https://www.wsj.com/articles/wells-fargos-wealth-management-unit-attracts-justic
ID: 348803 • Letter: H
Question
https://www.wsj.com/articles/wells-fargos-wealth-management-unit-attracts-justice-department-attention-1519920782?mod=searchresults&page=1&pos=2
Wells Fargo’s Wealth Management Unit Attracts Justice Department Attention
•WSJ Article - Wells Wealth Business Under Fire
Emily Glazer March 2, 2018
•Wells Fargo’s problems expanded to its wealth-management business after it was accused of making “inappropriate referrals or recommendations.”
•Organizational culture and reward structures derive employee behaviors. Actions from senior leadership and pressures to meet performance expectations create environments of unethical decision making. This article discusses the expanded problems at Wells Fargo as they continue to have issues with the culture and incentive systems.
QUESTIONS TO BE ANSWERED: (Atleast Two Paragraph for each question)
1. What is the nature of the investigation at Wells Fargo?
2. How is the Federal Reserve enforcing changes at Wells Fargo? Offer two ideas from the article.
3. What is the message to employees about the problems? How is the organization going to rebuild the culture of the company?
Explanation / Answer
What is the nature of the investigation at Wells Fargo?
Wells Fargo has fired four of its foreign exchange bankers as regulators probe the business, the latest sign of trouble at the US bank that is reeling from a scandal over fake accounts at its retail arm.
Senior salesman and traders who worked in the bank’s securities business in San Francisco and Charlotte have been dismissed. The reason for the firings and the nature of the investigation, first reported by the Wall Street Journal on Friday, could not be immediately established.
The bank confirmed that Simon Fowles, fomer global head of foreign exchange trading, Bob Gotelli, head of the foreign exchange sales group, Jed Guenther, who worked in foreign exchange sales management, Michael Schaufler, chief spot dealer, are no longer with the company.
How is the Federal Reserve enforcing changes at Wells Fargo? Offer two ideas from the article.
The Fed handed down unprecedented punishment late Friday for what it called the bank's "widespread consumer abuses," including its notorious creation of millions of fake customer accounts.
Wells Fargo won't be allowed to get any bigger than it was at the end of last year -- $2 trillion in assets -- until the Fed is satisfied that it has cleaned up its act.
Under pressure from the Fed, the bank agreed to remove three people from the board of directors by April and a fourth by the end of the year.
It is the first time the Federal Reserve has imposed a cap on the entire assets of a financial institution, according to a Fed official.
"We cannot tolerate pervasive and persistent misconduct at any bank," outgoing Fed Chairwoman Janet Yellen said in a statement. Friday was her last day on the job.
Wells Fargo (WFC) controls more money than any bank in the United States besides JPMorgan Chase, according to Fed data. But its reputation has been shattered over the past year and a half by a seemingly endless series of misconduct.
Most prominently, Wells Fargo admitted that its workers responded to wildly unrealistic sales goals by creating as many as 3.5 million fake accounts. The bank has also said it forced up to 570,000 customers into unneeded auto insurance.
The bank agreed to the Fed's conditions under what's known as a consent decree. In a statement, Wells Fargo said it is "confident" it can meet the Fed's requirements. After markets closed on her final workday in office, Federal Reserve Chair Janet Yellen delivered a blow to one of the nation’s largest banks: Wells Fargo & Co.won’t be allowed to grow until it cleans up.
Fed officials said the San Francisco-based lender’s pattern of consumer abuses and compliance lapses called for an unprecedented sanction. Until Wells Fargo addresses shortcomings in areas including internal oversight, it can’t take any action that would boost total assets beyond their level at the end of 2017, without the Fed’s permission. The bank said after-tax profit in 2018 would be reduced by $300 million to $400 million and its stock slumped in late trading Friday.
“This is akin to the last scene in ‘The Godfather,”’ said Isaac Boltansky, an analyst at Compass Point Research & Trading. “Chair Yellen decided to handle unfinished business on her way out the door.”
What is the message to employees about the problems? How is the organization going to rebuild the culture of the company?
Those with the most knowledge and experience are actually becoming less engaged.
Lower level employees have lower levels of engagement:-
High level management may be out of touch with employee morale on the front lines.
Engagement levels are lowest for sales and service people:-
BIG Problem: These are the same individuals who are most likely to interact with your customers!
These findings are worrisome for obvious reasons, among them being employees who get less work done, don’t support company goals, processes and initiatives, and spread their discontent to fellow employees and customers. And that’s not even counting the cost of high turnover.
As an employer, there are ways you can effectively work to engage employees. Studies suggest that open, communicative environments are the best place to start. Having honest conversations with staff at all levels about what they like about working for you and what things they would change can get you on the right path, if you are a.) open to hearing what they have to say and b.) willing to make some changes. Many managers we have worked with over the past decade have known only rapid business expansion. Managing during a significant business slowdown, even a short-lived one, is a new experience for them. For the first time in their careers, some managers will face the reality of dramatically reducing the number of people in their ranks.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.