Wells Fargo & Co. said Tuesday that it would eliminate all sales goals for credit cards, checking accounts and other retail banking products as the financial giant tries to fix its image following a $185 million settlement over aggressive sales tactics.
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Amid national criticism over improper sales practices that triggered $185 million in fines last week, Wells Fargo now faces investigation by federal prosecutors.
Shareholder resolutions could be a black eye for San Francisco-based Wells Fargo, which has avoided some of the investor backlash that other large banks faced coming out of the financial crisis under pressure from Walden and other activists.
“The people who we’re talking about here weren’t the high performers”, Chief Financial Officer John Shrewsberry said at a financial services conference Tuesday. That was set to reach $1.75 million this year before Tolstedt announced her retirement. In the July 12 statement announcing Tolstedt’s departure, Stumpf called her “one of our most valuable Wells Fargo leaders, a standard-bearer of our culture, a champion for our customers, and a role model for responsible, principled and inclusive leadership”.
Get ready for fireworks next week when Elizabeth Warren grills Wells Fargo’s CEO over the bank’s mind-boggling creation of millions of fake accounts. The phantom accounts resulted in some customers being hit with fees for insufficient funds.
Last week, Wells Fargo said that it takes complete responsibility and regrets the unauthorized practice due to which customers may have received unrequested product. The ratio hovers around six, which means every Wells Fargo household has on average six different types of products with the bank.
At the center of the bad behavior appears to be an effort by the bank to persuade customers to sign up for multiple products, known as “cross selling”.
Wells Fargo has always been known for its aggressive sales goals, but in an industry plagued with questionable action during the mortgage bubble and financial crisis, it was also regarded as a well-run, tightly managed firm that did not get into the poisonous behavior of its Wall Street counterparts. They transferred money from customers’ preexisting accounts to these new ones, and issued and activated debit cards, and created PIN numbers, all without customers’ permission.
The Senate Banking Committee will hold a hearing on September 20 to investigate how such widespread fraud occurred within the company.
In theory, Wells Fargo could try to “claw back” this pay, given the turmoil in Tolstedt’s division. Mr. Stumpf said that those fired included bankers, managers and managers of managers, but declined to name the most senior executive let go.
He said the bank will “take a big wide fresh look at who knew what and when and what else might have been done”. But it can refer a case to the Department of Justice for a criminal investigation.
Smith said a move to split the dual roles of Wells Fargo Chairman and CEO John Stumpf is also a possibility.
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But numerous workers that The Times interviewed were highly successful employees.
