Democratic presidential candidate Hillary Clinton took on the Wells Fargo Co bogus-accounts case in a letter to the bank’s customers to be released on Tuesday, when Wells Chief Executive Officer John Stumpf will testify before a Senate committee. “I am deeply sorry”, Stumpf said in a copy of his testimony obtained by Bloomberg.
“Bank of America, Citi, Chase were all envious of Wells’ ability to cross-sell as well as they did”, said Steve Beck, a managing partner with cg42. “I accept full responsibility for all unethical sales practices in our retail banking business”.
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.
Similar warnings were being relayed from corporate headquarters in San Francisco to regional bankers in Texas, as senior management learned that some Wells employees had been trying to meet sales goals by creating sham bank accounts and credit cards instead of making legitimate sales. Mr. Stumpf told The Wall Street Journal in an interview Tuesday that he is prepared to “share Wells Fargo’s story” at the hearing. “Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences”.
Troubles have been intensifying at Wells Fargo Company (WFC – Analyst Report) following its $190-million settlement to resolve regulators’ claims of illegally opening millions of unauthorized accounts.
The wide sweep of the strong-arm sales practices within the bank, which went on for years, has drawn attention from committees in both the Senate and House.
Senators will probably press Stumpf on how much he and other top executives knew about the misconduct. She has been replaced by Vic Albrecht, a 35-year veteran of the company. If he was unaware of the problems, critics could seize on that as evidence that Wells Fargo is too big and unruly to be properly managed. But when a bank wants to take back pay that already has vested to the employee, they often have to go to court. More than two million deposit and credit card accounts may have been created without customer authorization. Wells Fargo agreed to the CFPB’s consent order without admitting or denying its findings and conclusions.
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. If she decides to return to the bank, she’ll need to apply for a new position, Messick said.
While workers were fired, Carrie Tolstedt, the head of the unit responsible for creating the fake accounts, is scheduled to walk away with a 5 million golden parachute.
The panel also plans to question regulators from the Consumer Financial Protection Bureau, the Treasury Department’s Office of the Controller of the Currency and the Los Angeles City Attorney’s Office.