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Wells Fargo CEO preparing to apologize to Senate committee
Wells Fargo agreed to pay $100 million in restitution to victims to a Consumer Financial Protection Bureau fund, $35 million to the Office of the Comptroller of the Currency and $50 million to the county and city of Los Angeles, which had initiated legal action. Of Bank of America customers, 31 percent said they felt overly pressured for products they didn’t want or need.
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As bank customers across the country continued to fume Tuesday over news of Wells Fargo’s fraudulent accounts scandal, a House committee attacked the very law that guards against that kind of scheme.
The recent $185m fine levied on Wells Fargo & Company (WFC) for improper sales practices dating back to 2011 will not have any immediate rating implications but is credit negative for the company, says Fitch Ratings. Equities research analysts anticipate that Wells Fargo & Co. will post $4.02 earnings per share for the current fiscal year. It certainly isn’t a significant blow to the second-largest USA bank by assets ($1.7 trillion); the full $185 million represents less than 1 percent of its $20.7 billion in net income past year.
The bank’s shares fell 72 cents, or 1.6 percent, to $45.43 on Friday. The stock has tumbled 15 percent this year, the worst performance in the 24-company KBW Bank Index.
Wells Fargo spokeswoman Aimee Worsley told ABC News previously that the bank believes it has identified and refunded all affected customers, though it encourages customers who think they may have been affected to come forward. The CFPB’s order serves as a wake-up call to the banking industry to carefully monitor its sales practices and incentive compensation programs.
Apart from seeking all records related to the timing and detection of the unauthorized customer accounts, the committee will also ask several corporate officers to appear for interviews.
Bank executives were aware employees were gaming the system but failed to intervene, according to the lawsuit. Other banks fingered for high-pressure sales did not respond to requests for comment or declined to comment. Bankers expect consumers to “go with the flow”, she said, and asking questions can stump employees and spark an honest conversation.
The plaintiffs are seeking class-action status on behalf of up to a million people who may have been affected and damages.
In a letter to the bank’s customers to be released on Tuesday, the Democratic presidential candidate says she was “deeply disturbed” by the allegations. “The highest-ranking executive members of Wells Fargo, which may have included Carrie Tolstedt”, knew about that failure, they said.
To DeZoort, this misconduct rasies a lot of questions about accountability and the “tone at the top” at Wells Fargo. Others got calls from collection agencies warning them they were overdrawn on accounts they didn’t recognize.
“Not only is this conduct appalling and harmful to American consumers and communities, it also contributes to the growth of excessive regulation that needlessly burdens the local community banks that do right by their customers”, IABC CEO Camden R. Fine said in a written statement.
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A Wells Fargo branch is seen in the Chicago suburb of Evanston, Illinois, U.S. on February 10, 2015.