CHRIS ARNOLD, HOST:

Hey, just a warning, bankers sometimes use adult language. And in this podcast, they do.

ROBERT SMITH, HOST:

Recently, the third-largest bank in the country, Wells Fargo, got into trouble.

ARNOLD: Serious trouble - a federal investigation showed that Wells Fargo was secretly opening bank accounts in people's names without their permission.

SMITH: And we're talking checking accounts, credit cards, loans.

ARNOLD: Right, and not just a couple. We're talking about up to two million of these accounts. And this has come out now and this has blown up into a giant banking scandal.

SMITH: Now, maybe you saw this on the news. Wells Fargo paid a huge fine, fired a bunch of low-level employees, but that wasn't enough. The U.S. Senate demanded that the bank's CEO, John Stumpf, appear on Capitol Hill. Senator Elizabeth Warren had a few thoughts on the matter.

(SOUNDBITE OF ARCHIVED RECORDING)

ELIZABETH WARREN: So you haven't resigned. You haven't returned a single nickel of your personal earnings. Instead, evidently, your definition of accountable is to push the blame to your low-level employees who don't have the money for a fancy PR firm to defend themselves. It's gutless leadership.

ARNOLD: Stumpf sat quietly through this, and when it was his turn to speak, essentially what he said was, look, there were some bad apples, OK, but we fired the bad apples. Everything's cool now, and upper management is not guilty.

(SOUNDBITE OF ARCHIVED RECORDING)

JOHN STUMPF: We never directed nor wanted our team members to provide products and services to customers that they did not want.

SMITH: The hearing was all over the news, and in San Francisco, one of those low-level employees without a PR firm was watching her former boss testify. Ashley worked for Wells Fargo for five years, and she could not believe what she was hearing.

ASHLEY: Excuse me. That's bullshit. Like, this was such a systemic thing that was taught. It's a - it's the sales culture, so that's just b.s..

SMITH: And Ashley said you know what? I'm going to show the world how this scam worked.

(SOUNDBITE OF MUSIC)

SMITH: Hello, and welcome to PLANET MONEY. I'm Robert Smith.

ARNOLD: I'm Chris Arnold. And, Robert, today we are going inside a Wells Fargo bank branch and not just any Wells Fargo bank branch. This is the branch on the first floor of the Wells Fargo headquarters building in San Francisco.

SMITH: This is a place where a bunch of stressed out young people were pushed and pushed and pushed until they did some very bad things.

ARNOLD: And while all that was going on, the CEO, John Stumpf, was working right upstairs.

(SOUNDBITE OF MUSIC)

ARNOLD: I went to the Wells Fargo headquarters building, Robert, and it's a pretty plain stone-and-glass skyscraper building right in downtown San Francisco. It's pretty unremarkable though it's surrounded by taller buildings. For Ashley, though, she came with me, and she remembers everything about her first day there. She was 23, hadn't finished college, and she was about to become what's called a personal banker, so she dressed like she thought a personal banker should dress.

ASHLEY: Stiletto heels, about a pound of hairspray and bobby pins in my hair. I felt proud and fortunate to be able to work for such a big company, and really the sky was the ceiling.

ARNOLD: This was 2007, the beginning of the financial crisis, and other banks were starting to panic but not Wells Fargo. They were still growing, and they were still expanding.

SMITH: Wells Fargo positioned itself as the folksy bank, you know, the everyday friendly bank. Their plan was to get through the crisis by adding more customers, by taking in more money into accounts, and to get more customers, to get more money, they needed salespeople.

ARNOLD: That would be Ashley's job. She was young, long hair, sparkly eyes, and she would sit in the bank lobby waiting for someone to come in the door.

ASHLEY: Customer walks in, and we'd have to go through the whole motion of standing up, hi, Mr. So-and-So. What can I help you with? I'm looking to open a checking account. Great. Tell me about yourself.

SMITH: Part of the technique was to sell the grand history of Wells Fargo, you know, the whole Wells Fargo wagons coming down the street, stagecoach of the 1800s. In fact, there is a giant antique stagecoach parked right there in the lobby next to where Ashley worked.

ARNOLD: So Ashley worked with a lot of other young people. Some of them had suits on for the first time. They were very excited to be there. And we talked with a bunch of them. One of them was Eric, and like Ashley, he only wants to use his first name. And what he says is they would do is that they would leverage this wholesome reputation to get people to sign up for accounts.

ERIC: Because, you know, the reputation that, you know, that you were going into a safe place, right? This is where I go to park my money, right? This is where I go to, you know, get tools and instruments that will help me and my family advance and succeed in life. You know, the last thing that would be in the back of your mind would be that, hey, you know, I'm not in a safe place.

SMITH: Now, every bank tries to upsell people. You've been there, right? You have a checking account. They say, hey, why not get a credit card?

ARNOLD: Right. This is called cross-selling, and to some degree, it makes sense. But Eric and Ashley say Wells Fargo took it to a whole 'nother level, and they weren't just pushing another bank account, but let's say, OK, you should probably have a credit card and multiple savings accounts perhaps, and if you got kids going to college, maybe they need checking accounts and credit cards.

SMITH: Yeah, how about a new line of credit and a business line of credit? And how about two lines of credit while we're at it?

ARNOLD: This was a corporate priority. The more customers, the more accounts, the healthier the bank looks.

SMITH: The CEO, John Stumpf, remember, he worked upstairs from Eric and Ashley in the headquarters. He had a slogan, which was eight is great, as in everybody should have eight Wells Fargo accounts - checking, savings, credit cards and other products.

ARNOLD: And Ashley was expected to open eight new accounts, eight new products, every single day, so this wasn't just some aspirational thing. There was a goal, and her managers would push her all day long.

ASHLEY: It was how are you going to meet your goal? If your numbers were not what they were by noon, how are you going to fix it? Make a hundred calls a day - call, call, call. We were constantly on the phone - dial, dial, dial.

SMITH: Eight new accounts a day. In January, they raised the goal to 20, called it jump into January. You were expected to call everyone you knew, your friends and your family.

ASHLEY: Because you'd be calling them like, crap, I got to get out of here. I don't want to work Saturday. Let me please open you an account.

ARNOLD: Actually, all the bankers we talked to said that Wells Fargo would burn through a lot of young workers this way. They would get hired, sell Wells Fargo products to just about everybody that they knew and they could call on the phone, and then they'd get pushed out when they didn't have anybody else to sell to.

SMITH: Ashley told us a story about how deadly serious the managers were about these quotas. One day, Ashley was working a few blocks away from headquarters at what's called the Crocker branch in San Francisco, and a bank robber comes in - a bank robber - and police show up outside. And Ashley is telling us all about this in one of our conversations on the phone.

ASHLEY: Cops were swarming. They shut everything down. You know, public couldn't come in. You know, you're an employee, you know, you're watching all us, and the guy jumps the counter. It was a crazy big fiasco. And they had the guy detained. He, like, crapped his pants. It was a big fiasco. And then he faked a heart attack.

ARNOLD: Oh, my God.

ASHLEY: Like, it was don't even look at it. Dial for dollars.

SMITH: And Ashley is sitting at her desk, and her manager, her district manager, says, do not leave your desk. Keep selling.

ASHLEY: Nope, don't think you're walking out or going home early even though we're closed for the rest of the day. Dial for dollars. Dial for dollars. And it's like how am I supposed to be on the phone with a client and hold a conversation and try to sell him a checking account when you've got freaking a million cops in our lobby being loud and noisy? And then it smelled like crap because the guy crapped his pants.

ARNOLD: I mean, so were you and your co-workers just like are you kidding me? Like, the guy's, like, crapped himself.

ASHLEY: Well, it was - we weren't surprised. I mean, it was like no of course we're - of course - I mean, we're on the clock. You know, of course they're not going to be like, OK, everybody, like, let's have a discussion about what just happened. No, no, no, it was - it was a boiler room.

SMITH: Dial for dollars.

ARNOLD: Yeah, it just never stopped - dial for dollars.

SMITH: And the reality was, all of this pressure being put on Ashley and Eric - it was working. The bank was a huge financial success. In 2009, you know, some banks are still struggling from the financial crisis, right? Wells Fargo announced record earnings.

ARNOLD: Right, these guys were selling a lot of products. And around that time, a profile in Fortune magazine called Wells Fargo a rare upbeat tale amid the banking wreckage.

SMITH: The bank needed new money to keep this going, so they added more pressure. And Ashley says there were no excuses - not a bank robbery, not exhaustion. When Ashley didn't meet her number, two managers would show up at her desk.

ASHLEY: They said come with us. So I walked with them, followed the two of them through the large lobby, you know, past all my colleagues, whatnot - you know, it's like being called into the principal's office - sit down at the large conference table, no windows in this room. They shut the door, locked the door and put me on formal warning and say, here's your formal warning. You have to sign this. If you don't meet your solutions, you will be fired, and it's going to be on your permanent record. I mean, it was real, like, you were stuck. And it was the feeling that no other employer is going to want you because we will ruin you.

SMITH: They were essentially saying to Ashley, if you don't make it here at Wells Fargo, you're not going to get another job in banking.

ARNOLD: After one of these coaching sessions, Ashley went back to her desk, sat down...

ASHLEY: But I got sick to my stomach, and I threw up under my desk. Like, it really made me physically sick.

ARNOLD: You know, I heard similar stories from four other employees - the stress, crying - not just in Ashley's bank branch either. These sales scores were being pushed all over the country, all over downtown San Francisco. And it's not like these employees were getting rich. Ashley said she made around $35,000 a year.

SMITH: Yeah. It's striking that she and her colleagues were pretty young. I mean, these were sort of their first corporate jobs. When we talked to Eric, he said the pressure there - the pressure there was just crippling.

ERIC: I just - it was every day, man. I mean, it was literally every day, and it was a grind house.

ARNOLD: The goals just seemed impossible. The pressure was overwhelming, but there actually was a way out.

SMITH: Employees cheated - they cheated. They figured out ways to make new accounts appear out of thin air. And it's this thing that always seems to happen in these scandals. I mean, we saw this in the mortgage crisis too, right? You give someone a number, you say meet it no matter what. And they start figuring out ways to take shortcuts, to fudge that number.

ARNOLD: And at Wells Fargo at first, this stuff, you could argue, was pretty minor. So a customer would come in, they'd have an investment account - say, a CD - certificate of deposit - it was $10,000. So the bank employee could split that up into 10 different accounts with $1,000 in each.

SMITH: One account becomes 10 accounts. It's like magic.

ARNOLD: And then you meet your daily goal.

SMITH: There was another trick there. You could just slip extra accounts into the paperwork. Say someone wants a home equity loan - you could add a personal line of credit into the stack of papers they were signing. And just, hey, got a new account, customer never even notices.

ARNOLD: Now, the problem there was that was starting to get a little more serious because you give someone a personal line of credit for $25,000, that will affect their credit rating.

SMITH: Ashley remembers one day when a man comes into the bank branch.

ASHLEY: He was elderly. He had a cane. He was on his own. The teller had sent him over to me the first day I met him because he was overdraft. And he couldn't understand why he was negative. And he was saying, all I want is to buy a newspaper. Why can't I buy my newspaper?

SMITH: Ashley pulls up his account on her computer. And she notices something really strange. This man was living off of Social Security. He got around $1,100 a month, and yet...

ASHLEY: Well, he had accrued, I think, over $200 in overdrafts. And when I looked at his accounts, he had six different accounts. He had no understanding of the accounts he had. He just said, oh, this nice lady explained to me that I needed this new account package like it wasn't an option for him. I felt so terrible for this man.

ARNOLD: Ashley waived all the fees that the system would let her waive for this guy. But then she did something even more. She went into her own checking account, took money out and put it into the old man's account just to get him back to zero so he could, like, buy his newspaper and not get any more overdraft charges.

SMITH: Ashley says she tried to report the employee who had signed this man up for so many accounts, but her managers didn't do anything. Later, she would start to call the company's ethics line again and again but nothing happened.

ARNOLD: And you got to ask, how far up did this go? Did the executives know what their employees were doing to meet these goals? I mean, Wells Fargo would brag to top investors. The CEO would say on investor calls, eight is great. I mean, this was being heralded from the rooftops here.

SMITH: And remember, Ashley and Eric are working in the lobby of the corporate headquarters. Ashley says Wells Fargo bigwigs would walk by her desk. She would hold the door open sometimes and guess who would come through - the CEO, John Stumpf.

ASHLEY: Oh, yeah, I saw him - his car was always parked in the alley right behind my desk. I mean, these people were fixtures. They worked directly upstairs.

ARNOLD: And then there were the complaints because, look, you can't just keep giving people accounts that they don't want forever without it starting to come back on you to some degree, right? So customers were noticing the extra accounts. A few lawsuits were filed because all these customers were complaining. But for a long time, customers were told, look, it's a simple mistake, and the accounts were closed. And it seemed like no one was seeing the big picture.

SMITH: The scam started to unravel in 2013. An LA Times reporter published a story about some of the intense sales pressure that people like Ashley were feeling at Wells Fargo.

ARNOLD: So after that, regulators started to come in. So the Consumer Financial Protection Bureau was investigating along with the LA city attorney's office. Last month, the CFPB hit Wells Fargo with the biggest penalty it's ever issued against any financial institution in its history. It estimated there might have been more than 2 million unwanted accounts. We found out 5,000 Wells Fargo employees were fired. This whole thing blew up - giant mess, giant scandal.

SMITH: But we should say that the fines totaled about $185 million - pretty small in the big scheme of banking. And there is still an investigation about who knew what and when did they know it.

ARNOLD: We contacted Wells Fargo to ask about all this. And we showed them what Ashley and Eric and others had said. And Wells Fargo spokesman Oscar Cirrus read us this prepared statement.

OSCAR CIRRUS: Although the vast majority of our team members do the right thing every day on behalf of our customers, these allegations and accusations are very serious. And if any of these things transpired, it's distressing and it's not who Wells Fargo is. Our board announced last week that it will lead an internal investigation into retail banking, sales practices and related matters.

SMITH: Ashley and Eric both left Wells Fargo before all of this was revealed. Eric quit his job after the pressure just started to get too much for him to deal with. He was getting stomach problems. His eyes, he said, were twitching.

ERIC: Yeah, it was - it just got to a point where, you know, it was just like I can't. I just can't handle this, man, you know?

ARNOLD: As far as Ashley, she started to refuse to meet her quota. She was just saying, look, I can't ethically do this. She was calling the Wells Fargo ethics line trying to explain this, but eventually Wells Fargo fired her.

SMITH: Ashley tried to get another job in banking, but she found that she never made it very far past the initial interviews. She suspected that Wells Fargo had put some sort of black mark on her record somewhere. And it turns out that is exactly the case. Wells Fargo wasn't joking around when they said they would make it hard for her to find work again.

ARNOLD: No. Wells Fargo wrote her up on what's called a U5 document. It's like a report card for bankers basically. We tracked it down, and we asked Ashley to read what it said.

ASHLEY: Failure to perform job duties.

SMITH: Any bank - any bank that Ashley applies to will see this line, failed to do job duties.

ARNOLD: The form does not mention that those job duties were the sales goals that everyone we spoke to said were unrealistic and that are at the center of a series of ongoing investigations at the state and federal level.

SMITH: It just says failed to do job duties. It was the first time Ashley had seen it in print.

ASHLEY: It's like having a black cloud that's kind of looming behind you. And I'm always trying to get in front of the cloud, out of the cloud, into the sunshine, but it's always there.

ARNOLD: But at least now with the investigation maybe people can start to see through that black cloud and see what Wells Fargo did.

(SOUNDBITE OF MUSIC)

SMITH: We always love to hear what you think of the show. You should email us - planetmoney@npr.org - or you can tweet us - @planetmoney.

ARNOLD: Our episode today was produced by Elizabeth Kulas. Special thanks to Neal Carruth and Uri Berliner.

SMITH: And before we go, a quick shout-out to Alex Goldmark, our senior producer here at PLANET MONEY, who's away getting married this weekend. Mazel tov, Alex. And now that you're finished listening to PLANET MONEY, we have a special podcast event to tell you about. Everyone here in the U.S. knows, of course, that the second presidential debate is Sunday October 9. The very next morning, the NPR POLITICS podcast will have everything you need to know about that debate. You can subscribe or listen to NPR POLITICS on the NPR One app.

ARNOLD: I'm Chris Arnold.

SMITH: I'm Robert Smith. Thanks for listening.

Copyright © 2016 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.