Comparing Warren Buffet's Wells Fargo Written Policy To Their Actions

These actions created an unethical environment, while the corporation had ethical values stated for employees to follow. However, management created pressure to meet goals causing employees to falsify accounts to meet their targets.

In California, eight Wells Fargo employees were convicted of committing fraud facing a maximum penalty of 30 years in federal prison, also each employee is charged with at least one count of aggravated identity theft, which carries another two years in prison (https://www.justice.gov/usao-cdca/pr/eight-people-charged-bank-fraud-scheme-allegedly-used-information-stolen-wells-fargo). In the wake of the scandal, over 5,300 employees were fired over the course of five years for their involvements in the creation of the fake accounts. Some of the initial whistleblowers of the scandal faced retaliation by being terminated for speaking out against the orders to open fake accounts. CNN Money correspondent Matt Egan spoke with Bill Bado, a former employee of Wells Fargo, who has not been able to security another banking securities job since his termination for calling the Ethics Hotline to report the fraudulent activities.

Wells Fargo is one of the well-recognized banks in the United States with over 8,000 banks. Last year Wells Fargo paid millions of dollars in fines for opening around 1.5 million bank accounts and applied for around 560,000 credit cards without customers’ consent. Due to this unethical and illegal event, numerous stakeholders were affected. In the article, The Wal-Mart Effect and Business, Ethics, and Society by R. Edward Friedman, Friedman states that stakeholder is anyone who can be affected by the business or can affect the business (Friedman 38). A great deal stakeholders were affected by the Wells Fargo crisis including Board of Directors, stockholders, employees, and the customers. Each stakeholder has different interests,

According to Emily Glazer of the Wall Street Journal, Wells Fargo’s Sales Practice Scandal is a result of their corporate culture. The upper level executives could be getting nothing as their bonuses this year as the board continues to decide. This is because those men and women are responsible for the actions of those who they employ/supervise Making money has been the firm’s primary goal for many years and the higher up’s all the way down to the lower managers are responsible for creating this type of environment. According to the Wall Street Journal “One manager…in an email peppered with exclamation points and capital letters…urged her employees to ignore the bosses and get sales up at any cost, says someone who saw the email.” This is a perfect example of terrible managing. Throwing ethics and good conduct out the window just so that a few of the staff get bonuses at the year’s end is just wrong. In class, we constantly discuss the ethics involved in business and recently we’ve spent a lot of time on corporate culture. Shockingly enough, in last year’s annual report the company

On Thursday, September 8, 2016, federal regulators found that over two million fake accounts were created in a scam from Wells Fargo (Dugan). According to the New York Post, it has just been discovered that the Wells Fargo former senior executive vice president, Carrie Tolstedt, is linked to the scamming of Wells Fargo customers (Report). The many other employees were fired since the scam was discovered in 2011, however, according to the New York Post, Tolstedt was praised by Wells Fargo CEO John Stumpf, allowed to leave, and not lose any of her compensation (Report). This incident was highly unethical and resulted in customers and employees losing their trust in Wells Fargo.

Furthermore, Wells Fargo has been exposed to unethical behavior inside the organization. Wells Fargo employees opened 3.5 million of false accounts, including credit cards that were issued without the customer's consent. The employees were involved in unethical behavior, due to the cross-selling strategies that management put in place. Lower level employees were required to reach their quotas for their individual goals, as well as the bank to reach their goals. These goals were unattainable, which created a sense of pressure among employees as well as the absence of trust in the corporate culture. Timothy Sloan the new CEO of Wells Fargo is working very hard at gaining trust among their employees, hiring new managers as well as employees that can create and keep a healthy environment within the organization. Wells Fargo is paying out millions in refunds to consumers that were affected by these phony scandals. Consumers don’t think the refunds are enough, because of Wells Fargo lacks leadership throughout the organization, which created unethical behavior among their employees. Wells Fargo needs to earn American trust after the sales culture scandals that

As the scandal made national headlines, the Department of Justice opened an investigation which resulted in Wells Fargo former CEO John Stumpf testifying before the U.S. House of Financial Services Committee, where he avoided questions as to how the bank would help customers it harmed and whether it would recover income from executives. According to Rucker, Stumpf took full responsibility for “all unethical” practices for the Senate Financial Committee (2016). After testifying before the committee, Stumpf submitted his resignation after 37 years with the company due to his reputation being tarnished. Wells Fargo continues to suffer from the fake account scandal as several states and municipalities continue to end business relationship with

As with much of Enron, their outward appearance did not match what was really going on inside the company. Enron ended up cultivating their own demise for bankruptcy by how they ran their company. This corrupt corporate culture was a place whose employees threw ethical responsibility to the wind if it meant financial gain. At Enron, the employees were motivated by a very “cut-throat” culture. If an employee didn’t perform well enough, they would simply be replaced by someone who could. “The company’s culture had profound effects on the ethics of its employees” (Sims, pg.243). Like a parent to their children, when the executives of a company pursue unethical financial means, it sets a certain tone for their employees and even the market of the company. As mentioned before, Enron had a very “cut-throat” attitude in regards to their employees. This also became one Enron’s main ethical falling points. According to the class text, “employees were rated every six months, with those ranked in the bottom 20 percent forced to leave” (Ferrell, 2017, pg. 287). This system which pits employees against each other rather than having them work together will create a workplace of dishonesty and a recipe of disaster for the company. This coupled with the objective of financial growth, creates a very dim opportunity for any ethical culture. “The entire cultural framework of Enron not only allowed unethical behavior to flourish,

Ethics of Penn Square Bank and the Dow Corning Bankruptcy Penn Square Bank: What were the ethical pressures on the firm concerning documentation, credit extension, and revenue recognition that lead to the final collapse? What should have been done to reduce or offset these pressures?

It’s not very uncommon to see headlines of money hunger CEO’s or even a small group of decision making conducting unethical behaviors in their best interests. Generally, those conducting the unethical behaviors have the opportunity to gain from their actions. In the Wells Fargo scandal, this is not the case. This scandal was not acted out at the top, but yet through the front line employees. This scandal was also unusual due to the amount of

Nice post Lettie. As Parnell explains that managerial ethics includes the ability to make legal, honest, moral and fair decisions (Parnell, 2014), I wonder if the employees knew that their decision to open accounts without the consumer’s consent was wrong. If the instances were being reported to the front-line managers and those managers where reporting the information up the chain to top executives, why wasn’t this behavior stopped sooner rather than later. Why were so many great incentives being offered? I would classify this behavior as an organizational moral hazard. This type of hazard is described as hazard with the parties do not share equal risks and benefits (Parnell, 2014).

“Maintaining an ethical culture may be impossible if CEO’s and other top officers do not support an ethical culture” (Ferrell, Fraedrich & Ferrell, 2015, Pg232). An employee can choose to refuse participation in the illegal and unethical acts and follow their own values (Ferrell, Fraedrich & Ferrell, 2015). Furthermore, An employee can choose to report the wrongdoing either internally or externally which is defined as becoming the whistleblower of an organization. As an Executive of Fraud Complaint Management, Eileen Foster chose to follow her on values and uphold the code of ethics at Countrywide Financial. As a result of her whistleblower activity, Ms. Foster was terminated from her duties in September 2008 (GAP, 2012).

Many employers now have a code of conduct and a code of ethics on how they want their employees to behave and act. They take certain values that the company wants their employees to adhere to and emphasize them. These are included in company manifestos such as the mission statement. Many companies have expounded on the mission statement by creating a code of conduct and a code of ethics along with their company bylaws. These statements are the core of what the company is and what it aims to be as a whole. In this particular case, BNC Mortgage should include ethics statement included in their mission statement and create an ethics and code of conduct statement. Upper management will need to supervise the implementation of these new values into the company and ensure that people implement these in their daily activities. As Ronald James states, “senior leaders typically emphasize the importance of performance and the bottom line. But if they don’t also emphasize ethical behavioral messages, then all employees hear is that it’s all about the numbers.” (as sited in Hellriegel and Stocum, pg. 10) Had this been a priority for BNC Mortgage, they would have not allowed this unethical behavior to start in the first place.

It is only during moral lapses and corporate scandals that interest groups and the broader public ask themselves the fundamental ethical questions, who are the managers of the organization and were they acting with the ethical guidelines. For a long time, the issue of ethics was largely ignored, with organizations focusing on profit maximization. However, this has changed, and much attention is now focused on ethics management by researchers and leaders. The issue of ethics has arisen at a time when public trust on corporate governance is low, and the legitimacy of leadership is being questioned. Leaders are expected to be the source of moral development and ethical guidance to their employees.

The reason why Well Fargo Bank is an ethical quandary would be how they have gotten a fine for 185 Million dollars and have fired over 5,300 which were employee and manager.