Wells Fargo says it is eliminating sales goals as it works to recover consumer confidence after it was ordered to pay almost $200 million because its employees opened more than two million unauthorized deposit and credit card accounts.
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Last week, the San Francisco-based bank paid multiple fines to regulators totalling $185m after finding many of its customer’s accounts were either falsified or opened without permission.
The enforcement action caught the attention of USA presidential candidate Hillary Clinton, who on Friday applauded the CFPB, censuring Wells Fargo for what she called “outrageous behavior”. Wells Fargo refunded $2.6 million to customers who held those accounts, averaging $25 per account.
Wells Fargo has acknowledged that it fired 5,300 employees over a five-year period related to improper sales practices.
That includes about 1.5 million deposit accounts and 565,000 credit card accounts.
Once Wells Fargo is able to change leadership and get back to the “great brand” they have always been, Schiffer says that Buffett “will likely double down on his investment” in the company.
Richard Cordray, director of the CFPB, told CNBC earlier this week that he does not believe Wall Street has a systemic problem with regard to retail staffers committing fraud to meet performance objectives, adding that he and other regulations will remain vigilant investigating banks.
“The regulators’ findings are consequential for a bank such as Wells Fargo, which historically has had strong customer satisfaction scores and a reputation for sound risk management”, Moody’s analyst Allen Tischler wrote. The fines also are not that much more than the $125 million one of its top executives, Carrie Tolstedt, will walk away with when she retires this year. PIN numbers were created for debit cards that customers did not know they had – “pinning” in the bank’s argot.
The bank’s shares dropped more than 2 percent to $47.12 in morning trading Tuesday.
“Wells Fargo’s Global Fund Services is well known for its expertise in administering real estate equity and credit strategies”, Bill Stone, SS&C chairman and CEO, said in a statement.
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. The bank was ordered to pay a further $35-million penalty to the Office of the Comptroller and another $50 million to the City of Los Angeles.
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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.
