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Introduction of wells fargo scandal
Employee rights and employer responsibilities
Employee rights and employer responsibilities
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In regards to culpability for the Wells Fargo scandal, who deserves to accept the responsibility? On one hand, the employees themselves actually generated the false accounts. While the pressure for success and lucrative incentives constantly loom over their heads, the decision to create fraudulent accounts belongs solely to employees. These employees had complete understanding that the consequences of their actions had much greater ramifications for the company and its customers than for the employees themselves. To put this idea in perspective, if an employee underperformed, he risks losing his job, while problematic, the side effects remain temporary. On the contrary, if held accountable for credit card debt she never accrued, a customer
First of all, they will not be able to buy tangible properties such as house, car and etc. because of that their credit ratings got a huge hit. Moreover, only 5,300 of the employees that were fired from the Bank, 10% were Managers. What could have motivated them to engage in this sham? This is not an attempt to imply all were of malicious but certainly most them led the way. The aggressive sales goals pushed employees to break the rules. “On average one percent 1 percent of employees have not done the right thing, and we terminated them. I don’t want them here if they don’t represent the culture of the company,” says John Stumpf, the company’s longtime chief executive, in an interview with The Washington Post. It is obvious that simple employees and managers could not break the law if someone from the top did not allow them to do so. But the executive board of Wells Fargo claimed that they only fired 1 percent of below employees and some managers for fraudulent accounts, however they also might be involved in that business crime although to build a case against a company executive, prosecutors would have to show “they knew there was a plan to create false accounts to drive up sales,” said Brandon L. Garret, a professor at the University of Virginia School of Law. Even if it appears that the executive purposefully attempted to avoid knowing about the fraud, prosecutors may be able to build a case. Because they don’t have to participate if there is willful
As Wells Fargo convicted all the requirements of fraud they are involved to the business crime called fraud, they are liable to their fraud crime. There was a false statement which respectively conducted to the injury to the alleged victim as a result. Wells Fargo has been ordered to pay $185 million in fines, but that's a pittance compared with the $5.6 billion the bank earned in just the second quarter of this year. Meanwhile, the bank's victims weren't just nickel-and-dimed with overdraft and maintenance fees. Many of them took "significant hits" to their credit scores for not staying current on accounts they did not even know about. They will likely have difficulty securing home and car loans at reasonable rates for years to come, simply because their bank decided to defraud
One year ago, on September 8, 2016 the Consumer Financial Protection Bureau(CFPB), the Los Angeles City Attorney and the Office of the Comptroller of the Currency (OCC) fined Wells Fargo Bank $185 million, alleging that more than 2 million bank accounts or credit cards were opened or applied for without customers' knowledge or permission between May 2011 and July 2015. This essay will discuss the Wells Fargo scandal by explaining how the event happened and describing how the organization approached handling a response to the crisis. This will be seen, firstly by describing the how the scandal happened, and what were the causes, secondly by discussing the reaction of the company in front of the situation, how they dealt with the crisis and then
...FO at the Houston airport. While Mr. Fastow's parents were undergoing a random search, he stopped to chat with Mr. Schwieger. "I never got an opportunity to explain the partnerships to you," he said, according to Mr. Schwieger. Mr. Schwieger replied, "With everything that has come to light, I probably wouldn't like the answer I would have gotten."
In conclusion, people have still not been held accountable for one of the largest financial collapses of all time. I think that there should be a limit on who gets qualified for any loan in order to avoid this situation again. I think that everyone who was responsible should be held accountable for what happened even if it means banks going under.
Key stakeholders are owners, directors, employees, and the community that the organization draws it resources businessdictionary.com,2016). Out of the 1000 Wells Fargo customers that were surveyed 3% stated that they were personally affected by the scandal and 14% of them stated that they have changed banks while 30% of them were currently looking to switch. Studies predict that Wells Fargo could lose about $99 billion in deposits and $4 billion in revenue because of customers rejecting to do business. Individual customers weren’t the only ones that were affect by the scandal but similarly 10,000 small businesses (Razin, 2016). I believe that the owners will be affected as well because of profit losses that will eventually affect Wells Fargo shares and the employees were affected after 5,300 of were fired (Razin,
Jake Clawson Ethical Communication Assignment 2/13/2014. JPMorgan Chase, Bailouts, and Ethics “Too big to fail” is a theory that suggests some financial institutions are so large and so powerful that their failure would be disastrous to the local and global economy, and therefore must be assisted by the government when struggles arise. Supporters of this idea argue that there are some institutions that are so important that they should be the recipients of beneficial financial and economic policies from government. On the other hand, opponents express that one of the main problems that may arise is moral hazard, where a firm that receives gains from these advantageous policies will seek to profit by it, purposely taking positions that are high-risk, high-return, because they are able to leverage these risks based on their given policy. Critics see the theory as counter-productive, and that banks and financial institutions should be left to fail if their risk management is not effective.
According to Milton Friedman’s view of individualism “what corporations have the obligation to do is make a profit within the framework of the legal system, nothing else” (Machman, 1994, pg. 57) is what position Wells Fargo took in this case. According to this theory Wells Fargo leadership was acting ethically because their goal was to make a profit which they did, and it was “bad employees” who were to blame and committed the fraud. The Utilitarianism theory by John Stuart Mill states that “utilitarianism is attempting to do the greatest good for the greatest number of people. “(Johnson, C, 2016, p. 4). According to this theory I believe Wells Fargo would be unethical because they didn’t do the greatest good for the greatest number of people whom were affected. In fact, they did the opposite by acting unethically to the greatest number of people which were their
You have had sleepless nights anticipating graduating from university and receiving your diploma. As you work your way up, you finally accomplish your lifelong dream: a banker at Citigroup. Suddenly, the market crashes and some loans you set up have gone wrong. You had no intentions to put the company in danger. All you wanted was to contribute to the bank’s prosperity and live a comfortable life. The bank blames you for what has happened, fines you accordingly and puts your job in jeopardy. Despite your honest intentions, you are now left alone and blamed. Do you think that is fair treatment?
The new vision of Wells Fargo & Co. will need to address where it wants to be in regards to the trust of its customers. With the extensive media attention the company has received recently, it is important to focus the vision on changing how the public views it. The company’s vision should be as follows:
During the past year Wells Fargo, a well-recognized bank of the United States, has been trying to clean its name and the mess it got itself into, when it was brought to the public that the bank was involved in generating fraudulent checking and savings accounts for its clients without their knowledge or their authorization. “The way it worked was that employees moved funds from customers' existing accounts into newly-created ones without their knowledge or consent”
Accounting fraud refers to fraud that is committed by a company by maintaining false information about the sales and income in the company books, when overstating the company's assets or profits, when a company is actually undergoing a loss. These fraudulent records are then used to seek investment in the company's bond or security issues. By showing these false entries, the company attempts to apply fraudulent loan applications as a final attempt to save the company by obtaining more money from bankruptcy. Accounting frauds is actually done to hide the company’s actual financial issues.
When an ethical dilemma arises within an organization, it is difficult to separate right and wrong with what is best for the majority. Sometimes the answer is not a simple “yes” or “no.” In 2002, Enron Corporation shows us just that. By 2002, the sixth-largest corporation in America filed for Chapter 11 bankruptcy. The case of the Enron scandal is one of the best examples of corporate greed and fraud in America.
Employees tend to view their only obligations is to increase their company’s profit as so
During the recession, Senior Management told staff to lie to the public. They agreed that they could borrow at lower interest rates than they realistically could, in order to give off a better impression of the bank and show it in a better state than it actually was. This corruption at top level influences the culture within the organization. The lack of accountability at top management led a lot of non-implemented procedures.