John Shrewsberry, the bank’s chief financial officer, spoke September 12 in NY at the Barclays 2016 Global Financial Services Conference and detailed the bank’s internal investigation and resulting new practices.
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As public questions and criticism of the bank’s conduct mounted this week, many investors sold.
Although the bank eliminated sales goals for retail staff, Stumpf said “cross-selling” products from various businesses to customers is still important to expand its business.
To reach unrealistic goals, Wells Fargo employees engaged in all kinds of sordid practices, including the creation of fake email accounts.
But that “cross-selling” strategy is now under intense scrutiny after the bank was caught creating over 2 million fake bank and credit card accounts without the knowledge or consent of its customers. He said the consultant found that 115,000 of the unauthorized accounts had been charged fees.
He added that Wells Fargo’s headaches are also “quickly becoming a political problem” for big banks in general, providing critics “more ammunition to argue that mega banks are unmanageable”.
“Our objective has always been and continues to be to meet our customers’ financial needs and drive customer satisfaction”, said Wells Fargo chief executive John Stumpf.
The Consumer Financial Protection Bureau, the upstart regulatory agency that ostensibly led the investigation, got a 0 million fine from Wells Fargo.
The $185 million was fully accrued for at the end of the bank’s second quarter, Shrewsberry said. Customer interactions “were not handled as they should have been”, he said.
Shrewsberry said the review would impact people “at all levels of the organization”. That reduced the firm’s market value to $US236.9 billion, compared with $US240.3 billion for New York-based JPMorgan.
Shrewsberry said the bank increased staffing to prepare for the fallout over the regulatory settlement, but has so far seen “very very low volumes of customer reaction”.
Carrie Tolstedt, who ran Wells Fargo’s consumer banking division, also stepped down in July.
As a parting gift, Tolstedt will earn a purported $125 million payday, the lion’s share of which stems from the exercise of stock awards that she received from the bank along the way. Another alternative for bank customers is to use “pure online banking”, he says.
The Senate Banking Committee has scheduled a hearing for next week and Stumpf is expected to testify.
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SAN FRANCISCO – A Wells Fargo executive who oversaw the unit that created 2 million unauthorized customer accounts is retiring from the company with a golden parachute worth $124.6 million, according to a news report.
