Among allegations made by regulators were that Wells Fargo employees opened as many as 2 million accounts for customers without their authorization.
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The Consumer Financial Protection Bureau, the upstart regulatory agency that ostensibly led the investigation, got a 0 million fine from Wells Fargo.
The Wells employees opened unauthorized deposit accounts for existing customers and transferred funds from their authorized accounts, submitted credit card applications, enrolled customers in online banking services and email notifications and ordered and activated debit cards.
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 that did not get into the poisonous behavior of its Wall Street counterparts. Others say that there is no way that many employees could have conspired to carry out the underhanded activities without some sort of direction from above. In other words, the “rogue” employee explanation just doesn’t fly.
Wells Fargo did not comment on Tolstedt’s compensation, which CNNMoney calculated from regulatory filings. These were not high-powered salespeople, but primarily bank tellers.
Stumpf also declined to say he supports efforts to “claw back” the $124 million in stocks and options that community banking head Carrie Tolstedt is set to walk away with when she retires at the end of the year.
The sales goals will be eliminated starting January 1, Wells Fargo said. District managers discussed daily sales for each branch and employee “four times a day, at 11 am, 1 pm, 3 pm and 5 pm”, the lawsuit said.
As the political backlash continued, US Treasury secretary Jack Lew weighed in, saying that the behaviour at Wells demonstrated why the landmark Dodd-Frank financial reforms were necessary. But it seems it was a win-win for Wells Fargo, for those actions apparently helped the bank meet sales goals and also helped employees earn additional compensation.
Walking the talk? Sure, Wells Fargo repeatedly receives high rankings from the Human Rights Campaign, the largest LGBT advocacy group and political lobbying organization in the United States. The amount of the settlements was $185 million, which was fully accrued for at the end of the second quarter.
The Senate Banking Committee’s Republican majority, meanwhile, has scheduled a hearing for September 20, at which it wants to grill Stumpf.
Senate Democrats want Stumpf to testify before Congress about the scandal, which Senator Elizabeth Warren has called a “staggering fraud”.
On top of agreeing to pay a combined total of $185 million in fines, they have also agreed to pay all affected customers full restitution for fees associated with the “ghost” accounts. 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.
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In his remarks at the conference, Shrewsberry said the bank is adapting its business model by taking out sales goals, but believes there is still a growth structure in place.
