Wells Fargo CEO Commits to Fixing Fake Account Scandal
It remains one of the most embarrassing and customer-enraging PR crises in recent memory. The Wells Fargo fraudulent account scandal, in which thousands of employees were complicit in creating millions of fake accounts using real customers’ information, not only hurt the company’s bottom line but destroyed the trust many had in one of the largest banks in the nation.
More than 5,000 employees were fired, and several executives were also shown the door, but the crisis continued, each headline seemed worse than the last. Now, CEO Tim Sloan is speaking out. Sloan told the Associated Press that his company would need several more months to “resolve customer damage” created by the horrendous sales practices. Some of the damage that’s been reported or suspected: customers having trouble getting loans because the fake accounts messed up their credit. Sloan said that work will continue, and he repeated his mantra that “rebuilding customer trust” is his top priority. That’s going to be a tough hill to climb at this point. As long as the bank is in the headlines for this scandal, Sloan is likely fighting an incoming tide. For every wave of negative PR he stops, there’s another hitting the beach. As Sloan works to rebuild consumer trust, he’s also dealing with the sharp decline in new accounts opened at Wells Fargo banks. When people think about opening a new account, they’re not choosing Wells Fargo as they once were. That said, Sloan has said, repeatedly, that this decline has already hit rock bottom, and the company can expect growth from here. The numbers, depending on who you ask, don’t yet match that optimism, but they’re not plummeting either, so there could be more light than there is tunnel at this point.
But there’s still another boot that could drop on this whole mess. Sloan admitted his company has not yet determined the “full scope” of the consequences for customers, who could be dealing with negative marks on credit … including issues that might keep consumers from qualifying for a home loan. If this scenario is proven, you can bet there will be headlines … and that could send those “bottomed out” sales numbers down even further. Sloan, typically, is hoping for the best, while telling folks it will be a while before they have any definitive answers on this most important question: “I will describe it as more complicated than anyone could have imagined, but that's not an excuse. It's going to take a few more months to work through. But I assure you we will remediate all those customers…” The form that remediation will take can’t be known until the extent of the damage is quantified. Until then, Sloan and Wells Fargo just hopes to be able to report some good news in the near future. William Doonan is a tax law and legal expert in New York.