Editor's Note: Why the Wells Fargo fake-accounts scandal matters to all bankers

Why didn't Wells Fargo solve its problems earlier? 

Kevin Wack's investigation of the bank's fake-accounts scandal brings to life the troubles that rocked the firm and led regulators to impose an asset cap that hampered its growth — a constraint under which the bank continues to labor today. The story also sparks an important question: With so many red flags, why didn't the bank act faster? And for executives at other firms, there's a related issue: How can I avoid having this happen at my bank? 

Wack, American Banker's national editor, has been covering Wells Fargo and its difficulties for years. To report this investigation, he conducted hours and hours of interviews and sifted through reams of court documents. 

Wells Fargo Reports Record Profit As Credit Improves
Noah Berger/Bloomberg

The story itself is as important now as it was when he first started reporting it. The tale of Wells Fargo is a universal industry story about the pressures affecting banks, the way headquarters initiatives trickle down to branches, and the role of regulators. This look at what went wrong and why draws from a former Wells Fargo executive who had not previously spoken to the press. From inside the bank's San Francisco headquarters, he saw the crisis unfold. 

Much has been written about "tone at the top" and the importance of ethics in business. A frequent topic in business schools and industry lectures, understanding of this concept still eludes many financial institutions. Frequently, executives say one thing in press interviews and company town hall meetings, while employees feel that they're expected to do something different — cross a line, skirt a regulation, anything to make their numbers. They may understand these implicit instructions as part of their jobs, or they may think that managers expect them to be creative with the rules, regardless of what they heard the CEO say about compliance in his latest press interview. And this is the problem: Unless you can convince your front-line employees that it's their job to do the right thing, and reward them for doing it, a scandal is always lurking at your bank.

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Wells Fargo investigation Industry News Regulation and compliance
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