Wells Fargo CEO John Stumpf will get grilled by the Senate Banking Committee next week about what the government has described as the bank's "widespread illegal practice of secretly opening unauthorized deposit and credit card accounts" for customers.
"When cross-selling is based on efforts to generate more business from existing customers based on strong customer satisfaction and excellent customer service, it is a common and accepted business practice", the Consumer Financial Protection Bureau said last week in announcing its action against Wells Fargo. Mr. Stumpf said that those fired included bankers, managers and managers of managers, but declined to name the most senior executive let go.
Abraham Simmons, a spokesman for the prosecutor's office in San Francisco declined to comment on the probe, while James Margolin, a spokesman for U.S. Attorney Preet Bharara in NY, didn't immediately respond to a call seeking comment. Consider that in 2014, around the middle of the roughly five-year period reviewed by the CFPB, Wells Fargo set a record in reporting net income of $23.1 billion, on revenue of $84.3 billion.
Wells Fargo has said it regrets "any instances where customers may have received a product that they did not request" and that it has refunded $2.6 million in fees associated with products that were opened without authorization.
The sales goals were part of Wells Fargo's aggressive push into "cross selling", persuading customers to sign up for multiple products.
However, media organizations have reported that Carrie Tolstedt, the bank executive who oversaw the unit that created the unauthorized accounts, is retiring from Wells Fargo with a golden parachute package of benefits worth $124.6 million.
Wells Fargo CEO John Stumpf has accepted an invitation to testify, a spokesperson for the bank told CNNMoney.More news: Trump leads Clinton by small margin in Texas
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For decades, big banks sought to put tellers in a position to improve product sales, Bove said, but regulators and elected officials may now step up pressure against that business model.
Wells Fargo fell 0.9 percent to close at $46.52 in NY, erasing earlier gains.
Rather, Stumpf appeared to lay blame for the problems with the employees involved than with any flaw in Wells Fargo's WFC, -3.90% ystems or culture. I am accountable. Anybody else in the company, we all feel when we fall short of that plan, we feel accountable and responsible.
So customers ended up paying service fees on accounts they never opened, including fees imposed for failing to keep a minimum balance on accounts that were never authorized.
"We don't comment on the existence or non-existence of any investigation", said Abraham Simmons, a spokesman for the U.S. Attorney's Office in San Francisco.
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. Wells Fargo held almost $1.7 trillion in assets as of the end of March, compared with more than $2 trillion at industry-leading JPMorgan, according to the Federal Reserve.