Eight Isnâ€™t Great: Wells Fargo Stock Plummets as Illinois Finds a New Bank
Michael Frerichs, the Illinois state treasurer, announced that the state will “suspend its investment business” with Wells Fargo following recent revelations of unethical business practices with the bank.
In addition Chicago, aldermen for the city have issued a ban from conducting business with Wells Fargo as well. That ban will extend to 2018.
And in California, the state treasurer has also promised to suspend financial ties to the bank for the next twelve months.
The scope of this scandal has rocked the public, but testimony on Capitol Hill by John Stumpf, CEO of the bank, has infuriated law makers. Stumpf told Congressman Keith Rothfus that the 80,000 fake accounts created in Pennsylvania alone is not a large number of concern when compared to the two million in total that sprouted up across the country.
Richard Eskrow, host of the Zero Hour and senior fellow for Campaign for American’s Future (CAF), pointed out : “Nothing clarifies the mind of a bank board member than the loss of lucrative business deals. Wells Fargo’s CEO says he will pay a penalty for presiding over his bank’s fraud wave.”
Eskrow continues: “Stumpf now says he will forego $41 million in stock options and salary while the bank’s board investigates the scandal. This is important for a number of reasons. Stumpf, like Chase’s Dimon, is accustomed to receiving hagiographic treatment by much of the media. His PR firm-driven reputation is that he is one of the “good bankers.” Stumpf is, or was, given to opining in the press about his working-class upbringing and all the decent American values it instilled in him.”
Recently some of the 5,300 employees who were fired over this scandal have filed a lawsuit alleging that low-level bankers were “coached” into creating a minimum of ten fake fee-generating accounts per day using false names and fake email addresses such as NoName@WellsFargo.com so that they could not be traced back.
Employees were incentivized through monetary rewards for “sandbagging” (opening false accounts after the customer told the bank not to), “pinning” (connecting personal ID numbers without customer approval), and “bundling” (lying about availability of products to customers).
Another lawsuit concerning Wells Fargo, “contends the largest California-based bank violated state and federal laws by misusing confidential information and failing to notify customers when personal information was breached.”
Using “aggressive tactics” to coerce new customers, Wells Fargo made it “difficult to correct the mistakes” made by WF and return fees to customers because of “high-pressure sales culture set unrealistic quotas, spurring employees to engage in fraudulent conduct to keep their jobs and boost the company’s profits.”
In this case, the bank blamed “a few rogue employees who the bank has appropriately disciplined or fired.”
Through training, audits and processes “that work together to support … our commitment to customers receiving only the products and services they need and will benefit from”, Wells Fargo said they are working to improve internal systems.
Part of that training was the cross-selling strategy called “Going For Gr-Eight” which is a brochure for employees to push banking products onto households of existing customers to increase fee potential and overall profitability.