Wells Fargo to end product sale goals after bonus scam
Sep 26 2016 by Francis Osborne
Wells Fargo Chief Executive John Stumpf has been called to testify before a Senate Banking Committee hearing on September 20 to answer questions about the cross-selling scandal that resulted in a $185 million fine and $5 million in restitution for his bank.
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.
Torrie Matous, spokeswoman for the committee's chairman, Richard Shelby, a Republican from Alabama, said staff had "been arranging briefings and collecting information from both Wells Fargo and the regulators" to prepare for a September 20 hearing.
Credit rating agency Moody's Investors Service also commented, saying the "embarrassing episode" would have a negative impact on Wells Fargo's outstanding debt.
In its settlement with the CFPB - in which it didn't admit or deny any wrongdoing - the bank revealed that 5,300 employees have been fired, and that customers paid more than $2.6 million in bogus fees.
The scandal has amounted to the biggest criticism of Stumpf since he became Wells Fargo's CEO in 2007. Although the bank has eliminated sales goals for retail staff, Stumpf said "cross-selling" products from various businesses to customers is still important to growing its business. The bank encouraged "pervasive inappropriate practices" and managers didn't provide oversight of employees, Moody's said.
Following criticisms that USA authorities had failed to hold bankers to account in the aftermath of the financial crisis, the Justice Department last September issued a policy requiring all civil and criminal cases begin and end with a focus on individual accountability.