The bank has already fired 5,300 scheme-related employees. Wells Fargo’s shares have dropped approximately 5.6 percent since last week when the $185 million fine against the bank was unveiled, and the Senate Banking Committee said Monday that it would hold a hearing next week on Wells Fargo’s sales practices Chief executive financial officer John Shrewsberry said Tuesday that the move to eliminate product sales goals is meant to give Wells Fargo’s customers full confidence that the bank is always acting in their best interests.
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The largest US bank by market capitalization last week said it would pay $185 million in penalties and $5 million to customers that regulators say were pushed into fee-generating accounts they never requested.
Chief Executive Officer John Stumpf also sent an e-mail to customers on Wednesday apologizing for the actions. The financial expert thinks Buffett most likely shares the sentiment of disgruntled employees and would be all in favor of “tying Stumpf up to the Wells Fargo stage coaches and letting the horses run”, Schiffer tells TheDCNF. “It was really more at the lower end of the performance scale, where people apparently were making bad choices to hang on in their job”.
Nonetheless, the bank said it will eliminate product sales goals in its retail banking division, according to the Journal.
“These bad practices were not a revenue-generating activity”, Shrewsberry said, the news website writes.
Wells Fargo has said it regrets “any instances where customers may have received a product that they did not request” and that it has refunded $2.6 million in fees associated with products that were opened without authorization.
At the Delivering Alpha conference Tuesday, Treasury Secretary Jack Lew said the case shows the need for strong banking regulation.
The consumer bureau and the Office of the Comptroller of the Currency also opened investigations and found that bank employees illegally transferred money from legitimate accounts into unauthorized ones opened for customers without their approval. “It should remind all of us and firms that culture and compensation make a difference”, he said.
As for whether or not Buffett will pull out of Wells Fargo, a company he ardently supported over the years, Schiffer thinks the wealthy venture capitalist is in it for the long haul. The move marks a major switch in practice by the bank, which is known in the industry for its ability to sell multiple products to the same customer.
The targets, pushed from Wells’ top executives, were unrealistic.
Shrewsberry said Tuesday that cross-selling remained part of the bank’s “approach to satisfying all of our customers’ financial needs”.
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“We are prepared to provide the committee with information on this matter and to discuss steps we have taken to affirm our commitment to customers”, Wells Fargo said Tuesday.
