Among the fired employees are account executives, bank tellers, branch managers and customer service representatives. “Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed”.
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The unauthorized accounts led to customers receiving fraudulent fees and, in the case of unauthorized credit card accounts, hurting the customer’s credit rating.
Buffett’s silence on Wells Fargo contrasts with his support of executives including Goldman Sachs’s Lloyd Blankfein and JPMorgan Chase’s Jamie Dimon when their companies drew regulatory scrutiny.
One former Wells Fargo human resources official even said the bank had a method in place to retaliate against tipsters. However, notwithstanding the $185 million settlement, and the $50 million that the City and County of Los Angeles will receive for the objective of consumer protection, I remain concerned that mere financial penalties may not be enough to prevent this from happening again. Numerous senators, including Senator Elizabeth Warren, called on Stumpf to resign, and argued that the executive who oversaw the fraud should not receive this year’s bonus or all her compensation. Warren. Stumpf replied, “There is a process that the board goes through and they will do that, they’ve already met, and we’ll give that -” “I don’t understand, you keep saying, ‘The board, the board, ‘ as if these are strangers that you met in a dark alley”.
Sens. Elizabeth Warren, D-Mass., Sherrod Brown, D-Ohio, Jack Reed, D-R.I., Robert Menendez, D-N.J., Bernie Sanders, I-Vt., Jeff Merkley, D-Ore., Kirsten Gillibrand, D-N.Y., and Mazie Hirono, D-Hawaii, sent the letter two days after many of them grilled Stumpf for almost three hours in a Senate Banking Committee hearing on Capitol Hill.
Stumpf said later, “I apologize to all of the American people and our customers and I will make it right”. Other issues include, 1) how to compensate customers whose credit scores were dinged, 2) how to compensate employees who were fired for not meeting sales targets, 3) how far back in time the bank will have to go to scrutinize sales. Wells Fargo declined to comment on the suit, which was filed in U.S. District Court in Utah.
“What is particularly disappointing to us is that we and investors have long held Wells Fargo management in very high regard – they have been smart contrarian thinkers and made thoughtful decisions”, JPMorgan analyst Vivek Juneja writes. She also says she never did anything illegal while at Wells, but said there were ways to game the system.
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Hensarling, R-Texas, said he wasn’t sure the CEO had all the answers, but noted that Stumpf now has a week to prepare before he faces the House.
