“When does ‘taking full responsibility’ have consequences?” iSchool Lecturer Annie Searle asks in the latest edition of The Risk Universe.
In an article in the October 2016 edition, Searle shares her thoughts about recent incidents of misconduct in the financial industry and asks whether institutions will ever clean up practices that take advantage of customers and abuse employees.
The article comes after recent revelations that Wells Fargo Bank executives failed to report fraudulent activity that boosted the bank’s sales numbers.
“How is it that, after a 2013 Los Angeles Times investigative report on fraudulent practices at Wells Fargo was published, both John Stumpf, the bank’s chief executive officer and Carrie Tolstedt, its former head of community banking, did not respond and report the scale of the problem?” Searle asks. “Where was internal audit, external audit, regulators or the board of directors?”
In the article, written before Stumpf’s resignation, Searle notes that a $185 million fine amounts to a small dent in Wells Fargo’s annual earnings, and it took intense pressure from the Senate Banking Committee to bring an end to the shady practices and prompt the bank’s board of directors to claw back bonuses and salary from its former CEO.
“I suspect there will be some fine-tuning of regulatory guidance after the Wells Fargo drama, but it is hard not to conclude this is not a one-off instance and we have still not managed, neither in guidance nor in the character of our banking leaders, to clean up practices which feed the bottom line but are just plain wrong,” she writes.