On Tuesday, Wells Fargo CEO John Stumpf released a statement promising that the bank would eliminate product sales goals for its employees after thousands of employees were found to have opened fake accounts using real customer names and identification in order to boost internal sales numbers.
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Lew slammed Wells Fargo after it was fined US$185 million and charged last week by a federal consumer watchdog with secretly opening accounts without customers’ knowledge.
The Consumer Financial Protection Bureau, the upstart regulatory agency that ostensibly led the investigation, got a 0 million fine from Wells Fargo. Some of the practices in which the bank engaged, as alleged by the CFPB, include: opening deposit accounts and transferring funds, as well as applying for credit cards and issuing and activating debit cards, all without consent. To regain the trust of its customers, the company has announced to eliminate its product sales goals in its retail banking segment.
The bank’s shares dropped more than 2 percent to $47.12 in morning trading Tuesday. In some cases, employees even created fake email addresses to sign up customers for online banking services, regulators said. Fortune reported on Monday that the executive who head of the division that at the center or the settlement, Carrie Tolstedt, left the bank in July with almost $125 million in stock, options and restricted shares.
The Senate Banking Committee has scheduled a hearing for next week and Stumpf is expected to testify.
The bank has since fired almost 5300 employees while setting aside R71 million ($5 million) for customer refunds of fees for accounts the customers never wanted.
The U.S. Attorney’s Offices in Manhattan and San Francisco are investigating Wells Fargo, the person said, following a settlement announced on September 8 over claims that some customers were pushed into fee-generating accounts they never requested.
In an attempt to combat the huge amount of bad PR, Wells Fargo announced this week that they would be ending the competitive sales goals which plagued employees, ending the requirements which ultimately led to the illegal behavior. Wells Fargo had been the largest by market cap since 2013, based on closing values.
Currently, about 3,100 people work for Wells Fargo in Alabama.
Tolstedt received a pay raise in March, after getting more than $9 million in cash and stock past year. In that model, banks try to enlist customers to buy more and more products from them, thereby saving on servicing and other costs, which add to profits.
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Wells Fargo, known for its stagecoach logo, has always sold itself as first and foremost a community bank. Wells Fargo has also worked to improve its training programs, including additional emphasis on ethics.
