Thousands of staffers who were fired in recent years after opening unauthorized customer accounts represented under-performing employees struggling to meet goals, Wells Fargo CFO John Shrewsberry said Tuesday. On Thursday, Wells Fargo was fined $185 million by various regulators for the fraudulent accounts. "The financial tailwind from the sales mishaps was immaterial to the company's fee revenue, but the elimination of product sales goals could materially change how the company's retail banking segment operates and the fee revenue it generates".
In announcing the fines last week, however, regulators said Wells Fargo sales staff opened more than 2 million bank and credit card accounts that customers may not have authorized, and that money in their accounts was transferred to the new accounts without authorization.
"I plan to do it again this year", Armstrong said.
Still, he said the Wells Fargo episode was a "wake-up call" for the banking industry to show that the "culture and compensation make a difference".
"Somebody has to be punished for this kind of behavior", said Representative Al Green of Texas.
Federal prosecutors are in the early stages of an investigation into sales practices at Wells Fargo & Co. that led to the bank being hit last week with a $185 million fine, according to people familiar with the matter. The lender's stock has lost 11 percent this year, while the S&P 500 Financials Index gained 1.6 percent. Because of anticipated call-volume increases that are typical after Labor Day - and the expected settlement news, which also would generate additional inquiries - the roughly 10,000 workers at the bank's telephone contact centers were instructed to try to process customer requests as quickly as possible. Performance and incentive adjustments will made by the end of the month.
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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.
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.
The terms of the transaction were not disclosed, Wells Fargo said in a statement. The bank also dismissed 5,300 employees, including some managers, who were accused of creating sham accounts. The company agreed to resolve the allegations without admitting or denying wrongdoing. Moody's has an A2 rating on the bank's long-term debt with a stable outlook. Presidential candidate Hillary Clinton on Friday praised the consumer watchdog for its work.
Stumpf, Cordray and Tom Curry, from the Office of the Comptroller of the Currency, will testify before the committee next week.
The scandal "probably should lead to a pay claw-back" from Tolstedt, CSLA analyst Mike Mayo wrote in a report on Monday. Her estimated total compensation was more than $124 million.