Wells Fargo Scandal: A Labor Issue and One More Argument for Postal Banking

(This article first appeared in the January-February 2017 issue of The American Postal Worker magazine.)

The recent Wells Fargo scandal, involving the nation’s third largest bank, revealed more than two million accounts and credit cards were opened largely without the knowledge of its customers. When questioned, Wells Fargo Chair and CEO John Stumpf put the blame on “rogue” employees. 

What really happened is the bank created a corporate culture of sales goals and quotas. It drove workers to open fraudulent accounts or risk losing their jobs. When workers could not meet the goals, “they were coached, disciplined and terminated,” according to the Committee for Better Banks. “Fear of discipline and termination became a significant sales motivator, and bank employees suffered from high levels of stress, anxiety and physical ailments related to high-pressure workplace practices.”

Wells Fargo employees tried to blow the whistle on the fraudulent practices. For the past three years, they organized with the Committee for Better Banks, a project of the Communications Workers of America and other organizations. As the Committee’s Erin Mahoney put it, “when bank workers came together as an organization in a collective way, they had more power.” The employees are largely credited for the recent crackdown at Wells Fargo.

Stumpf resigned on Oct. 12 because of the scandal. Wells Fargo settled with the government for $185 million and will possibly face additional investigation. But, much more needs to be done to stop the abuse of bank customers and workers.

Eight states and at least seven cities including Chicago, San Francisco and Seattle voted to curtail or end business with Wells Fargo. The Committee on Better Banks and the Take on Wall Street campaign (of which APWU is a part) is launching a nationwide effort to pass state and city resolutions to end business with Wells Fargo. Take on Wall Street continues to pressure Congress for real financial reform to prevent future scandals.

For more information on the Committee for Better Banks, visit http://betterbanks.org/.

Large Portion of U.S. Population Remains Unbanked

A new report by the Federal Deposit Insurance Corporation (FDIC) finds that 24 million households are underbanked – they have a checking account but must rely on services such as payday and title loans, checking cashing stores, and pawn brokers. About seven percent of households – 9 million Americans – have no bank account at all.

The number of bank branches is declining. Low-income neighborhoods have been hardest hit. Since 2008, 93 percent of closings were in neighborhoods with a median income below the national average. Another FDIC survey found only 43 percent of banks actively develop products and services for the underserved.

“What the Wells Fargo scandal reveals, is that when big banks don’t abandon these customers, they are likely to fleece them,” journalist Katrina vanden Heuvel wrote in the Washington Post.

Postal Banking: A Win-Win

The Wells Fargo scandal shows the need for an alternative to the big banks. Consumers want, need and deserve access to fair, non-profit and affordable financial services. With more than 30,000 locations across the country, a mission to serve the public and accountability to the people of the United States – rather than shareholders – the U.S. Postal Service can do the job.