Richard Cordray, the director of the Consumer Financial Protection Bureau which levied a $100m penalty on Wells Fargo, said it was not a coincidence that so many employees were involved. The damning CFPB report could directly impact its credit rating, for example.
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The bank’s shares dropped more than 2 percent to $47.12 in morning trading Tuesday.
Now Wells Fargo is also facing political repercussions. On Tuesday, Wells Fargo announced it would remove product sale requirements for its retail bank.
“This morning we took the further step of announcing the elimination of sales goals in retail banking”, effective January 1, he said.
Wells Fargo fired 5,300 for improper sales push. The fines also are not that much more than the $125 million one of its top executives, Carrie Tolstedt, will walk away with when she retires this year.
Tolstedt has unvested stock awards that would be worth about $17.8 million if the company hits certain financial targets. That was set to reach $1.75 million this year before Tolstedt announced her retirement.
The government financial watchdog that brought the $150 million fine against Wells Fargo has been pressured to extend their investigation to other institutions.
By Wells Fargo’s own figures, the bank opened roughly 1.5 million deposit accounts and 565,000 credit card accounts that may not have been authorized by consumers, the CFPB said. They all worked in Tolstedt’s community banking division, the company said. “For the past several years, we have significantly strengthened our training programs, controls and oversight and have evolved our model to ensure we are rewarding deeper relationships and providing excellent customer service”.
“Somebody has to be punished for this kind of behavior”, said Representative Al Green of Texas.
I speak here of the cataclysmic revelations at Wells Fargo Bank, now known to have been gaming the system via the “sandbagging” and “pinning” and “bundling” of customers and their accounts, actions that recall such sleight-of-hand language as channel stuffing and cookie jar reserves. A customer who opened a checking account would be encouraged to consider a debit card or savings account.
But he said he considered himself responsible for any deviation from Wells Fargo’s goals.
John Shrewsberry, the bank’s chief financial officer, spoke September 12 in NY at the Barclays 2016 Global Financial Services Conference and detailed the bank’s internal investigation and resulting new practices.
This is just another example of the Wall Street corruption that has gone unchecked for too many years.
“This ought to be a moment where people stop and remember how risky the system is when you don’t have the proper protections in place”, Treasury Secretary Jack Lew said at a conference Tuesday, according to CNBC.
“We believe this decision is both good for our customers and good for our business”.
He said the bank will “take a big wide fresh look at who knew what and when and what else might have been done”.
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Elizabeth Warren will get her chance to rip into Wells Fargo one week from today when the Senate banking committee holds a hearing on what the senator has called “a staggering fraud”.
