Wells Fargo cutting sales goal in wake of hefty fine

Vickie Mathis
00:14, Sep 14, 2016
Copyright 2015 All rights reserved. This material can't be published, transferred, copied or redistributed.
Copyright 2015 All rights reserved. This material can't be published, transferred, copied or redistributed.

When Wells Fargo was hit last week with $185 million in fines after thousands of its employees were caught setting up fake accounts customers didn't ask for, regulators heralded the settlement as a breakthrough.

The Senate Banking Committee plans to hold a hearing September 20 on San Francisco-based Wells Fargo, following last week's enforcement case in which regulators accused bank employees of opening deposit and credit-card accounts without approval to meet sales goals.

When the news first broke about Wells Fargo employees' blatant fraud, there was widespread reporting about the employee's behavior, but not a word was said about the culture which could have created such dishonesty, nor the higher-ups who were no doubt to blame.

The allegations have tarnished Wells Fargo's reputation and threatened a key money-maker for the company: the ability to sell customers multiple accounts, also known as "cross-selling".

"We believe this decision is both good for our customers and good for our business", Stumpf said. Robert Menendez of New Jersey, said Wells Fargo's CEO, John G. Stumpf, should be called to testify.

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"The regulators' findings are consequential for a bank such as Wells Fargo, which historically has had strong customer satisfaction scores and a reputation for sound risk management", Moody's analyst Allen Tischler wrote.

Debit cards were issued and activated, as well as PINs created, without telling customers.

Stumpf's statement made no direct mention of the more than 2 million bogus accounts revealed by the Consumer Financial Protection Bureau last week. She has typically awarded millions a year in bonuses and Wells Fargo stock.

The powerful Senate banking committee plans to hold a Wells Fargo hearing on September 20, according to the office of Senator Richard Shelby, the committee's Republican chairman.

Meanwhile, the bank said Tuesday it has eliminated product sales goals for its consumer bankers. Warren Buffett's Berkshire Hathaway is the biggest shareholder in the bank with more than nine percent. 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.

Copyright 2015 All rights reserved. This material can't be published, transferred, copied or redistributed.


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