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Ethical Issues in Wells Fargo


Wells Fargo is one of the banking institutions in the U.S that faces significant ethical issues due to its distinctive practices. Over the decades, the company faced various lawsuits and scandals concerning customer relationships and breaches of their trust. A violation of clients’ rights in producers’ and consumers’ settings negatively affect the confidence index among the purchasers and potential buyers of the product and service. Therefore, it is the responsibility of the managerial team to establish policies that appreciate shoppers’ reliability to the organization’s ethical guidelines (Bayly, 2020). Wells Fargo faces numerous issues on reproachable malpractices rendering the necessity to understand causative agents and develop remedies for the firm’s prospects. Moral behavior among employees and administration fosters proficiency in business competence both inbound and outbound in an organization.

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Dynamic Ethical Issues in Wells Fargo

Wells Fargo’s major scandal set off in 2008-2009 when the managerial team incorporated the employees’ incentives for optimal cross-selling of accounts. The concept led to the establishment of an aggressive sales culture. Primarily, a worker earned a larger incentive package for more cross-selling services (Bayly, 2020). The practice triggered the development of an unsustainable competitive culture, causing pressure among the laborers for promotions and better payouts. As a result, the employees focused on an unethical practice entailing creating false accounts for clients as a demonstration of a higher cross-selling approach. The customers encountered significant repercussions due to the increased fees for the premium accounts created without their approval. In this case, one of the consequences of the immoral act enshrined losing confidence in customers in Wells Fargo banking services.

Another consequence of creating falsified accounts is encapsulated negatively affecting the clients’ credit status. The registration of new accounts for customers with premium fees without consumers’ consent led to an increase in debts and defaulted payments (Bayly, 2020). Therefore, the framework provided an overview of poor customer relationships and credibility for financial support to the clientele baseline. After realizing the malpractice, the organization encountered profound negative implications, including increased lawsuits and complaints that affected the marketability of the products and services.

The onset of technological advancement fostered intensification in the sharing of information globally. The concept triggered the emergence of a universal village enshrining significant engagement among people despite marginal physical locations. One of the sectors highly affected by social media networks is the service sector due to the reliance on consumers’ feedback for competitive advantages (Bayly, 2020). Wells Fargo violated its clients’ confidentiality, which is an unethical practice and negatively affected its public image.

The impact amplified with individuals sharing their encounters with Wells Fargo, causing an international uproar based on the dysfunctional organizational culture. According to research, the head of Wells Fargo was barred from professional banking practice in 2020, at least ten years since the onset (Bayly, 2020). The approach fostered the perception regarding unethical concern for the clients and accountability scale. Wells Fargo incurred high costs for the scandal and paid out to the victimized clients. At least 5,300 employees were fired while Stumpf paid a $17.5 million fine, and Tolstedt faced a penalty of $25 million. Since 2016, Wells Fargo paid $185 million worth of fines and settled $110 million for class-action lawsuits. The company incurred profound costs for the unethical practice to create 3.5 million accounts (Bayly, 2020). The aggressive sales culture highly contributed to the pressure among workers for better performance and productivity scale leading to the trickle-down effect within the spectrum of poor decision-making.

Modern Banking Ethical Practices

Human society has evolved under the gradient of technological advancement hence fostering a change in the business culture operations. It is a phenomenon that renders proficiency in competence across the global enterprise market. Researchers argue that the intensification in the incorporation of automation structures and the customization of services for clients is an ideology that is a competitive advantage in corporate banking. Examples of the systems attributing to computation as an emerging trend encompass immediate payment service (IMPS), online banking, telebanking, national electronic funds transfer (NEFT), and real-time gross settlement (RTGS) (Shilling & Celner, 2021). The industry demands incorporating the dynamic shifts to enhance the growth, development, improvement in the operations, and performance outlier.

Business activities encompass the interplay of different entities that enhance the satisfaction of stakeholders’ needs while spearheading growth and development. In this case, Hearit (2018) establishes that one of the factors to assess during the determination of strategic management approaches is the enterprise environment. Hearit (2018) demonstrates that there are three locale levels: relevant, competitive, and task-oriented. The corporate banking sector is service-based hence the prominence determining the distinct elements attributing to the customer’s experience. Online banking as an emerging trend significantly enhanced the evolution of the environmental structure based on the establishment of niche variables.

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Sustainable financing is another factor in corporate banking due to the consequences of the COVID-19 pandemic. In the research by Shilling and Celner (2021), the authors note a profound impact on the capital markets across Europe, Asia-Pacific, and American regions. Although the sector encountered dynamic challenges pre-pandemic era, the emergence of the event triggered the process based on the lockdown, social distance, and virtual work-from-home concept. Shilling and Celner (2021) further establish that International Monetary Fund approximates at least a 4.4% decline in the global gross domestic product which is equivalent to US$ 6.2 trillion. The distinction between the current pandemic effect and the global financial crisis encompasses the ability of institutions to adopt proactive measures for minimal impact on depression.

COVID-19 rendered the adoption of a different system and human behavior mainly on the types and levels of engagements. Due to the decline in economic activities, Shilling and Celner (2021) postulate that banks across different regions will loan at least US$318 billion between 2020 and 2022. The documentation is lesser than the recorded loss incurred between 2008 and 2010 at 6.6%. However, the comparison between the U.S, Europe, and Asia-Pacific indicates that in the second fiscal quarter of 2020, the best-performing banks had issued loans totaling US$4103.4 billion, US$62.5 billion, and US$68.8 billion, respectively (Shilling & Celner, 2021). Primarily, the pandemic fostered the emergence of the trend as a necessary measure to boost the performance of enterprises within the various regions, with Asia-Pacific posing a higher chance of recovery. The global positioning of the entities in the sector encounters the opportunity to boost their competence based on the necessity to remit loans to individuals to grow their businesses. In this case, the emergence of sustainable financing is a strategy featuring a baseline solution to the ideal operations within the U.S.

Sustainable finance is a multifaceted phenomenon involving integrating dynamic facets during investment decision-making. The initiative’s main goal encompasses fostering a long-term effect and security for the client through projects and activities. As a result, it is vital to consider the social structure, governance, and environmental state in corporate banking. The initial policy in financing engulfs the provision of capital without regard to its benefit to the region (Lurie et al., 2021). However, the onset of the post-pandemic era renders a prominent factor in considering the importance of the facility to individuals and the effect on the governance structure in the U.S. The major products involved in the conceptual framework encompass savings, insurance, credits, and investment funds.

The U.S government plays a proficient role in regulating credit scores and the investment portfolio based on the country’s economic growth index. An excellent example is the onset of the COVID-19 pandemic which led to a significant decrease in the activities and the flow of monetary elements leading to a rise in unemployment. In this case, the administration focused on implementing policies that enhance the remittance of credit finances to the American population to facilitate a healthy lifestyle. Therefore, the political and legal analysis involves regulating taxes and trade operations to boost the safety and capacity for growth and development.

Corporate and credit banking is part of a vast community whose capital fosters the growth and development of the industry within the U.S. Shilling and Celner (2021) indicate that the pandemic exacerbated the disparity in the distribution of income between various parties in addition to the integral values of racism and gender discrimination. An excellent example of a company that spearheaded sustainable financing during the COVID-19 era is JP Morgan, which committed US$30 billion, aiming to enhance the welfare among personnel and reduce the marginal difference in wealth acquisition. It is a practice that the researchers argue is an insight into the ideal solution for expanding and articulating ethics and moral ideologies across the region (Shilling & Celner, 2021). Forest Jr. (2019) depicts that the externality is the ability of an institution to enhance the relationship with different stakeholders across the industry to enrich the network. It is an approach that renders the social sphere empowerment due to implementing policies intensifying the trickle-down effects.

Under the spectral view of sustainable financing, a significant paradigm shift in the corporate responsibility attitude focused on safety and precautionary activities. The consequences of climatic change triggered a difference in companies’ strategic management and public relations. As a result, the organizations established affiliate relationships with the parties identified with the green initiative. It is a practice that led to improved competence across the U.S based on the association with the entities implementing the green initiative (Lurie et al., 2021). In this case, the components focused on boosting the value chain by incorporating the concept in dynamic activities and engagements such as the distribution of relief to communities highly affected by the COVID-19 outbreak. Wells Fargo faces a significant challenge encompassing the determination of effective marketing approaches and strategic management aspects. The intersection of supply chain value and functional corporate culture poses an imminent potential comeback to high performance in the banking sector.

A firm’s profitability relies on the interdependence between the macroeconomic conditions in the industry and the positioning to determine the performance. In this case, the various dimensions of the sector include customers, products, geography, production stages, and abound activities (Hearit, 2018). Primarily, integration of the dynamic components influencing the operations fosters the advancement to competence based on the outlying conditions of effective management. Wells Fargo faces a prominent challenge adhering to the evolutionary overview in the banking sector. In 2008 and 2009, the managerial team engaged in fraudulent activities while advocating for unsustainable aggressive marketing, leading to unethical approaches. Employees focused on attaining monetary gains at the cost of the corporate’s competence and reputation. However, the executive intensified the situation by compelling the workers to lie to the courts concerning the malpractices (Bayly, 2020). Primarily, Wells Fargo encountered a profound consequence as an untrustworthy financial service institution across the U.S and globally. The administration’s accountability is to ensure the restructuring of the company’s policies and culture to elevate professionalism among the bankers.

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It is recommended that Wells Fargo adopts modern practices, mainly sustainable financing policy, and reconstructs organizational culture. The approaches enshrine the prominent integration of values and ethical practices to intensify financial transactions. Poor implementation of managerial strategies risks the lack of profitability regarding the significant competition from multinational corporations. Primarily, the advent of coronavirus fostered a profound loss of job opportunities globally, increasing the poverty rate. Lack of finances is an issue that affects the entire international community due to the essence of poor living conditions, the flow of economic operations, the rise in debts, and dependence levels. As a result, it is the responsibility of the banking sector to establish green approaches in lending money while monitoring the optimal utilization of the resource to boost the quality of living within the US. Notably, the enterprise ideological construct focuses on intensifying the value of capitalism and quality of living among US citizens during the COVID-19 era.


Bayly, L. (2020). Former head of Wells Fargo banned from banking after role in sales scandal. NBC News. Web.

Forest Jr, L. R. (2019). Inaccuracies caused by hybrid credit models and remedies as implemented by ZRE. Z-Risk Engine. Web.

Hearit, L. B. (2018). JPMorgan Chase, Bank of America, Wells Fargo, and the financial crisis of 2008. International Journal of Business Communication, 55(2), 237-260. Web.

Lurie, N., Keusch, G. T., & Dzau, V. J. (2021). Urgent lessons from COVID 19: why the world needs a standing, coordinated system and sustainable financing for global research and development. The Lancet. Web.

Shilling, M., & Celner, A. (2021). 2021 Banking and Capital Markets Outlook. Deloitte Insights. Web.

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