It was big news earlier this month when headlines in papers across the country announced that Wells Fargo had agreed to pay $185 million in fines because its employees, under extreme pressure from management, had opened more than a million bank accounts, some of which were opened without customers’ knowledge.
This huge story continues to make headlines: On Tuesday members of the Senate Banking Committee grilled Wells Fargo C.E.O. John G. Stumpf for more than two hours.
The occasion gave Banking Committee members an opportunity to grandstand and expel their wrath at Stumpf for firing more than 5,000 employees — although not a single one in senior management, where the pressure originated and was maintained.
One thing I think is important for people to know — although relatively few people ever will — is this snowball ball started rolling because, three years ago, an editor at the Los Angeles Times sent an email to the paper’s banking reporter, E. Scott Reckard, about something that had been called to his attention.
Here’s how Reckard, who retired last year, explained it to the Columbia Journalism Review in an article published Sept. 12.
“I got an email from one of the editors, Pat McMahon, saying there was this weird story. I talked to this [Wells Fargo employee] who claimed he had signed people up for accounts and services they didn’t need, but never without them knowing it—he would just talk them into it. Anyway, he told a story about these incredible pressures to make sales numbers and about how the branch had basically been setting records and getting kudos for doing this, but then people started complaining, and some trouble came down. Before too long, all these people got fired, these front line workers. He said all they were doing was responding to pressure from above and coaching from above about how to get the numbers up.”
If he wasn’t conscientious, Reckard probably could have blown off the editor, saying it was an aberration. Instead he jumped right into it, and on Oct. 3, 2013, the paper ran a 12-paragraph story saying Wells Fargo had fired about 30 branch employees in the Los Angeles region for opening accounts that were never used and attempting to manipulate customer satisfaction surveys.
What happened next took Reckard by surprise:
“(T)he phones started ringing off the hook and the emails started landing from people all over the place. Mainly current and former Wells Fargo employees, but customers too. They wanted to tell stories about what had happened to them.”
With the help of another editor, Brian Thevenot, Reckard dug deeper, and what he found was “the scope was really big” and not just limited to Southern California.
On Dec. 23, 2013, the Times published a much more comprehensive story, which Reckard began with an anecdote from a former Florida branch manager. Reckard quoted the former manager, Rita Murillo, as saying: “If we did not make the sales quotas…we had to stay for what felt like after-school detention, or report to a call session on Saturdays.”
From there, the Consumer Financial Protection Bureau and state regulators got involved, and early this month the story exploded when the CFPB announced the $185 million settlement.
A Sept. 8 New York Times story quoted CFPB director Richard Cordray as saying, “Unchecked incentives can lead to serious consumer harm, and that is what happened here.”
I’m not taking anything away from the CFPB. I’m glad its investigators got in there and cracked open the pineapple. But there wouldn’t have been any pineapple if it hadn’t been for Scott Reckard and the Los Angeles Times.
As I mentioned, Reckard retired last year, after 18 years with the Times and 14 before that with the Associated Press. He told the CJR he retired “because it wasn’t as much fun…working for newspapers these days.”
Almost any veteran newspaper reporter would say the same thing. Yet the work remains as important as ever, and let’s hope many in the new generation of reporters are as dedicated, resourceful and enthusiastic as Reckard. The dividends can be great, not just for the individual but, as the Wells Fargo story clearly demonstrated, for the public at large.
Reckard acknowledged the personal and professional satisfaction when he told the CJR:
“It’d be easy to look back and say, ‘Why the hell did I spend my life doing something?’ But when you get a chance to actually see that there was some action that resulted on something important you covered, it sort of restores your faith in the whole process.”