The bank paid another US$5 million to customers for creating more than two million fake accounts for products like credit and debit cards to meet aggressive sales targets.
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Carrie Tolstedt was an executive at Wells Fargo who ran the division which oversaw the creation of over 2 million fraudulent accounts.
Separately, Wells Fargo said Tuesday that it would eliminate all product sales goals in its retail banking operations starting in January. Wells Fargo had 25 local branches with about $2.8 billion in deposits for a 24.6 percent share past year, the FDIC said. That was set to reach $1.75 million this year before Ms. Tolstedt announced her retirement.
The bank last week agreed to pay a $185 million fine and refund $5 million in fees wrongly charged to customers.
Lew said regulators were “correct to take action” against Wells Fargo.
The activity peaked in 2013 and mostly occurred in the Southwest part of the country, John Shrewsberry, the company’s chief financial officer, said at a conference Tuesday.
Jaret Seiberg, an analyst who covers the bank at Cowen and Company, warned in a report Tuesday that Wells Fargo’s recent troubles probably mark the end of the bank’s “special status” as a “mega bank that was really just a regional bank”.
Wells Fargo declined to comment. But Mr. Stumpf also said the bad behavior didn’t signal wider institutional or cultural problems within Wells Fargo.
Smith said a move to split the dual roles of Wells Fargo Chairman and CEO John Stumpf is also a possibility.
Tolstedt’s annual base salary is $1.7 million per year, and she made more than $9 million total last year with bonuses and stock options.
If Wells Fargo were focused on bank charges and interest rates rather than political hot button issues, perhaps it wouldn’t have had to fire thousands of employees for ripping off customers and be liable for millions of dollars in fines.
Federal prosecutors are in the early stages of an investigation into sales practices at Wells Fargo wfc , the Wall Street Journal reported, citing people familiar with the matter. The Office of the Comptroller of the Currency got only $35 million, while the city and county of Los Angeles, which was the first to sue the bank, received $50 million in civil penalties. They all worked in Tolstedt’s community banking division, the company said. A settlement with regulators last week over sales tactics and cross-selling of products has raised questions about the bank’s culture and controls, especially around its push for employees to sell multiple products to individual customers. Because of anticipated call-volume increases that are typical after Labor Day – and the expected settlement news, which also would generate additional inquiries – the roughly 10,000 workers at the bank’s telephone contact centers were instructed to try to process customer requests as quickly as possible.
Torrie Matous, a spokeswoman for the committee’s chairman, Richard Shelby, a Republican from Alabama, said staff has “been arranging briefings and collecting information from both Wells Fargo and the regulators” to prepare for a hearing on September 20.
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Considering the intense focus of regulators and popular distrust of big banks “It really is insane how stupidly Wells management has behaved”, Sen said via e-mail.
