WASHINGTON - In a recent press release, the CEO of Wells Fargo claimed nearly 150,000 Texas bank accounts were possibly affected in the banking scandal that came to light a few weeks ago. This scandal has resulted in gaining the attention of Congress.
Chief Executive Officer John Stumpf testified on Thursday, Sept. 29, before the House Financial Service Committee. Stumpf explained that Wells Fargo bank is expanding its review of accounts and roles of executives. During the hearing is when Stumpf provided the figures for the Texas bank accounts involved in the scandal.
The San Francisco-based Wells Fargo has been fined by the U.S. and California regulators for $185 million. This fine is due to bank employee claims that they were trying to meet sales goal targets. As a result of trying to meet their sales quota, up to two million fake deposit and credit card accounts were opened without the knowledge of customers.
The press release stated, “Several lawmakers alleged that Wells Fargo’s sales practices may have violated federal racketeering laws."
U.S. Rep Jeb Hensarling of Texas said, while leading the committee, “Fraud is fraud. Theft is theft.”
Another press release yesterday explained how Wells Fargo & Company Chairman and Chief Executive John Stumpf reiterated the company’s commitment to addressing improper sales practices within its retail bank in his testimony before the U.S. House Financial Services Committee. These sales practices include actions the independent members of the Board of Directors have taken to ensure executive accountability. Stumpf has also reviewed changes and improvements made by the bank to date, and he provided an update on the customer remediation program.
The press release from Wells Fargo stated, “On Tuesday, September 27, the independent members of the Board of Directors of Wells Fargo announced steps to promote accountability for unethical sales practices in the company’s retail bank, including conducting an independent investigation. As part of these actions, Stumpf will forfeit all of his outstanding unvested equity awards, valued at approximately $41 million based on the closing share price on September 27th. He will also not receive a bonus for 2016, and forego his salary while the Independent Directors conduct their investigation. Former head of the community bank Carrie Tolstedt has left the company, and she will receive no severance or bonus for 2016. She has forfeited all outstanding unvested equity awards valued at approximately $19 million based on the closing share price on September 27th, and has agreed not to exercise any of her outstanding stock options while the Independent Directors’ investigation is ongoing.”
During his opening remarks, Stumpf respected and accepted the Board's decisions. Stumpf added, “We have new leadership in our retail banking business focused on ensuring that our team members provide the best service to our customers.”
Additionally, Stumpf provided an update on key actions the company is taking to reinforce that the bank's culture "is wholly aligned with the interests of customers." He said the company is accelerating the process for the elimination of product sales goals for retail banking team members during this time.
“We want to make sure nothing gets in the way of doing what is right for customers,” Stumpf said.
Stumpf also emphasized that the company is now sending customers a confirmation email about one hour after opening any retail deposit account and an acknowledgement letter after submitting a credit card application.
Stumpf reported that, as part of the effort to ensure customers have only products they want and need, the company has begun contacting those with open credit card accounts identified by PricewaterhouseCoopers as possibly being unauthorized.
“For retail deposit account customers, the company has refunded fees and is contacting every single one of them across the country in order to ensure a full understanding of every customer affected by this problem," said Stumpf. “We should have done that sooner, but we will not stop working until we get this right.”
Stumpf concluded, “I am fully accountable for all unethical sales practices in our retail banking business, and I am fully committed to fixing this issue, strengthening our culture, and taking the necessary steps and actions to restore our customers’ trust.”
Today, LIVE! interviewed Public Information Representative Michael King and asked for his response to the scandal. He reiterated that anything sent to customers without their acceptance is unacceptable. This concept is being carried throughout the investigation and implemented now with all customers, he said.
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