Wells Fargo’s CEO is expected to be grilled on Tuesday by US lawmakers on allegations the bank’s employees secretly opened accounts over a five-year period in order to meet sales goals.
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The giant bank at the center of a blossoming scandal over bank accounts and credit cards that were created for unsuspecting customers gave $70,000 this election cycle to members of the Senate committee who Tuesday will question Wells Fargo’s chief executive officer.
The Associated Press, which obtained a copy of Stumpf’s prepared testimony, reports he will say he is “deeply sorry” that the bank failed to meet its responsibility to customers and didn’t act sooner to stem what he called “this unacceptable activity”.
Wells Fargo has always been known for its aggressive sales goals, but the details and the $185 million fine that regulators imposed last week have singed the consumer banking giant’s reputation as a well-run, tightly managed company removed from the reckless conduct on Wall Street that stoked the financial crisis.
The change in focus for retail banks had been taking place slowly for years, but the financial crisis that began in 2007 and the impact on banks fueled faster change. In another report, CLSA analyst Mike Mayo also suggested Wells Fargo should reduce Stumpf’s compensation to hold him accountable for the bank’s practices. As a senior leader, she was among three Wells Fargo employees who each donated the maximum allowed of $5,000.
Overdraft protection was one common tactic, former Wells bankers said, telling customers to open an additional savings account to put aside money to cover overdrafts even though the customer didn’t have the resources to fund the account. The consumer banking giant has said it plans to eliminate the sales targets by January 1.
Several Democratic senators, including Elizabeth Warren of MA, are pressuring Wells Fargo to claw back bonuses from senior leaders, including former community banking chief Carrie Tolstedt. In a CNBC interview, Mr. Stumpf said that “to the extent that is a consideration, we have a process”, but didn’t elaborate on what that entails.
A stock photograph showing the exterior of a Wells Fargo bank building in New York, New York. In fact, several executives were awarded promotion for shoring up the bank’s figures. In July, the San Francisco-based bank said Carrie Tolstedt, 56, the head of the unit and Anderson’s boss, was retiring. Bank officials have also said that they believe all affected customers have been refunded, and sought to downplay the terminations, saying that they represented only about one percent of their workforce.
She said she was reprimanded when she made a decision to stop pressuring her employees to push products customers didn’t want or need, as the bank pursued a cross-selling initiative of eight products per household.
Wells Fargo’s CEO previously said the behavior was isolated to a handful of employees and managers.
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The bank must pay $100 million to the Consumer Financial Protection Bureau – the largest fine ever levied by the federal consumer watchdog.
