Tag Archives: ethics

Dear John, (a letter to the CEO of Wells Fargo)

Letter to John Stumpf of Wells Fargo

I’m feeling pretty blue right now, as this is a difficult letter to write.

You see, I’m going to have to end our eight-year relationship as I no longer believe that I can trust you.

While I’m not one of the millions who had fraudulent accounts opened in their name by your minions at Wells Fargo, I can’t condone or accept the practices you and your senior management seemed all too eager to promote.

C.S. Lewis is quoted as saying: “Integrity is doing the right thing, even when no one is watching.” It seems that you’ve been doing the wrong thing, and just hoped you wouldn’t be seen and get caught.

So much for your integrity. And Wells Fargo’s.

In one Senate hearing, Sen. Elizabeth Warren, D-Mass., said that you made millions of dollars in the “scam,” telling you, “You should resign … and you should be criminally investigated.” “It’s gutless leadership,” she said, noting that you are not resigning, willingly returning any of your earnings or firing any senior executives. “Wells Fargo wasn’t cross-selling. Failing to notify these customers about these sham accounts, this isn’t cross-selling, this is fraud,” Senator Pat Toomey (R-Pennsylvania) said.

To add to fuel to the fire, on September 29th, Rep. Carolyn Maloney (D-NY) accused you of using insider information about the phony accounts to cash in $13 million worth of your own shares before knowledge of the fraudulent activity became public. Maloney said the timing of that trade raised questions of whether you put yourself ahead of customers who had been defrauded, and ahead of the bank in general. Of course, you denied that you had done anything wrong. You said he sold stock with proper approvals and claimed the sales were made “with no view about what was going on.”

Yeah, right. Forgive me if I find it difficult to believe you.

Sadly, John, there appear to be even more deceitful practices coming to light. The U.S. Labor Department is investigating possible abuses of employees by Wells Fargo in connection with the scandal. What’s even more disturbing to me, as veteran, is that Wells Fargo is now facing a Justice Department sanction over improperly repossessing cars owned by members of the military.

John Chiang, Treasurer for the state of California expressed my own feelings when he wrote in a letter to you and the bank’s board members, saying: “How can I continue to entrust the public’s money to an organization which has shown such little regard for the legions of Californians who placed their financial well-being in its care?” Chiang then suspended many of its ties with your Wells Fargo for at least a year. Included in the suspension are its most highly profitable business relationships with the state. These cover the lucrative business of underwriting certain California municipal bonds, investments in Wells Fargo securities, and the bank’s broker-dealer work to purchase investments on the treasurer’s behalf.

That’ll hurt a bit. As it should.

Warren Buffett has said that: “It takes 20 years to build a reputation and five minutes to ruin it.” You’ve done a good job of it, John. Your focus on short term success will probably have a long-term price. Of course, I should mention that I’m also upset with Warren. He’s been notably silent on this issue. Maybe it’s because he’s a big investor in Wells Fargo. Or perhaps he really does not believe in one of his oft-quoted statements about hiring based on integrity.

Sigh. So I’m a bit sad, and unhappy.

You and the Wells Fargo team are probably hoping to weather this storm with little damage. You’ll take whatever medicine you’re given and move on. And the recently announced “clawback” of $41 million in company stock won’t hurt you too much personally. After all, your retirement payout is pegged at $134 million. Glad to see that you’ve taken care of yourself, John. It helps explain in part why you pay your D.C. lobbyists millions to educate our politicians on how banking should be done. Your way.

Well, I get that. So I’m going to do the only thing I can do.

I’ll be ending our relationship. I’m moving on to a credit union, where I can place my trust as a member/owner. I can also expect to be treated with a little more respect. It’s a small thing. And it won’t make a blip on your profit/loss radar. But for me, it’s about putting my money into an organization I can trust to do the right thing. And that’s not Wells Fargo.

Goodbye, John.


Phil McCutchen

P.S. to readers. From a marketing standpoint, Wells Fargo has made a mockery of the fiduciary vision and values it has long embraced. As a result, it’s alienated many and will (hopefully) pay a hefty price for its failures. This should be a reminder to anyone in business that operating with integrity, honesty, and transparency should be your ultimate goal.


Do Good Ethics Equal Better Profits?

How good are YOUR ethical practices?
How good are YOUR ethical practices?

“There is no such thing as a minor lapse of integrity.”
— Tom Peters

It doesn’t take much effort to find more than a few ethical lapses of integrity. I’d like to take a few minutes to bring up a point that is all too often lost in the media maelstrom.

Good ethics are good for business.

Whether you are trying to sell recruiting services or software, widgets or lollypops, financial products or better abs in 30 days; ethical practices that are based on moral integrity and fair, honest dealings will deliver better profits for longer periods of time. In fact, there is research that shows that businesses with a truly ethical culture enjoy better employee commitment and trust, improved investor loyalty and trust, and improved customer satisfaction and trust. All of which lead to higher profitability. (Curtis C. Verschoor, “A Study of the Link Between a Corporation’s Financial Performance and Its Commitment to Ethics”).

I don’t believe that there is any argument as to whether or not a business — whether a solo recruiter or a mega corporation — has a social responsibility to its stakeholders and to the global community at large to run their business in an ethical manner. They, and you, do.

The problem, and the challenge, is that knowing the right thing to do and doing it are two different things.

It’s a problem that is as old as mankind, and not one that will go away. Just as the recession we’ve been in can be traced to socially irresponsible ethical failures by individuals, businesses, government, and, yes, consumers. Just as the next recession will also be traceable to failures in human nature. It is not possible to legislate moral ethics and social responsibility — although many have tried and failed and others will keep trying.

That may seem both cynical and pessimistic, but it’s apparent that money still trumps all for many businesses and individuals. For example, a recent article in the New York Times pointed with glee at a group of freshly minted Harvard MBA’s who were going to take an oath to abide by ethical principles at their future jobs and careers. Yet fewer than 25 percent of that graduating class signed up to take the oath. Click here for the article: http://www.nytimes.com/2009/05/30/business/30oath.html]

The same article notes that ethics study programs at the college level are growing. One can only ponder why, and what impact, if any, they may have today or in the future.

So, are businesses today more socially responsible, or less?

The Internet and other social media give consumers an amazingly powerful light to shine on those corporations whose practices are less than socially responsible. Those businesses who truly walk the talk will be socially responsible and reap the rewards. Those that don’t deserve to fail — assuming of course that the government doesn’t bail them out with our tax dollars.

I believe that learning the mechanics, methods and techniques of ethical business decision-making is absolutely necessary in order to be socially aware and responsible. However, it is no substitute for ethical integrity that is quite likely a combination of that which is ingrained into a person from childhood and their innate moral character. Thus, a businesses’ operations will reflect the character and socially responsible awareness of those employed.

At the end of the day then, when you’re counting the lucre from the deal you just made, you should be able to do so with a clear conscience.

The most important persuasion tool you have in your entire arsenal is integrity.”
— Zig Ziglar