A bumpy ride for the Wells Fargo stagecoach

The board members riding that iconic Wells Fargo stagecoach must be feeling like they’re out in the prairie and have just been captured. By the good guys.

And that’s not good, not for a banking company that has in the past few months been excoriated by Congress, in particularly Sen. Elizabeth Warren of Massachusetts, who is a former Harvard professor and respected economist.

Only she wasn’t very professorial when questioning Wells executives about the accounts scandal in which banking officials were accused of encouraging a process whereby various accounts were opened for customers without their knowledge to help profits. Warren went after Wells leaders, who departed shortly thereafter, like few senators ever do when questioning witnesses. And the bank execs had few on their side. Few, if any.

Now there’s another chapter in the Wells saga. It might be called, “Yes, after things go from bad to worse, they can still get worse.”

It seems the company’s board of directors have been paying a lobbying firm to work on the board’s behalf, presumably to repair the bank’s image and thus protect business.

The problem, as The Charlotte Observer reported, is that while companies hire lobbyists all the time, it’s rare for a board of directors to hire them to work just for the board.

Denis Arnold, a professor of business ethics and management at the University of North Carolina at Charlotte, was surprised by the lobbyist hiring. “It suggests,” he said, “they’re more interested in buffering themselves against external criticism and regulation, rather than focusing on internal changes to ensure that these types of practices (extra accounts) never take place again.”

And of course, there’s another irony here.

The board has spent $600,000 on a high-powered lobbying firm in Washington at the same time directors have said they want to cut $4 billion in annual expenses by the end of 2019.

So it should be no wonder to directors that ... look out ... Warren has been calling for all the board members who were on the board during the years the scandal about the extra accounts was taking place. It’s astonishing that the board wouldn’t have done that already, that its members would be so blind to the obvious importance of removing those members for the bank’s image and credibility.

That reflects a corporate arrogance that has survived even a televised pummeling in front of Congress.

Better fasten your seat belts, board members. You’re likely to be having another meeting with Warren, who demonstrated last time out that in any debate over banking issues, her opponents are fighting out of their class.

The shame in all this, in part at least, is that people who deal with branches of this or any other bank come to develop relationships with everyone from tellers to loan officers, most of whom are nice, honest people who want to serve customers. It’s unfair that the action, or inaction, of directors, and the misguided leadership of those at the top who have resigned will reflect poorly on all those who work for the bank and had nothing to do with the scandal.

The board cannot explain to anyone’s satisfaction its preposterous hiring of a lobbying firm to help the board and only the board. Members should forgo any further compensation and apply that money to reimbursing the bank for the lobbying expenses.

Congratulations board members. You managed to take a situation where bad had already gone to worse and make it worse still. Warren doubtless will have something to say about that. Buy the popcorn and settle in.

This story was originally published November 3, 2017 at 10:28 AM with the headline "A bumpy ride for the Wells Fargo stagecoach."