By Shawn Golson
Wells Fargo was fined over $185 million by the Consumer Financial Protection Bureau (CFPB), the LA City Attorney, and the Office of the Comptroller of the Currency (OCC) back in September. Bank employees were accused of opening or applying for 2 million bank accounts or credit cards without customers’ knowledge or permission. In response, the bank terminated about 5,300 employees. The employees were allegedly opening and funding fraudulent accounts to satisfy the sales goals related to the bank’s cross-selling ambitions.
The bank has been hit hard in its credit card division, at least in terms of new business. The bank said that new credit card applications were down 43 percent in the fourth quarter of 2016 from a year ago, and that new checking account openings fell 40 percent. Teller transactions were down 16 percent. Physical visits from customers visiting branches slid 14 percent.
The bank has sworn to change its aggressive sales culture, doing away with sales goals in the retail banks and backing down from its cross-selling strategy of pushing multiple products on a single customer. That strategy played out in the bank’s national network of thousands of branches, where employees’ compensation was tied to how many accounts they could sell. The pressure led thousands of them to create sham accounts in customers’ names.
One of the former branch managers, Susan Fischer, told CNNmoney that she was told to instruct her tellers and personal bankers that they needed to hit their goals no matter what. She said the pressure of holding the team accountable to unrealistic standards and astronomical goals. Her district manager even told her “I don’t care how you reach the goals as long as you cover your assets.”
Wells reported a larger than expected loss with profit falling 4.3 percent to $21.9 billion.
Most recently, about 5 days ago Wells Fargo fired four senior employees who were involved with the scandal. Wells Fargo identified the four employees it fired as:
- Claudia Russ Anderson, former community bank chief risk officer.
- Pamela Conboy, Arizona lead regional president.
- Shelley Freeman, former Los Angeles regional president.
- Matthew Raphaelson, head of community bank strategy and initiatives.
These executives won’t receive a 2016 bonus, and the company says they will forfeit all of their unvested equity awards as well as any vested outstanding options.
CEO John Stumpf also retired and forfeited $41 million in stock awards.
The new CEO of Wells Fargo, Tim Sloan, announced plans last month to shut down more than 400 bank branches by the end of 2018. That’s on top of the 84 locations it pulled the plug on in 2016.