Wells Fargo is on a mission to make good with its customers and with the public, after federal regulators accused it of opening millions of bank accounts and issuing hundreds of thousands of credit cards without customer consent.
Bank employees issued 565,000 lines of credit and opened 1.5 million bank accounts for customers without their consent from 2011-2014, and sometimes created false email addresses to sign them up for banking services in order to pad their numbers. Some 14,000 of those credit accounts accrued over $400,000 in fees alone. (RELATED: DOJ Demands Wells Fargo Whistleblower Testify In Formal Investigation)
Initially, Wells was slapped by the Consumer Financial Protections Bureau (CFPB) with a $185 million fine— the largest ever levied by the federal agency — after finding these practices were rampant throughout Wells Fargo since 2011.
Former Chairman and CEO of Wells Fargo John Stumpf faced congressional investigation, which ultimately led Wells’ board to force the executive to cough up $41 million in assets and earnings he accrued from his decades-long tenure. The move, however, proved not harsh enough for members of Congress and the public. Stumpf announced he was stepping down as chairman and CEO Oct. 12.
The bank must first determine the exact number of customers that had accounts opened without their knowledge, and then the extent to which each customer was affected. It’s shelling out millions for current employees and new consultants to figure out the answers to these questions, the Journal reports. All of this, in hopes that the bank will be able to reach an adequate compensation proposal specifically tailored to each customer.
The success of the campaign will be the first major test of the bank under new CEO Timothy Sloan. (RELATED: New Wells Fargo CEO Pushes Trump For Less Regulation)
The bank has made almost 200,000 calls to customers since news broke about the scandal in August, and only about one-fifth have responded. Some in leadership overseeing the bank’s new efforts say one of the most difficult parts will be determining how much damage customers incurred from these ghost credit accounts, the Journal reports.
Removing an unwanted credit card from a customer’s credit report results in damaging a customer’s credit score. Wells is trying to ascertain whether lower credit scores mean customers either paid more for a loan or were denied one.
The Office of the Comptroller of the Currency (OCC) announced in late November that it “revoked” certain provisions of the original deal and that Wells Fargo now has to comply with a host of new demands. For instance, the firm must provide the OCC with a “written notice” if it is making changes in “directors and senior executive officers.” The firm can no longer provide “golden parachute payments,” a term used to describe the lucrative benefits an employee gets from the firm if they are terminated or retire.
The Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) determined Tuesday afternoon that Wells Fargo had again failed to provide an adequate outline for “living wills.” The FDIC slapped the largest American bank with two sanctions: It cannot establish international bank entities or acquire non-bank subsidiaries.
Wells Fargo is allowed to submit another living wills outline to federal regulators March 31.
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