After getting caught with his hand in the cookie jar for pushing dangerous retail banking products on unsuspecting customers, Wells Fargo CEO John Stumpf offered a belated mea culpa by forfeiting a portion of his outstanding stock awards and taking early retirement. Don’t worry about him, though, unlike the 5,000 low-wage front line workers his bank fired during the scandal he is still going home with an estimated $120-134 million security blanket to wrap himself up in.
His tenure as CEO and the extreme sales quotas would no doubt continue if not for the intense public scrutiny, a suit filed by the Los Angeles City Attorney, and the bravery of poorly paid frontline workers who came forward to expose them. After all, cross-selling is an industry-wide practice that has won praise in the business press and rewards on the stock market.
In 2012, Stumpf boasted about Wells Fargo’s cross-selling strategy and noted that other big bank CEOs clamored for his advice. No surprise, then, that in 2014, Bank of America, was fined more than $700 million by the Consumer Financial Protection Bureau for selling add-on products to credit cards. And before the Wells Fargo scandal hit the front pages, the CFPB investigated overdraft fees, which account for billions in revenue for the big banks. A recent analysis of CFPB complaints data shows that complaints against Wells Fargo are actually lower than the number filed against Citigroup or Bank of America.
While bank executives pass the buck, and regulators and lawmakers investigate these common industry practices after the fact, workers could be our most important allies in knowing in real time what the big banks are up to.
When we partnered with the Committee for Better Banks last June to interview frontline workers for our report, Banking on the Hard Sell, we heard from tellers, call center workers, customer service workers, and branch managers employed by seven banks around the country.
These workers reported being subject to ever-changing sales quotas, harassment and belittlement on the job, and threats of termination for not meeting quotas. Many reported working unpaid overtime hours or signing up friends and family members for banking products to make their sales goals. On-the-job stress and troubled consciences led to physical and mental health problems and had negative effects on their family lives.
For years now, big banks have been padding their bottom lines with fees and revenues garnered from practices that hurt customers, their own employees, and the economy at large. While fraudulent sales of customer banking products, unfair credit card practices, and aggressive overdraft policies may not crash the economy the way that banks’ aggressive sales of bad mortgages did, they have the potential to ruin individuals’ credit-worthiness and financial health.
Regulators are too often running to catch up with whatever new dangerous practice bank CEOs conjure up to please Wall Street and win themselves massive compensation packages from inattentive boards of directors.
We need investigations of all the big banks, and stronger regulations that ensure customers’ needs come before profits. And we need to support workers to do the right thing. In Europe, where bank workers have the protection of a union, they were able to blow the whistle and win regulations forbidding these practices. It’s time that U.S. workers, too, be able to exercise their right to organize without fear of retribution, and to be paid enough so that they don’t have to weigh customers’ interests against their bosses unreasonable demands or their need to put food on their own tables.
Anastasia Christman is a senior policy analyst with the National Employment Law Project and author of the report, Banking on the Hard Sell: Low Wages and Aggressive Sales Metrics Put Bank Workers and Customers at Risk.
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