I’ve been sitting on a string of articles describing the mess Wells Fargo has created for itself by opening accounts without customers’ permission. That issue keeps hanging around like a bad hacking cough.
At the same time some new fiascos have surfaced.
It is time to get caught up, so here are some articles I saw a few months ago:
4/4/17 – Wells Fargo advertisement in Wall Street Journal – The bank published a full-page public letter from the CEO.
He describe the steps taken by the bank to make things right. I will paraphrase or nearly quote the steps:
- Refunded $3.2M to 130K small business and retail customers
- Agreed to $110M class action lawsuit
- Promised to ‘make things right’ for customers whose credit rating was affected
- Eliminated sales goals for retail staff
- Changed compensation plan for retail staff
- Created an Office of Ethics, Oversight, and Integrity
- Created an ethics hotline, with protections for callers
- Changed leadership in Community Bank group
- Terminated a number of executives
- Cancelled cash bonuses from 2016 for 8 senior managers
- Split the role of chairman and CEO
Criticize the bank as you wish, which I’ll continue doing, but we all need to acknowledge those are some very serious steps.
4/6/17 – Emily Glazer and Ruth Simon at Wall Street Journal – Wells Fargo’s Aggressive Sales Tactics Hit Small Firms – Story showed up on page B6 of the print edition, which shows it is a relatively minor wrinkle in the overall fiasco Wells is working through.
The bank identified the issue on its own. Staff in the merchant service area were pumping up the reported volume of customer transactions. Why? That meant when the customers called in, they didn’t get routed to a call center and were instead routed to someone in merchant services. Customers were then pushed to open high cost, hard to understand, costly to cancel contracts.
4/10/17 – Reuters – “Best banker in America” blamed for Wells Fargo sales scandal – A report by a committee of the Board of Directors consisting of the board chair and three outside directors placed blame for the fake account scandal on the head of the retail banking division. Report says she created the atmosphere for the aggressive sales practices, ignored reports of abusiveness when they surfaced, and interfered with the board trying to address the issue.
The former boss of the retail division disagreed with the report.
4/10/17 – Emily Glazer at Wall Street Journal – Wells Fargo Slams Former Bosses’ High-Pressure Sales Tactics – The bank will clawback another $75M from the former CEO and former head of the retail bank division making the total clawback from all senior staff $182.8M.
This article says the blame is placed on the former CEO and the former head of the retail bank division. Report cites misrepresentations from the retail banking boss to the Board of Directors as to the number of staff fired.
Severity of the fake account scandal is highlighted by one unnamed branch manager whose teenage daughter had 24 counts, whose adult daughter had 18, her husband had 21, her brother had 14, and her father had merely 4 accounts. That would be 81 accounts for her five named relatives.
I’m not sure but will guess that the following two articles are discussing the same group of class action suits.
3/28/17 – National Law Journal – Wells Fargo Strikes $110M Settlement Deal in Fake Accounts cases – A dozen class action lawsuits against Wells were settled for $110M. That amount, after covering unspecified legal fees, will be used to remediate the damage for around 2M customers who had fake accounts opened on their behalf by the bank. This is the settlement mentioned in the ad ran in the WSJ on 4/4/17.
7/10/17 – NPR – Wells Fargo To Pay $142 Million To Customers Hurt By Bogus Accounts – A federal judge has given a preliminary okay to a plan to settle in a class-action lawsuit against the bank, with expected cost of $142M. If given final approval, this will settle 11 different class-action lawsuits.
Like I said, I don’t know if these are overlapping claims or this will be cumulative settlements.
Part 2 follows here. Hopefully I can get caught up before new fiascos fall off the stagecoach.