For Sabra Freeney, it was oh-so-satisfying to see the CEO of Wells Fargo skewered by senators last month.
She used to be a teller at a Tucson branch of the big bank. And yes, she felt the pressure to sell, sell, sell that led to employees fraudulently opening new accounts for customers. Everyone felt it. In fact, she said she lost her job in 2011 because she couldn’t sell enough new accounts.
“Let me think of the professional way to say it,” she told me last week. “I was like, ‘Heck yeah, finally someone caught their game.’ It ruined people. You almost felt like it was do or die.”
Many former employees felt the same way, that Wells Fargo’s high-pressure sales tactics should have been exposed long ago. But they noted a couple of things wrong in the way the story of Wells Fargo’s fraudulent accounts has been told recently: This has been happening for a long time, and it wasn’t just at Wells Fargo.
The problem: Employees were required to sign up customers for new accounts. The pressure was so intense that thousands of employees opened millions of accounts in customers’ names without the customers’ knowledge.
You may have seen the video of Sen. Elizabeth Warren ripping John Stumpf, the Wells Fargo CEO, at a U.S. Senate hearing:
“Here’s what really gets me about this, Mr. Stumpf. If one of your tellers took a handful of $20 bills out of the crash drawer, they’d probably be looking at criminal charges for theft. They could end up in prison.
“But you squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket.
“And when it all blew up, you kept your job, you kept your multi-multi-million-dollar bonuses, and you went on television to blame thousands of $12-an-hour employees who were just trying to meet cross-sell quotas that made you rich.”
You can imagine why this made people like Freeney feel good. The pressure was so strong, she said, that she opened an account in her mother’s name and told her just to cancel it the next month. She needed the sale.
“The big bosses would always be walking around, not making conversation but listening to see if the tellers were selling,” Freeney said. “They wanted us to offer people who had 30 overdrafts in a month to apply for a line of credit or apply for a credit card.”
Mark McKenna and other branch managers saw the bigger picture. It wasn’t any prettier.
McKenna joined First Interstate Bank in 1994, but Wells Fargo bought it in 1996, a transition that was fraught with difficulties, so bad that Star reporter Alan Fischer wrote stories about the rough transition. Wells Fargo responded by hiring an investigator to pose as a student and interview Fischer to see if he had any biases against the company.
The change to a more sales-oriented culture was immediate, even back then, McKenna told me.
“The focus changed. It was no longer applying customer service to make true value,” he said. “Immediately, a sales culture built in.”
Note that this was back in the late 1990s, not in the last five years, though some employees said the pressure got worse more recently.
What the bank demanded was recruiting new customers and selling new customers on additional accounts. This is what’s known as “cross-selling” — having someone add, for example, a home-equity line of credit to their existing checking, savings and credit card accounts.
The expectations weren’t realistic. McKenna, who worked in a variety of south-side branches, noted that the communities were “saturated.” There weren’t additional people to sign up for accounts or additional services to sell them.
“To grow your branch, you have to have legitimate, organic growth within the community,” he said.
Lacking that, but still under tremendous pressure to sell, tellers and bankers would resort to all sorts of tricks, McKenna and other said. Some would open multiple accounts in their own names. Others would open credit cards that people didn’t ask for.
When Wells Fargo started charging people to cash checks drawn on Wells Fargo accounts, that opened a new angle, McKenna said. Laborers might come into the branch and be told there was a charge to cash the check, but not if they opened a new account.
“Before you know it, you’re walking out the door and you’re like, ‘What the hell just happened to me?,’ ” McKenna said.
That customer, he added, would often leave just a little money in the account.
“What are we going to get from him, potentially? We’re going to get overdraft fees from him,” he said.
Bear in mind, McKenna started with Wells Fargo in 1996. He left in 2006 and went to Chase, where he said the same sort of tactics were used.
“Wells Fargo was the one that got caught with its hand in the cookie jar,” he said.
In the years after McKenna left Wells Fargo, the pressure increased, former Tucson branch manager Aaron Maynard told me.
“Until 2008 or 2009, I loved it,” he said. But, he added, “This kept getting more and more ridiculous, as to what accounts people needed.”
Employees were pushed to sign customers up for between six and eight accounts each. Can you imagine having eight separate accounts?
One of the outcomes of the years of aggressive sales was that older, more experienced bankers left or were driven out. After leaving Wells Fargo in December 2010, Maynard took a lower-paying job to get out of the pressure cooker and work closer to home.
At Wells Fargo, younger people came in who knew nothing but high-pressure sales.
“That day in and day out pressure,” retired Tucson branch manager Sharon Alexander said. “I loved my job, but that pressure, I couldn’t take that anymore.”
“A lot of people retired because we just couldn’t do it anymore,” Alexander said. “We were all probably threatened with our job, probably on a monthly basis.”
Of course, the experience wasn’t uniformly bad for the employees. Freeney, for example, started at Wells Fargo when she was just 18 in 2007. It taught her resilience.
“I had to dig deep and fight and fight and fight,” she said. “Once I got to the point when I had to ask family members and friends to come in and open accounts, I was just like, ‘You know what, do what you need to do.’ I had too many morals to open, like, an account for a dead person.”
She was fired. But as McKenna pointed out, someone like Freeney wouldn’t count among the 5,300 employees the CEO reported were fired for opening fraudulent accounts in the last five years. She was just one of the many who didn’t meet the goals.
Those goals are gone now, thanks to pressure from Congress and the public. Gone, too, are $41 million in stock awards and bonuses for Stumpf. He had to forfeit them in response to the unauthorized customer accounts.
But the pressure to find some way to improve the company’s share price quarter after quarter, year after year, will always be there for the publicly traded, too-big-to-fail banks. Look out for their next tricks.
