Wells Fargo has undertaken a number of other measures in an attempt to right the wrongs of its fake-accounts scandal. Stumpf and Tolstedt both stepped down toward the end of 2016, and more than 5,000 employees related to the fake accounts have been laid off. Recently, the bank announced that it would pay $110 million to settle a class-action lawsuit related to the scandal. The bank has instituted some internal changes too: It has created an Office of Ethics, Oversight, and Integrity to handle complaints from employees and to monitor sales practices. It has also eliminated sales goals.
All of these seem like moves in the right direction, but, in addition to the fake-account scandal, Wells Fargo may still have deeper problems that will be harder to solve. A recent paper published by the National Bureau of Economic Research found that Wells Fargo was one of the firms most likely to punish female financial advisors much more harshly for misconduct than their male peers. A spokesperson for the bank questioned the finding, saying, “We believe there are substantial issues with the authors’ methodology and the variables that underpin the study, and that its findings and conclusions are grossly distorted. We also note that the study has not been peer reviewed.”
Additionally, a recently released report from the OCC that covers the years 2009 through 2012 resulted in a downgrade in the bank’s Community Reinvestment Act rating, which determines whether or not banks are successfully serving their communities, particularly low-income households. The OCC originally ranked the bank as “outstanding” when it came to the primary lending test (which determines whether or not it is meeting the credit needs of the community), but then reduced the bank’s rating to “needs improvement” on account of several lawsuits and settlements, which included some allegations of discriminatory lending practices related to pregnant women and minorities.
Responding to the report, a spokesperson for the bank wrote, “We take the issues cited by the OCC—some of which involved industry-wide matters—very seriously and have gone above and beyond to solve them. There are no new findings or instances of [as the report states] ‘discriminatory and illegal credit practices’ that we have not previously disclosed, and we have been transparent about them with extensive public disclosure and discussion.” Since the report was issued, the bank has announced that it will provide $60 billion in loans in hopes of increasing the number of black homeowners by 250,000 over the next decade.
While these problems certainly aren’t unique to Wells Fargo, they may point to just how big of a challenge the bank may have on its hands when it comes to reframing culture and bank priorities in the future. Susan Ochs, a senior fellow at the left-leaning New America Foundation, argues that while replacing the CEO and the head of the community-banking division are important to reframing the bank’s culture, there’s much more that will need to be done. “Tone from the top is incredibly important, but it is only the first step,” she says. “Wells Fargo had this allegedly great culture, and this very articulate values statement and mission statement, but unless you are making sure that stuff trickles throughout the organization, it's not doing you any good.”
Ochs points out that it can be difficult to track improvements in company culture, especially from the outside looking in. To a certain extent, that means that going forward, customers will have to trust Wells Fargo to be transparent about not just its own progress, but any of its shortcomings, too.