. More than likely the same

information was used to open multiple accounts. I would gather that more than 5,300

people were affected by this practice, the number of people who were laid off over the

years while management knew of the practice. There is information dating as far back

as 2010 that this practice was ongoing so the numbers might be higher. In either case

the number of people negatively affected are greater than those who stand to gain . The

people who stand to gain the most are higher up and receive bonuses from the fees

accumulated on the ghost accounts and through.

Virtue ethics focuses on the individual rather than the decision or action and its

outcome. Characterized by virtues being upheld on a linear spectrum with two

extremes. Finding that too much or too little of anything can be considered wrong. Here

a person must decide what virtue they want to employ and will it work? Is this the

person they want this to be known for? The example I like most is that of Batman killing

the joker, under utilitarianism he should because he would save the most lives, under

deontology he shouldn’t because it’s bad to kill someone. In virtue ethics one decides

for themselves, does Batman want to be known as the person who kills his enemies, his

answer is no.

4
Rodriguez, David

April 20, 2017

Currently

Wells Fargo currently is paying out $185 million in fines and up to $5 million to

those who claim they were affected by this terrible practice. The most recent news from

the San Francisco Business Times is that there is an upcoming important vote at the

shareholders meeting. At this meeting they expect a lot of board members to be

replaced including the heads of positions such as bank’s risk, corporate responsibility,

human resources, and audit committees.3 They claim that the reason for this scandal

stems from a lack of oversight and that it needs to come from the top . It makes it clear

that the upper level management is out of touch with what the ground level employees

are experiencing. So it’s not so much a lack of oversight as much as a lack of real

understanding of what is going on.

3
http://www.bizjournals.com/sanfrancisco/news/2017/04/17/wells-fargo-board-vote-wfc.html

5
Rodriguez, David

April 20, 2017

Works Cited

Hiltzik, Michael. "How Wells Fargo Exploited a Binding Arbitration Clause to Deflect

Customers' Fraud Allegations." Los Angeles Times. Los Angeles Times, 26 Sept.

2016. Web. 20 Apr. 2017.

Matt Egan. "5,300 Wells Fargo Employees Fired over 2 Million Phony Accounts."

CNNMoney. Cable News Network, 9 Sept. 2016. Web. 20 Apr. 2017.

Mcdermid, Riley. "Wells Fargo's Board Faces Shake-up as Important Vote

Approaches." Bizjournals.com. San Francisco Business Times, 17 Apr. 2017.

Web. 20 Apr. 2017.