Accountability Wells Fargo

Unintended Consequences

Dave Kinnear 1-On Leadership


More Pain:

Finally. But who’s going to jail? According to the 2/2/18 article in the Los Angeles Times, the Federal Reserved ordered Wells Fargo & Co. to “cap its growth and improve its corporate governance.” This is supposed to be punishment for “widespread consumer abuses and other compliance breakdowns.” But who’s going to jail? And who, really, went to jail for the last big financial meltdown in 2008? Did anyone pay the consequences? Was anyone held accountable?

As far as I can see, it’s not “too big to fail,” it’s “too big to jail.” Yes, I know. Some folks lost their jobs. Even a few executives lost their jobs. But mostly folks who did what they were told to do lost their jobs and the “big guys” paid back a few million dollars of the many millions they took home over the years.


The leadership at Wells Fargo clearly did not live up to the values they claimed to hold. They did not hire to values. There were no consequences for abusing customers in the pursuit of KPIs and personal bonuses. From what I am able to learn, the employees were (largely) treated poorly if they did not perform. Surprise! They treated customers poorly in return and/or cheated in order to make their bosses happy.

The Top:

Setting the tone for an organization starts at the top. And by that I mean the Board of Directors and the Executive Team.

“We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again,” said Janet Yellen, whose term as chairwoman ends Saturday [2/3/2018].

2/2/2018 LA Times

The Fed also ordered the bank to submit a plan for improving board oversight and risk management. That’s fine. But where was the Board of Directors in the first place? What are the consequences for this failure in leadership?

Lessons Learned:

I worry about the lessons learned here. It seems to me that in general, the leadership at Wells Fargo is going to come out of this with their lives pretty much intact and largely unchanged. That doesn’t sit right with many of the leaders I work with.

“In letters sent to Wells Fargo board members, Michael Gibson, the Fed’s director of supervision and regulation, said those problems show the bank’s board failed to properly oversee the bank.”

James Rufus Koren, LA Times

So what are the consequences for that lack of oversight? A little discomfort? With all the money being made by the “captains of industry,” would they conclude that the discomfort is worth it in the long run?


The system we, as a society, have set up is complicit in most of the abuses we see from corporations. It is often observed that what gets measured gets done. So we should be very careful about what we set up for measurements. Right now, in our system, we insist on maximizing shareholder value. My opinion is we need to shift that to maximizing stakeholder value: employees, customers, vendors, creditors and community. Balancing the needs of all the stakeholders will force companies to think ahead about how actions will affect each stakeholder. That can only be a good thing.

I hold out hope that we can change things. Many states now have B-Corp entities which relieves some of the pressure on returns to shareholders and allows focus on giving back to the community — while still being a for-profit organization.


I’m disappointed that such an egregious abuse of public trust has not been more severely punished. During the previous financial crisis, larger banks were forced to take on bad debt of smaller banks to make sure consumers were protected. Why isn’t the reverse possible? Why can’t we methodically and carefully break up this behemoth and revoke its charter?

I do not believe big is inherently bad. I do believe that big is much more difficult to control in terms of culture. A CEO has only one job, and that’s to actively manage the corporate culture. If the organization is too big for the CEO to perform that job, then the corporation needs to divest and/or cap its growth.