The US Senate Banking Committee has scheduled a hearing on Well Fargo for next week at which Stumpf is expected to testify.
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The U.S. Attorney’s Offices in Manhattan and San Francisco are investigating Wells Fargo, the person said, following a settlement announced on September 8 over claims that some customers were pushed into fee-generating accounts they never requested. The employees created phony email addresses to enroll existing customers in online-banking services, for example, and issued them debit cards they didn’t request. Employees have said that these unrealistic targets led to a pressure cooker environment that prompted them to create millions of fake accounts.
“We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers”, said CEO John Stumpf in a statement. By removing these goals, Wells Fargo is signaling that it will end this practice to avoid these kinds of embarrassing headlines.
During a CNBC appearance on Tuesday evening, Chief Executive John Stumpf apologized and said management takes responsibility for the problems identified in the settlement. The ratio hovers around six, which means every customer of Wells Fargo has on average six different types of products with the bank.
Wells Fargo did not admit any wrongdoing in the settlements.
“Unfortunately, it’s not surprising that numerous employees took advantage of an incentive system created to spur cross-selling”, Morningstar said. That reputation is now at risk as lawmakers, regulators and even Wall Street analysts question how one of the country’s largest banks could have allowed such behavior to fester for years.
Carrie Tolstedt, the head of the bank’s retail operations where the abuses are alleged to have occurred, stepped down in July.
On Monday, Fortune magazine said Tolstedt will receive a $124.6 million compensation package in connection with her recently announced retirement.
Responding to the uproar, Wells Fargo said on Tuesday it will stop setting sales goals effective January 1.
Lew did not discuss whether prosecutions were warranted, but said no executive was “too big to jail”, and declined to discuss whether a clawback from Tolstedt was warranted.
Wells Fargo was also ordered to pay $35 million to the Office of the Comptroller of the Currency and another $50 million to the City and County of Los Angeles. It will also pay restitution to affected customers.
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At the conference Tuesday the bank said its review of millions of accounts showed that in as many as 1.5 million deposit accounts and 565,000 credit card accounts, “we could not rule out the possibility that an account was unauthorized”.
