The Consumer Financial Protection Bureau reports that over a five-year period, more than 5,000 Wells Fargo employees were fired for engaging in the practice. The CFPB reports that the bank opened more than 2 million deposit and credit card accounts that may not have been authorized.
A Wells Fargo spokesperson told CNNMoney.com that the firings took place between January 2011 and March of 2016 and only affected about 1% of the company’s workforce. The spokesperson added that “while we regret every interaction that was not handled properly, the number of instances and team members involved represent a very small portion of our business.”
Nevertheless, it’s a big revelation considering the financial industry has been under increasing scrutiny and regulations since the 2008 financial crisis. U.S. Senator Elizabeth Warren, Senator (D-MA) and senate colleagues are calling on Wells Fargo CEO John Stumpf to testify on the scandal before the U.S. Senate banking committee. CNNMoney.com reported that it’s not clear yet if Stumpf will agree to testify or if a hearing will be held. Warren says if executives were in the dark then it means “this is simply a bank that is too big to manage.”
Wells Fargo announced on September 13 that it would end the product sales goals. The Wall Street Journal reported that the bank said it is spending $50 million per year for enhanced training and monitoring, part of which includes a mystery shopper program that tries to detect bad behavior at branches. Stumpf told the Journal that the company is eliminating product sales goals to rebuild the confidence of customers. “We believe this decision is both good for our customers and good for our business. The key to our success is the lifelong relationships that result from providing each customer with great value,” said Stumpf.
Stumpf was named the 2015 CEO of the Year by Morningstar, which said in its announcement that he guided the bank through a “difficult period in the industry and shunned activities that put profits ahead of customers.” Morningstar said that a big criteria for the award was a top executive who demonstrated independent thinking.
An article at CNNMoney.com, which questioned whether the CEO and other executives need to be “let go too,” reported that Berkshire Hathaway is the largest owner of Wells Fargo with more than 480 million shares for a nearly 10% stake in the company. CNN reported that Charlie Munger, Berkshire vice chairman and Buffet’s “right hand man,” said that “Wells Fargo behaves better than the average big bank…[although] nobody’s perfect.”
The lawsuit was filed in 2015 by the state of California and alleges that the bank imposes “unrealistic” quotas on its employees and that the bank “has known about and encouraged these practices for years.” It says that Wells Fargo has engineered a virtual “fee-generating machine” that harms customers, puts the blame on employees and provides the company with profits.