NY Fed president compares Wells Fargo fake account scandal to subprime mortgage crisis
Housing Hire-
The president of the Federal Reserve Bank of New York told the Banking Standards Board in London on Tuesday that he sees quite a few similarities between the Wells Fargo fake account scandal and the subprime mortgage crisis of the late 2000’s.
New York Fed President William Dudley, in a speech entitled “Reforming Culture for the Long Term,” said that the goal-driven sales culture at Wells Fargo, which drove 5,000 of the bank’s former employees to open as many as 2 million accounts without authorization in order to get sales bonuses, reminded him of the environment that led to the mortgage crisis.
“As I have argued before, incentives shape behavior, and behavior drives culture. If you want a culture that will support your long-term business strategy, you need to align incentives with the behaviors that will sustain your business over the long haul,” Dudley said in his speech across the pond.