The Critics of Wells Fargo Might Try to Be Serious

The Critics of Wells Fargo Might Try to Be Serious
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The recent criticism of Wells Fargo for its alleged ‘scamming' of customers has been painfully foolish, and almost uniformly childish. The eternally uninformed Darrell Delamaide referred to bank executives like those at Wells as "too big to jail." Delamaide was seemingly parroting the anti-finance droolings of Senator Elizabeth Warren; Warren someone who wholly derives her pirated swagger from the very financial institutions she brainlessly browbeats. Opining in the New York Times, lawyer Jordan Thomas decried a culture at Wells "so toxic that an astounding 5,300 employees have been fired for their involvement in the companywide multiyear scheme."

All three should at least try to be serious. They know not of what they speak, nor do most who've chosen to exploit the publicity surrounding Wells Fargo. No reasonable analysis of what took place at the banking giant would generate such incoherent criticism, not to mention loud suggestions of corporate scheming.  

To understand why, readers need only consider what lawmakers like Warren have criticized Wells for doing. As the New York Times (no friend of big, bad banks) explained it, Wells' misdeeds that so enraged lawmakers amounted to certain employees "setting up phony accounts to meet sales goals." What the Times has implicitly acknowledged is that a small percentage of former Wells employees set up phony accounts not to the detriment of firm clients, but to the profit-detriment of Wells Fargo itself.

This is what the great Holman Jenkins of the Wall Street Journal has been regularly pointing out amid all the hysteria surrounding the big bank: the misdeeds by former Wells Fargo employees hurt Wells Fargo, not the firm's clients. Accounts set up for the sake of opening accounts amounts to very expensive administrative costs for all institutions. Such an act is even more costly for banks given all the money spent on compliance officers who are charged with making sure new accounts and clients are reputable.

Credit cards? It's also been revealed that some Wells salespeople issued credit cards to clients without telling them. A dumb move for sure, but it's not as though they were opening charge accounts only to go on buying sprees with the money of others. Eager to build their books of business, Wells employees were plainly opening up accounts and credit cards in the hope that desired clients would use them, along with the bank's suite of financial services. These clients weren't forced to use the credit cards or Wells' services, but the errant Wells employees clearly hoped they would. To the extent that improperly opened credit card accounts enraged potential Wells' customers, the actions of a few have possibly shut the door on long-term client relationships with thousands of potentially lucrative customers. Again, Wells Fargo was harmed by the actions of a few, not those Wells was courting.

Anyone who has ever worked in sales understands what was happening at the bank. Sales jobs have the potential to pay well, but the pressure is high precisely because these jobs can be lucrative. Sorry, but a Wells' sales culture that the Times reported was defined by "intense pressure" reflects reality, as opposed to the no-pressure/high pay parallel universe imagined by Wells' emotionally stunted critics. If an individual wants to earn a lot of money in sales, and better yet, if that same individual wants to remain employed in what can be a high-paying sales job, the tradeoff will be "intense pressure." This isn't uniquely a banking thing. It's just a sales thing. To attain high pay and ongoing employment, one must produce. Those who've worked in financial services, software sales, fundraising, and any other kind of sales role that can be remunerative understand that high pressure is the tradeoff for handsome pay.  What's staggering and sad at the same time is that Wells' sales practices actually surprised reporters, and obviously horrified reliable hysterics like Delamaide.  One gets the feeling Halloween-themed haunted houses would still scare him after all these years.  

Politicians regularly talk a big game about good jobs at good wages, but their arrested emotions of the pre-teen variety make it impossible for them to understand that good wages only exist insofar as the worker produces a great deal of profit for the employer. Sales jobs can once again pay very well, but only insofar as the salesperson opens lucrative accounts with acquisitive clients.

It's been reported that over 5,300 Wells employees lost their jobs for the actions that have witless politicians, regulators and commentators up in arms. It's assumed that the dismissals were rooted in the creation of dummy accounts, but it's equally realistic to guess that a majority lost their jobs simply because they didn't measure up. Hoping to remain in the employ of Wells, some no doubt opened up accounts and credit cards with an eye on showing their managers progress. Anyone who has ever been in sales of any kind is familiar with what took place. What's important is that the actions of the errant employees once again brought harm to an embezzled Wells Fargo, not to nominal clients of the bank, or potential clients.

Critics of Wells Fargo simply need to grow up. Among adults it's well known that high pay comes with high expectations. In sales the expectations are that the salesperson will aggressively open up accounts with commission-generating customers. In that case, the mildly sentient understand that some salespeople will cross the line.

With Wells Fargo, the apparent "scandal" is that some now-departed employees responded to wise, remunerative incentives. In doing so, some didn't measure up and some doubtless were dishonest. They're now gone.  Salespeople who don't reach their targets are eventually made redundant.  End of story. Wells' critics need to relax.


John Tamny is editor of RealClearMarkets, Director of the Center for Economic Freedom at FreedomWorks, and a senior economic adviser to Toreador Research and Trading ( He's the author of Who Needs the Fed? (Encounter Books, 2016), along with Popular Economics (Regnery, 2015).  His next book, set for release in May of 2018, is titled The End of Work (Regnery).  It chronicles the exciting explosion of remunerative jobs that don't feel at all like work.  

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