Dick Yarbrough: Bank’s ethical lapses could be costly for all business
There is nothing more important than your good name. I inherited mine from one of the most honest and ethical men I ever knew: My father. A man without a lot of education or sophistication, his was a world of right and wrong, good and bad, legal or illegal. It either was or it wasn’t. Rationalization didn’t count much with him if you were trying to defend bad decisions. It was just simpler to do the right thing.
I later had the opportunity to work for another man with a strong ethical foundation, John L. Clendenin, chairman and CEO of BellSouth Corporation. He was not the easiest man to work for, but as his external counselor, I was never put in a position of defending bad or unethical behavior on the part of our company.
Mr. Clendenin gave me the opportunity to present the potential public impact of corporate decisions at a weight equal to that of his legal counsel. He understood that a business can be legally correct and still lose badly in the court of public opinion. Telling a CEO, even as enlightened as John Clendenin, “no” is not a lot of fun, and I didn’t always win the argument, but whatever the discussion, it was never about trying to justify an unethical act.
That obviously wasn’t the case at Wells Fargo Bank. Their lack of integrity and corporate arrogance has to be staggering to even the most ardent capitalist.
To refresh your memory, the San Francisco-based bank was accused of opening false accounts for customers, ordering credit cards without their permission and forging customers’ signatures to documents. The estimated million-and-a-half phony accounts brought in roughly $2 million in fees and earned the bank undeserved revenue and the involved employees fatter paychecks.
Their malfeasance was first reported by the Los Angeles Times in 2013, but the scam had evidently been going on since 2011, only three years after the financial meltdown of 2008. The bank just recently got around to firing some 5,300 employees they say were involved in the scheme.
Wells Fargo has been slapped with $185 million in fines, including $100 million by the Consumer Financial Protection Program — the largest fine the federal agency has ever imposed.
Why did the bank let it happen and who, if anyone, had enough influence in the corporate offices to tell a seemingly clueless CEO that what was going on at Wells Fargo would do serious harm to the company’s good name, not to mention their bottom line? And did anybody tell him that the buck stops in his office? Evidently not.
Wells Fargo CEO John Stumpf recently appeared before a U.S. Senate committee to say it was “dishonest employees” who were responsible (and by implication, not him) and then had the unmitigated gall to defend the $125 million in compensation given to the executive who oversaw the division that carried out the fraudulent activity, upon her retirement in July. The bank said her retirement was because Wells Fargo wanted “to go in a different direction.” Like maybe the right direction?
Now, do you see why big business is its own worst enemy? Left-leaning socialists in Congress are licking their chops to hobble big businesses any time they can. Companies like Wells Fargo that make unethical business decisions in order to pump up their bottom line serve themselves up on a silver platter. Where was their external counselor?
Too many CEOs don’t understand the impact that public opinion can have on their ability to manage their business. That is because there are not enough competent external counselors willing to tell them that. When the American public has had enough of the kind of corporate arrogance exhibited by companies like Wells Fargo, they turn to the government to solve the problem.
Listening to a CEO who earned $19.3 million last year trying to say the phony scheme going on at Wells Fargo for five years wasn’t his fault will surely give government another opportunity to stick it to big business. Not to mention giving a lot of good ethical businesses an underserved black eye. For that, you can thank Wells Fargo Bank.
Whether you are the nation’s largest bank or just some soul trying to eke out a living, your good name is all you have. Guard it zealously. Don’t throw it away with unethical or dishonest behavior and then try to justify your actions to the rest of us. Is that so difficult to understand? My daddy didn’t think so.
You can reach Dick Yarbrough at firstname.lastname@example.org; at P.O. Box 725373, Atlanta, Georgia 31139; online at dickyarbrough.com or on Facebook at www.facebook.com/dickyarb.