Bankers’ Hours column: Wells Fargo sales targets were a formula for disaster |

Bankers’ Hours column: Wells Fargo sales targets were a formula for disaster

Pat Dalrymple

The other day I had a question from a reader: In light of all of the bad publicity in recent years about banks, when Wells Fargo engaged in its high-pressure sales scam, what were the bank leaders thinking?

Good question, simple answer:

They weren’t.

By now the sordid story is familiar to just about everybody on the planet, except the residents of Antarctica. How a high-pressure sales culture mandated that front-line employees sell a plethora of banking services, including credit cards, overdraft protection accounts, home equity loans and maybe even the branch office furniture, for all we know.

The grunts in the trenches were, in some instances, summoned to several meetings a day to see if quotas were met. Finally, the stress got to some people, and they blew the whistle, whereupon, as they always do, the feds stepped in.

The climax of this drama came when the executive in charge of this particular consumer products division retired after years at the bank and walked away with some $125 million in her pocket.

But wait, there’s more: Chairman and CEO John Stumpf, the suit who runs the company, did exactly the worst thing he could have done:

He blamed the whole mess on his employees after he fired 5,300 of the nefarious worker bees who were doing pretty much as they’d been told.

All of this has been told by better reporters than this one, so here’s some depth on the answer to the question:

Cross-selling has been a banking mantra for decades. There’s certainly nothing wrong with the idea. Every business that markets to the public pushes every variety of widget on the shelves. If you have a checking account at the Last National Bank of East Paradise, getting a mortgage to buy a home seems to make sense, for both you and the bank.

But Wells injected some motivational steroids into the process. It gave employees bonuses if they met the hyped up goals, and often fired them if they didn’t. This was a formula for disaster. It’s like the sophomore in chemistry class who learns that, if you mix two different compounds together, you get an explosion. So, he goes home, does just that, and blows the roof off the house.

The kid is probably 15 years old, but the bankers should have had a bit more sense. People perform in compliance with the way they’re compensated. If you say to someone,”Open a whole bunch of accounts and you’ll get a few hundred extra in your next paycheck, or don’t do it and you’re probably out of a job,” what do you think will happen? In fact, what would any of us do, given those options?

There’s been a curious tendency in national life in the first 15 years of this century to forgo the use of common sense, and banking is no exception. After the Great Recession hit us, you didn’t have to be a Wharton graduate to know that making mortgage loans to people who obviously couldn’t repay them was a recipe for disaster, or that waving a juicy carrot and very big stick at your workforce is likely to get you a front row seat at a congressional hearing.

We’ve noted in this space before that bankers have overtaken lawyers as the least trusted, most disliked, profession. (Yep. The results of an actual poll.)

Gee, I wonder why?

Pat Dalrymple is a western Colorado native and has spent almost 50 years in mortgage lending and banking in the Roaring Fork Valley. He’ll be happy to answer your questions or hear your comments. His e-mail is

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