Last week, three regulators fined Wells Fargo $185 million, including a $100 million fine from the Consumer Financial Protection Bureau (CFPB).
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Wells said it had fired over 5,300 employees over the past five years related to the unauthorized accounts.
Specifically, approximately 5,300 employees may have opened roughly 1.5 million deposit accounts, transferring funds from consumers’ accounts to temporarily fund the new, unauthorized accounts.
“Every day we strive to get things right”.
Last year, in response to an advertisement featuring a lesbian couple, noteworthy evangelicals like the Rev. Franklin Graham said they’d had enough and closed out their accounts.
“We’re not sitting idly by”, he said, “we are investing in controls and training.We’re making big investments and my goal is perfection”.
The investigation was first reported by the Wall Street Journal.
“This is a wake-up call”.
“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”, the Wells Fargo spokesperson said. According to USA Today, Shrewsberry told an audience at a financial services conference today that “unauthorized customer account activity peaked in 2013 and two-thirds were concentrated in the southwest United States”. “It’s tailed off since then”, he said. Bank employees had been pressured to do so by aggressive sales quotas that could not be met through actual sales.
According to interviews with employees, many workers felt pressured to sell customers multiple unnecessary products in order to reach branch-level sales targets tied to bonuses and their employment.
“The risk is not worth it, it is not critical to the growth of the company”, Stumpf said.
By defrauding customers, one Wells Fargo executive earned a $125 million payday.
8 settled allegations that it opened credit-card and deposit accounts for customers without their approval, while not admitting or denying wrongdoing. The industry has been under pressure amid historically low interest rates and tighter banking-industry regulations after the 2008 financial crisis, and “cross selling” can be a profit driver.
This goes to show that even the best-performing banks in the country seem to have lost their bearings over the past few decades in terms of what is and what isn’t appropriate conduct. The pause in offering additional products is temporary, a company representative said. JPMorgan Chase, Citigroup and Bank of America declined to say whether they, too, would consider altering how retail bankers’ performance is evaluated. “Today is another move along that continuum”.
Wells Fargo has always been known for its aggressive sales goals, but in an industry plagued with questionable action during the mortgage bubble and financial crisis, it was also regarded as a well-run, tightly managed firm.
Critics have been weighing in to signal disapproval of the malpractice from Wells, with Treasury secretary Jack Lew the latest to condemn the bank.
Stumpf said clawback decisions are determined by the board of directors, and that product sales goals are not a component of compensation for any senior executives.
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Wells Fargo’s biggest investor is Warren Buffett’s Berkshire Hathaway. “When we fall short of that goal, I feel accountable and our leadership team feels accountable-and we want all our stakeholders to know that”.
