The CFPB, which was created by the 2010 Dodd-Frank Wall Street reform law, will receive $100 million of the total penalties, the largest fine levied by the agency.
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A pressure cooker environment is also described in a lawsuit filed by the city of Los Angeles against Wells Fargo in 2015.
Wells Fargo’s market cap dropped to $235 billion on Tuesday. In a press release from the company’s corporate headquarters, CEO John Stumpf stated: “We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers”.
Earlier Tuesday, Wells Fargo announced that it was eliminating all product sales targets in its retail banking division, effective from January 1, 2017.
Wells Fargo fired 5,300 for improper sales push.
If it is found that Tolstedt had knowledge or involvement in the fraud, she could be forced to forfeit up to $45 million of her retirement package or even more because of Wells Fargo’s clawback policies, which were created to help defray the cost of huge fines. An 27-year veteran of the bank, Tolstedt ran the community banking division where regulators said aggressive sales goals fueled illegal behavior by bank employees.
It should be noted that Wells Fargo already announced plans to revamp its compensation plan in the wake the “cross-selling” scandal.
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.
All this while Wells Fargo was simultaneously shoving social issues down consumers’ throats, something they’ve done for years. Affected customers were charged fees for maintaining the accounts, overdraft charges and other surcharges as a result of the fraud, leading Wells Fargo to pay $2.6 million to customers in compensation. “This is unacceptable behavior, and the kind of behavior we ought to catch and stop”.
The civil enforcement action called into question Wells Fargo’s oversight of “cross-selling”, long a central part of its business model, in which employees encourage customers to buy products or to open accounts they might not otherwise consider.
“The trust our customers have that we will put them first [is paramount]”, Stumpf said.
The issue has also attracted the attention of U.S. Democratic presidential nominee Hilary Clinton, and at least seven U.S. Senators have signed letters calling for an investigation. The lawmakers, including Sen.
Wells Fargo has so far offered no comment on Tolstedt’s guilt or innocence, but it’s clear as day to see that while 5,000 former Wells Fargo employees sit at home jobless today, the executive who created the permissive and high-pressure environment in which they committed their crimes is free to roam and steal from even more unsuspecting Americans.
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“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”.
