Stumpf also confirmed that none of his personal compensation was tied to the product sales goals from the company, or for any of the named executive officers.
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Tuesday’s announcements are part of a series of actions by the bank to implement change throughout its organizations.
Of the 5,300 employees who were fired over five years due to improper selling, Mr. Stumpf said these included bankers, managers and managers of those managers.
“We need to look no further than just last week to see why we need a strong Consumer Financial Protection Bureau, which used its authorities under Dodd-Frank to uncover a massive scheme under which millions of consumer accounts at Wells Fargo were fraudulently opened, with the bulk of this fraud perpetrated in my hometown of Los Angeles”, Rep. Maxine Waters (D-Calif.), the ranking Democrat on the committee, said during the markup.
“Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences”, said Mr. Cordray.
The bank agreed to pay $100 million to the CFPB, $35 million to the Office of the Comptroller of the Currency, and $50 million to the city of Los Angeles, plus $5 million in remediation to customers.
But Stumpf said Wells Fargo is not abandoning this emphasis.
According to regulators, thousands of Wells Fargo employees were allegedly involved in a widespread scheme to reach aggressive sales goals – and earn bonuses – by creating 2 million accounts, including credit cards, customers didn’t authorize. In some cases, employees created fake email addresses to sign up customers for online banking services, regulators said. Executives highlight this so-called cross-sale ratio every quarter, according to the Associated Press.
All this while Wells Fargo was simultaneously shoving social issues down consumers’ throats, something they’ve done for years.
The Fortune article seemed to hit a nerve: one day later, Wells Fargo announced it will eliminate all product sales goals in retail banking, as of the start of 2017. “Our objective has always been and continues to be to meet our customers’ financial needs and drive customer satisfaction”.
Wells Fargo CEO John Stumpf is “sorry” for the fake-account scandal at his bank, but he’s got no plans to exit despite a growing firestorm.
Stumpf also declined to say he supports efforts to “claw back” the $124 million in stocks and options that community banking head Carrie Tolstedt is set to walk away with when she retires at the end of the year.
The executive charged with repairing Wells Fargo’s tarnished retail banking reputation is a former Wachovia and First Union veteran based in Charlotte.
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“The risk is not worth it, it is not critical to the growth of the company”, Stumpf said.
