What's next for Wells Fargo?

Posted On October 04, 2016

Last Thursday, embattled Wells Fargo CEO John Stumpf faced the House Financial Services Committee to address the bank’s fake account scandal that broke earlier in September.  Wells Fargo employees are said to have opened more than 2 million fake accounts to accrue sales bonuses.  

Wells Fargo has been ordered to pay the largest penalty the Consumer Financial Protection Bureau has ever imposed, totaling $100 Million.  The $100 million fine is one part of this historic enforcement action. Wells is also directed by CFPB to provide an estimated $85 million in customer refunds. 

Some of the unlawful actions included: 

• Opening deposit accounts and transferring funds
• Applying for credit card accounts
• Issuing and activating debit cards
• Creating email addresses to enroll consumers in online banking

The CFPB stated “Wells Fargo [is required] to provide full refunds to consumers for the fees they incurred as a result of the bank’s illegal conduct, and affected customers are not required to take action to get a full refund.  

“The historic $100 million fine we imposed on Wells Fargo is in addition to the money the bank must pay back to harmed consumers. There were also fines from other government agencies. The CFPB’s large fine reflects the seriousness of these violations and sends the message to the bank and other financial institutions that this type of misconduct carries serious consequences.”

At this time reports show that 5,300 employees have been terminated because of their participation in the activity listed above.  California State Treasurer, John Chiang, is calling for Stumpf to resign declaring, “Mr. John Stumpf must go.  Following-up on last week’s duck, dodge, deny performance with another listless one has convinced me that Mr. Stumpf is not – and will never be – the change agent leader Wells Fargo so desperately needs.”

Stumpf currently serves as both CEO of the megabank and chairman of the board.  Treasurer Chiang is calling for a separation of the roles and believes Stumpf is unfit to fill either position.  Oregon State Treasurer Ted Wheeler is also attacking Stumpf, pushing for a restructuring of management and executive compensation at Wells Fargo. 

Discussion of possible legislative action to break up the bank also arose at the Committee meeting.

Sources: HousingWire, HousingWire, Consumer Financial Protection Bureau