When a brand’s reputation is on the line, sometimes an apology simply isn’t enough to save it from public scrutiny.
In early September, Wells Fargo reported it would pay $190 million in penalties and customer payouts, and that it had fired 5,300 employees after staffers allegedly created millions of unauthorized bank and credit card accounts in customers’ names without their permission.
In his testimony before the Senate banking committee on Tuesday, Wells Fargo CEO John Stumpf promised to make good on the alleged wrongdoing.
Stumpf told the Senate Banking Committee that customers who had bogus accounts opened in their name will be made whole and compensated for any damage to their credit rating, but some Democratic senators called for his resignation.
He followed up with an apology to the panel—and Wells Fargo customers:
I am very sorry that that happened. That is not what we wanted to have happen.
Although only roughly $5 million will be paid out to bank customers, Reuters reports Stumpf said he has told his managers to “do whatever it takes” to make them whole.
The damage to Wells Fargo’s reputation, however, digs deep.
The revelations are a severe hit to Wells Fargo’s reputation. During the financial crisis, the bank trumpeted itself as conservative, in contrast to its rivals.
From Financial Times’ John Gapper:
Wells Fargo, with its homely approach and uncanny ability to gain loyalty from customers, as supposedly proved by the number of accounts and payment cards that each held, enjoyed the last shining reputation.
It is now tarnished by the revelation that Wells Fargo’s winning ways with customers owed as much to the intense pressure it placed on employees to hawk products as to its friendly culture.
Thus the expression on Mr Stumpf’s face as he endured his Senate interrogation: Less one of disgrace than puzzlement that the story Wells Fargo’s bosses told for two decades no longer works. Time for a new one.
Despite his “regretful actions” and apology, Sen. Elizabeth Warren, a Democrat from Massachusetts, was the first to call for Stumpf’s resignation. She also accused him of “gutless leadership.”
From The New York Times:
“Have you returned one nickel of the money that you earned while this scandal was going on?” asked Ms. Warren, Democrat of Massachusetts. “Have you fired any senior management, the people who actually oversaw this fraud?”
“No,” Mr. Stumpf answered.
Ms. Warren added: “Your definition of accountability is to push this on your low-level employees. This is gutless leadership.”
Democrat and Republican committee members were united in their condemning of Wells Fargo’s actions.
More from the NYT:
He said the 5,300 employees who had been terminated over the issue—many of them earning $12 an hour—deserved to lose their jobs.
“The 5,300 were dishonest, and that is not part of our culture,” Mr. Stumpf said. “That is not scapegoating.”
Stumpf answered questions from lawmakers for nearly two hours to the best of his abilities.
Reuters reporter Dan Freed reports:
[He] repeatedly told a congressional panel that he had to check with staff, lacked information or was not an “expert” on a range of topics including executive compensation, credit scores and contracts that must be signed to open an account.
ValueEdge Advisors chairman Robert Monks told Freed that Stumpf’s responses reminded him of Muhammad Ali’s “rope a dope” defense—”he gets up against the ropes, he puts up his hands.”
From Monks, on Stumpf’s protecting the brand’s image:
He talks about the team, [and] he talks about the good people. He smiles, he’s sweet and he’s in no way responsible.
What do you think, PR Daily readers? How did Stumpf handle the two-hour grilling from lawmakers? Can the brand’s reputation recover?
(“‘Wells Fargo’ Sign — 3140 Washington Boulevard Arlington (VA) 2013” by Ron Cogswell via / CC BY 2.0)